7574-R1_LGP_MechanicFalls_AnnualReport_2021_Text_4C_Web

50 With a better understanding of the stability, we see within our revenues I want to shift this discussion to changes within appropriations. The most notable change on the expense summary page is a negative NET change to the Debt Service line. In last year’s budget we needed to move $396,000 from a savings account to pay down the unspent balance of the loan we received for the purchase and renovations of 22 Pleasant St. This budget still carries the annual debt service for 22 Pleasant St. Affected by this one-time pay down is the similarly sized NET reduction of Applied Revenues . Therefore, a simplified comparison to the previous year does not portray the full picture of this budget. The up side is that if and when that building is sold that debt will be cleared, ultimately saving us $40k per year in payments. Additionally, this building being placed back on the tax rolls will also generate $8-12k per year in new revenue. To compound the apparent impact on Debt Service the FY20-21 budget eliminated the regular Road Bond payment which was paid in full the previous year. At the ballot box we requested voter authorization to take out another $500k Road Paving bond as we do every 5 years. For logistical and Covid19 related reasons we opted to shift from paving from the fall to paving in the spring. This resulted in no payment being made in the current fiscal year. The resumption of a Road Bond payment of approx. $105k reduces the appearance of the one-time payment on the 22 Pleasant St loan, but I still wanted to draw attention to the reality that this $105k increase was present the prior year and should not be seen as new spending. Where there is new funding not covered by other increases in revenue is within the Capital Improvement Plan (CIP). This account is a Charter requirement for maintaining a 5-year financial investment plan. There was no plan in place when I began my contract here but we have created one to use annually during the budget process. The included 7-year Capital Improvement Plan was compiled through work with Department Heads as well as our insurance carrier and is an ever-improving list of insured assets maintained by the town. This practice combines a Funded Depreciation account with a Capital Expenditure Plan. If it is funded effectively, the town is left with a 7-year forecast of planned expenditures with the accompanying savings to pay for them without having the added expense of bonding, borrowing or creating sudden increases in taxation. Within this budget you will see that the most notable increase in spending (other than the resumption of the Road Paving Bond) is an $85k increase in the CIP accounts. Broken down at the bottom of the CIP summary page is the percentage we invest annually to fund the rehab and replacement of the town’s substantial assets. In this year’s budget (with this $85k increase) we are only funding 5.8% of our total asset value. Instead of a traditional depreciation rate we instead, through this CIP, look to establish a more formal Asset Renewal Rate. This involves first establishing a current list of assets, tabulating their replacement value and then forecasting the service life for each vehicle, building or piece of equipment the town owns. It is a lengthy but worthwhile exercise we have been working on. Each year through our work with the Department Heads, Budget Committee and Council we get to keep refining this process and I look forward to this conversation again this year. Some of the prominent additions to this version is funding towards the Town office building as well as the Before & Aftercare building. Both of these buildings are in disrepair with the old siding deteriorating and more imperative repairs identified. Whether CIP funds would be used for these needed repairs or the balances put towards a comprehensive municipal project will be decided by the Council. Continuing to have funds set aside will allow the Council to make impactful decision on these future projects. Other additions within this expenditure plan include priorities we have previously discussed, like the town revaluation, currently schedule for 2023, or the allocation of funds toward a Governance Codification service which the Council has made a priority in the upcoming fiscal year. Other adjustments have been made within various departments in attempt to catch up with the useful life of the asset, as in the case of our Police Cruisers