Below is a summarized version of the Finance Committee meeting, organized by timestamps and speakers, focusing on key points raised during the discussion in Reading, Massachusetts. This summary condenses the discussion into major themes, speaker contributions, and decisions, avoiding excessive detail while retaining the essence of the conversation. Timestamps correspond to the video linked at the bottom.
Contents
Meeting Overview
Meeting Summary: Finance Committee – March 12, 2025
Start Time: 7:00PM
Format: Hybrid (in-person at the Town Hall Select Board Meeting Room and Zoom)
Purpose: Third of four weekly budget meetings. The meeting focused on the town manager’s recommended FY 26 budget, with significant attention to financial pressures, free cash usage, and capital projects.
Opening and Roll Call (3:54 – 4:56)
- Speaker: Joe Carnahan (Chair)
- Details: Meeting called to order at 7:00 PM. Roll call confirmed attendance: Mark Zarrow, Ed Ross, Joe McDonough, Emily Sisson, Marianne Downing, Geoff Coram, Endri Kume, John Sullivan, and Mark Zarrow (Zoom). Additional committees (Select Board) were also called to order with respective members present (e.g., Carlo Bacci, Mark Dockser, and Chris Haley).
- Outcome: Meeting formally opened with quorum established.
Agenda Overview
and Liaison Reports (4:56 – 5:45)
- Speaker: Chair (Joe)
- Summary: The Chair introduces the agenda, highlighting the town manager’s budget presentation as the main focus. No significant liaison reports are shared due to the short interval since the last meeting (one week). Pickleball is mentioned as a potential future topic.
- Outcome: No immediate action; proceeds to public hearing announcement.
Public Hearing Announcement
(5:45 – 7:04)
- Speaker: Vice Chair (Marianne)
- Summary: The Vice Chair reads the formal notice for the public hearing on the FY 26 budget, scheduled for March 12, 2025, at 7:00 p.m., with a vote planned for March 19, 2025. The hearing aims to gather public input on the budget.
- Outcome: Hearing officially announced and opened.
Motion to Open Public Hearing
(7:04 – 7:33)
- Speakers: Chair, Emily, Joe, Committee Members
- Summary: The Chair entertains a motion to open the hearing, seconded by Emily and Joe. Roll call vote: Mark (yes), Joe (yes), Emily (yes), Marianne (yes), Ed (yes), Endri (yes), John (yes), Joe (yes).
- Outcome: Public hearing opened unanimously.
Public Comment
from Mark Dockser (8:01 – 10:58)
- Speaker: Mark (Zoom, Select Board Member, Precinct 1)
- Summary: Mark urges the committee to scrutinize the use of free cash in the budget, historically set at 7% as a buffer for unexpected expenses. He notes increased reliance on free cash for operations due to conservative budgeting regenerating funds. With free cash exceeding 7%, he suggests using some for capital projects (e.g., Recal, Killam School) to reduce borrowing.
- Outcome: No immediate response allowed per rules; comment noted for future agendas.
Budget Presentation
Introduction (11:27 – 12:51)
- Speaker: Matt Kraunelis (Town Manager)
- Summary: Matt introduces the FY 26 budget as a team effort, delayed by prior discussions on Recal and Killam projects. He outlines the presentation structure: Sharon (CFO) on financial forecast, followed by departmental reviews. Questions are encouraged.
- Outcome: Presentation begins; Sharon takes over.
Financial Forecast
Revenues and Free Cash (12:51 – 18:20)
- Speaker: Sharon (CFO)
- Summary: Sharon presents projected revenues:
- Free cash at $6M (up from $5.8M approved, additional $200K requested due to health insurance shortfall).
- Property taxes up 2% (affected by excluded debt expiring in FY 25).
- Local revenues (9% of total) up 5.1%, state aid (13%) up 2.5%, transfers up 2.2%.
- Free cash use up 40%, driven by a $650K health insurance increase (13.5% vs. projected 7-10%).
- Solutions: Reduced OPEB funding from $500K to $200K ($300K savings), lowered rubbish line from 12% to 5% increase ($150K savings), seeks $200K more from free cash.
- Alternatives: Increase investment income or reduce OPEB to zero if committee opposes extra free cash.
- Outcome: Options presented; no decision yet.
Q&A
Capital, Debt, and Free Cash (18:20 – 22:01)
- Speakers: Mark Zarrow (Zoom), Sharon
- Summary:
- Mark: Questions if debt inside the levy includes new borrowings (e.g., $3M for fields, $1M for trash gauges). Sharon confirms existing debt and planned borrowings (e.g., Birch Meadow Phase 2) are included, with adjustments possible if projects delay.
- Sharon: Notes reliance on free cash for operations limits its use for capital (contra Mark’s suggestion), risking reserves and bond rating ahead of major borrowings.
- Outcome: Clarifies debt inclusion; free cash debate ongoing.
Revenue and New Growth (22:01 – 25:17)
- Speakers: Ed, Sharon
- Summary:
- Ed: Asks about new growth trends. Sharon explains it’s unpredictable (e.g., $1.6M in FY 22, $693K in FY 25), conservatively projected at $875K for FY 26, based on permitting revenue trends.
- Sharon: Inflation strains budget (double-digit increases in costs like health insurance), mirroring other towns’ struggles.
- Outcome: Conservative revenue approach justified; no immediate action.
Regeneration and Free Cash (25:17 – 28:47)
- Speakers: Marianne, Sharon
- Summary:
- Marianne: Questions $3M regeneration projection vs. historical averages ($5.8M last 5 years, $5.2M last 10). Sharon calls $3M a safe minimum, but rising free cash use ($6M) exceeds typical regeneration, risking reserves by FY 29 ($9M projected need vs. $19M current reserves).
- Sharon: Advocates conservatism amid economic uncertainty, prefers free cash over uncertain investment income.
- Outcome: Highlights reserve depletion risk; decision pending.
Investment Income and Overrides (28:47 – 33:01)
- Speakers: Chris (Zoom), Sharon, Joe
- Summary:
- Chris: Defends Sharon’s projections, notes override inevitability (circa FY 29).
- Sharon: Clarifies debt exclusions phase in gradually (2-3 years), not all at once.
- Joe: Seeks new growth and investment income updates. Sharon notes FY 25 new growth likely under $875K projection; investment income over $4M in FY 25, but FY 26 uncertain (rates dropping from 5% to 4.5%).
- Outcome: Override foreshadowed; revenue uncertainties persist.
School Surplus and Free Cash Options (33:01 – 40:57)
- Speakers: Joe, Sharon
- Summary:
- Joe: Notes a $242K school surplus (FY 25) reported in the Chronicle, suggests it return to the town given health insurance costs impact school staff more. Sharon confirms $242K returns, $300K goes to school stabilization, sees value in dialogue with the superintendent.
- Sharon: Offers free cash ($200K), investment income, or zero OPEB as options for the $650K shortfall.
- Outcome: $242K return confirmed; free cash use debated, no vote yet.
Accommodated Costs
Review (41:05 – 46:04)
- Speaker: Sharon
- Summary: Highlights major FY 26 cost drivers:
- Vocational schools up 18.6% (capital payment rise to $339K).
- Health insurance up 13.6% ($650K over budget).
- Retirement up 8.3% (possible adjustment via board).
- Rubbish down to 5% from 12% ($150K savings).
- Property/casualty at 2.5%, snow/ice steady at $675K.
- Outcome: Costs detailed; health insurance dominates shortfall.
Departmental Budget
Administrative and Public Services (46:11 – 50:05)
- Speaker: Jayne Wellman (Assistant Town Manager)
- Summary:
- Admin Services (p. 26): Level services budget, election costs down (one election), property/casualty up 2.5%, safety grants utilized.
- Public Services (p. 38): New part-time volunteer coordinator (ex-ARPA), savings from staff turnover and grants (e.g., MassWorks).
- Outcome: No major changes; questions deferred.
Grants and Capital Plan
(50:05 – 2:54:03)
- Speakers: Emily, Jayne, Sharon, Joe, Matt
- Summary:
- Emily/Jayne: Most grants are state-funded, some federal (e.g., EOA for Elder Services).
- Sharon (Capital Plan, p. later): Elevators added (2026-2028, $500K-$600K), roofing delayed, pickleball at $1.65M (debt, adjustable), turf at Parker Middle School moved up ($1.5M debt), food service items shifted to revolving fund.
- Joe/Matt: Pickleball cost questioned; Matt notes ongoing refinement (down from $1.95M), possible Burbank funds use.
- Outcome: Capital adjustments noted; pickleball cost TBD.
Free Cash, Overrides, and Staffing
Discussion (2:54:03 – 3:15:57)
- Speakers: Sharon, Joe, Ed, Chair
- Summary:
- Sharon: Rising costs (e.g., DPW trucks up 20%) strain capital; suggests override to reset budget (not on agenda).
- Joe/Ed: Debate override size ($5M-$7M?), regeneration levers (staffing gaps), and cost control narrative (salaries in line, accommodated costs soar).
- Chair: Links discussion to free cash vote, stresses public communication.
- Outcome: No override vote; free cash use tied to budget approval.
Closing Public Hearing
(3:19:21 – 3:20:06)
- Speakers: Chair, Marianne, Emily, Committee Members
- Summary: Motion to close hearing by Chair, seconded by Marianne and Emily. Roll call: Mark (yes), Joe (yes), Emily (yes), Marianne (yes), Ed (yes), Endri (yes), John (yes), Joe (yes).
- Outcome: Hearing closed unanimously; budget vote set for March 19, 2025.
Future Agendas
and Minutes Approval (3:20:06 – 3:34:14)
- Speakers: Chair, Joe, Mark, Emily, Committee Members
- Summary:
- Future Meetings: March 19 (warrant review), April 2 (special town meeting prep, quorum TBD), town meeting April 28-May 5.
- Minutes (March 5): Mark corrects scanner cost ($4K, not $10K), comma removed. Motion to approve as amended by Emily, seconded, passed unanimously.
- Outcome: Meetings scheduled; minutes approved with amendment.
Key Outcomes
- Budget Hearing: Opened and closed; vote on FY 26 budget set for March 19, 2025.
- Free Cash: $200K additional use proposed ($6M total) due to $650K health insurance shortfall; alternatives (OPEB, investment income) offered, decision pending.
- Capital Plan: Adjustments made (elevators added, pickleball/Turf debt planned); costs rising, some items delayed or shifted.
- Override Talk: Informal consensus on future need (circa FY 29), size TBD, tied to free cash depletion and inflation.
- Revenue/Costs: Property tax constrained (2.5%), accommodated costs (e.g., health insurance) drive shortfall; $242K school surplus returns to town.
