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2007-05-24 Special Meeting Beverly City Council 7:00, PM May 24, 2007 Roll Call: Councilors Present: John Burke, William Coughlin, Timothy Flaherty, Miranda Gooding, Patricia Grimes, Kevin Hobin, Donald Martin, Maureen Troubetaris, Paul Guanci Pledge of Allegiance to the Flag: Led by Councilor Hobin #142 Call for Special Meeting May 24, 2007 Communications from His Honor the Mayor: #143 May 24, 2007 Honorable City Council City Hall Beverly, MA 01915 Dear Honorable Council: I present to you tonight the proposed Operating Budget for FY 2007-2008. Overall the General Fund Budget is up by 2.9% rising from $91.7 Million to $94.3 Million. I am pleased to advise you that this budget depends far less on the infusion of "free cash," a synonym for funding from the City's saving account, than did the budgets of recent years. The general plight of cities and towns throughout the Commonwealth continues to worsen because State Aid remains far below the level communities received before the drastic cuts imposed by Governor Romney shortly after he entered office. As you know, State Aid is the return of some of our State tax dollars to local communities and has historically been our second largest source of revenue, second only to real estate taxes. Beverly's situation while not easy, is better than that of many communities. If we look first at the year soon to end, we will once again produce overall favorable revenue and expense variances. And you will recall Beverly received an upgrade in its bond rating to A 1 in February of this year. A major positive factor affecting the FY2007-8 Budget relates to the education sector which as you well know makes up the largest portion of the budget. It is worth looking inside that budget to view several significant factors. First, a large positive variance in the School Budget at end June 2006 has benefited the current fiscal year which ends this June 30th and which in turn has generated a positive variance, although smaller, sufficient to aid next year's school budget. Second, the real estate lease income derived largely from the Memorial building benefits the school system in a magnitude unanticipated when the middle school were combined. Total real estate lease income to the schools in nearly $500,000 per year. Third, the anticipation of additional Medicaid reimbursement dollars made possible by the diligent work of the new school Business Manager is most welcome. On both the school and city sides of the budget we have been aided by the increase in employee contributions to health care plans from 17 %% to 20% of the total cost of HMOs. The FY 2008 budget represents the last step in the shifting of the employee contribution from 10% to 20% which no doubt will put added pressure on next year's FY2009 budget. In addition to the increased employee contribution level, the increase in health car costs has been moderated by a number of other factors including a drop in the total number of persons enrolled in health care plans by about 2%, the continued impact of the shift of Medicare eligible retirees from regular health plans to Medicare supplement plans, the conversion of he Medex Plan from premium based to self-insured and less than anticipated activity in the self- insured plans which has slowed the upward trend in costs and while contributing to a gain in the Health Insurance Trust Fund Balances. There is nothing to say the future will be easy. Nor do I wish to convey that the present is all roses. You will note that the combined water and sewer rates increase for next year by50 cents per 100 cubic feet of usage. This is the first increase since July 2003. This money is necessary to fund drainage project throughout the City and will continue the work to be able to be 'back feed' water throughout our system in the event of a large pipe failure thus minimizing potential interruptions in service. Also, we have recently discussed, many of Beverly's roads and streets are not in acceptable condition. Cities and towns have come to depend on State supplied Chapter 90 Funds for most road and sidewalk work. In order to free up the entire amount of Chapter 90 Funds for most road and sidewalk work. In order to free up the entire amount of Chapter 90 Funds available to Beverly for paving purposes, we have included in the Operating Budget some $150,000 of design funds for Rantoul Street improvements. Normally this type of project would be charged to Chapter 90 monies. With this transfer we will be able to pave $1,500,000 of roads and streets before Thanksgiving. The inclusion of the $150,000 in the Operating Budget brings the total budgeted use of Free Cash to $400,000 for next fiscal year. 78 Let me also note that recent recycling efforts are very encouraging with a reduction in trash delivered to RESCO of 682 tons during the February through April period of this year. It is to early to declare this effort a success, but we are very optimistic. And in our efforts to make Beverly cleaner and more beautiful we have budgeted a new street sweeper for the coming year. Lastly, the FY 2008 Budget as submitted provides funds for the Main Library to be open on Sunday afternoons throughout the year for the first time in several years. This improvement in service has been requested by the Library Trustees. There is, of course, no guarantee that this service level can be maintained as we face the future. Very truly yours, William F. Scanlon, Jr., Mayor Refer to Finance and Property and Committee of the Whole Meeting Adjourned: 7:15 PM Frances A. Macdonald, CMC City Clerk 79