Thursday, June 08, 2006

Enter the enterprise funds

In the “Good heavens – is this thing still going on?” department, TM is starting to resemble a public radio fund drive. You know that feeling when you turn on the radio and it's like – “Ugh, still?” That’s how this is feeling right about now.

Hmmm – maybe we should start pitching the folks watching on ACTV – “We still need to raise $4.7 million dollars by the end of this Town Meeting. Call now with your pledge of support and we’ll send you an autographed copy of the Finance Committee Report and a one-year membership for the Cherry Hill Golf Course!”

Maybe not.

We are called to order first for another Special Town Meeting, which this time we actually conduct, instead of immediately adjourning until later. First though, our interim moderator makes a few announcements and explains how he will run the meeting, the most significant difference from usual being that when recognizing people to speak, he won’t use any names. He says this is because he doesn’t know as many names as our regular moderator, and he doesn’t want to embarrass himself by forgetting the names he does know. Recognition will be by eye contact and pointing. And just in case you think he’s going to be some kind of pushover on rules – like when you had a substitute teacher in social studies – beware: he will bang the gavel when your time is up, and you’ll be expected to finish your sentence and be done.

The Special Town Meeting concerns the acquisition of a parcel of land in Pelham that is part of the watershed area for Hawley Reservoir, one of Amherst’s water supplies. The land is for sale and can be acquired by the town for $220,000, which would come from our Water Fund surplus. Various people speak in support of the motion from the Select Board, the Finance Committee and the Conservation Department. The land could be developed if we don’t buy it. It contains streams that drain directly into the reservoir, and that’s worth protecting. There’s potential for grants and donations to help offset the cost, but we do have this money available in the Water Fund reserves, and that is its purpose. The area would not be closed to the public, but recreation is not encouraged – no trails, etc. Timber production on the land can help bring in off-setting revenues. We make payments in lieu of taxes (PILOTs) to Pelham for other such parcels, and this one would be expected to cost $4000 per year in payments, which also comes from the Water Fund. The Kestrel Trust, an organization that preserves open space, is supporting the acquisition process. This is the last unprotected watershed parcel so such requests to TM won’t keep happening

A member opposes the acquisition primarily on the grounds that just because the Water Fund is an enterprise fund, doesn’t mean it isn’t real town money. If this proposed acquisition were considered under the same financial strictures as the rest of our budget items this year, he predicts it would be opposed, but because of the accounting technicality of the enterprise fund, we treat it differently.

Another member explains that the reason we treat enterprise fund money differently is because it is different – the funds come from user fees, which encompass not just property owners, but also those who are property tax exempt, i.e., UMass, who ends up paying about 50% of the town water fees. She emphasizes that major capital expenditures like this one are the purpose of the fund’s reserves.

The motion to appropriate $220,000 from the Water Fund surplus to acquire this property passes nearly unanimously. I vote in support.

The Special TM is dissolved, and we’re back to the regular TM, right where we left off – still muddling through the operating budget and the endless subsections of Article 26.

Indeed, the first subsection we deal with is – ta-da! – the Water Fund. This is to appropriate $3,722,592 for the Water Fund’s FY07 operating costs, with $3,529,777 to be from its own revenues, and $192,815 to come from its surplus.

The Finance Committee explains the revenue structure: we have a two-tiered system in which the largest consumers (again, UMass) pay the most. And because of effective conservation efforts (by, yet again, UMass,) less consumption means less revenue, so we need to increase the fees to raise the money needed to fund all the water operations, so rates per 100 cubic feet of water will go up 40 cents to $2.40 for tier 1 users and to $2.50 for tier 2 users. These are still lower than ¾ of the other towns in Massachusetts, and are significantly cheaper than in Northampton ($3.37) and Hadley ($3.72.) Costs involved in water treatment issues aren’t just personnel—chemicals and lab testing costs have increased, various filter materials need to be replaced, and the Village Park water tower needs repainting and is extra costly because of lead paint issues.

The Select Board is unanimously in favor of the recommendation, and has much praise for the water department.

The same member who opposed acquiring the watershed protection land symbolically opposes this article with a recommendation to reduce the appropriation by $1. He wants to make the point that the SB recently removed what had been a costlier third tier in the fee structure that had UMass paying more, and since the water fees are one of the few ways we can get money from UMass, it was unwise to reduce their fee.

A member of the town’s water study committee praises UMass’ conservation efforts and said that despite increased enrollment, their water consumption had decreased significantly.

The preliminary vote is on the higher number – the FC recommendation – and it passes nearly unanimously.

There is a little more discussion on the topic of the need for UMass to contribute more to the town, and explanation of how and why the third tier of water fees was removed. A SB member explained that SB representatives meet with the UMass Chancellor regularly, and the high rate had been an ongoing concern, and one that was hampering the university’s efforts to invest in conservation measures. They also increased their contribution to our fire and ambulance funds because of the water rate reduction.

We then have the appropriation vote, which again is nearly unanimous, and we’re on to the next enterprise fund.

Now if ever there were a budget proposal that should not be accompanied by a photo essay of how the system works, it would have to be the Sewer Fund.

And yet, with the rousing introduction of “I took pictures of what comes into the plant and what goes out!” that’s exactly what we got. If you really want the details, you can catch the ACTV replay. I’m just going to say that while the presentation was really not even relevant to the budget discussion, I found it informative and funny and delivered with such enthusiasm and careful language that it may end up as my highlight moment of Town Meeting.

The vote to appropriate $3,232,035 to the Sewer Fund, with $3,020,200 from revenues and $211,835 from the Fund’s surplus, passed nearly unanimously.

The Solid Waste Fund was next. Perhaps because we were now afraid of where exactly that discussion might lead us, we needed only the briefest explanation from the Finance Committee and we were ready to vote. We voted unanimously to appropriate $473,497 to the Solid Waste Fund, with $440,000 coming from revenues and $33497 from the Fund’s surplus.

Every session seems to have its dramatic hot button issue. Tonight it was the Transportation Fund.

The Finance Committee recommended spending $829,199 for this budget. The Select Board recommended $920,199. The FC recommended discontinuing a couple of low-ridership bus routes and instead using that money to fund the remainder of our PVTA assessment (which last year was funded by taxation, outside of the Transportation enterprise fund.) The SB recommended keeping the bus routes and making up the difference in paying for those as well as the PVTA assessment with increased parking fees.

As with most discussions so far regarding funding cuts, this one quickly departed from the economic rationality of the situation and devolved into moral tsk-tsking and tales of personal woe. (This is a depressingly effective tactic. Has it failed yet? I’ll have to think about that.) Some folks on both sides of the issue attempted to bring it back to fiscal stuff, but they couldn’t counter the fact that it had been redefined as a referendum on public transportation and you were either for it or against it.

There were a lot of interesting elements of this discussion and I might parse through my thoughts on it more in the next day or so, but I’m just not up for that now, so I shall conclude. We ended up with a preliminary tally vote on the larger SB measure, which passed 84 in favor, 70 opposed, and I was opposed. We then had the appropriation vote on that amount – $920,199 – and I voted for it, because there was no other option. Many voted “no” that time, but I think that was symbolic. I have no idea what would have happened if somehow the appropriation vote failed.


Random Bits

So whadya think – the Cherry Hill video retrospective or the sewage treatment plant photo montage?

All these years I thought I was among the childless tax payers helping to subsidize the school system without adding any strain. Turns out I’m actually repaying debt I incurred back in the day as one of these freeloading school kids from UMass family housing. Those were some pricy Cuisenaire rods . . . (Do they still use those?)

I’m really intrigued by the constant refrain of needing to get more money from UMass. It sounds good to me too. But I wonder – might a truly comprehensive analysis of all the financial plusses and minuses possibly come out with us owing them? Then what?

It must be a good sign that “nearly unanimously” and “near unanimous’ are becoming my most over-used phrases.

Kudos to Jim Pistrang for being willing to fill in for the moderator, and for doing that so ably.

13 comments:

Jonathan O'Keeffe said...

I'm still trying to figure out how reducing the water fees for UMass is going to encourage them to use less water...

Anonymous said...

A member of the SB explained that it had to with "cost centers". What I understood from this is that the UMass budget has a fixed-size pot of money they can use for water-related expenses. They can use it to pay for water or for financing the toilet and shower upgrades that will save water.
This is quite different from the way the Town budget works, where an operating expense and a capital improvement should never come out of the same pot. But it isn't an unreasonable way to do it.

Anonymous said...

A study done over ten years ago concluded Umass cost Amherst one million dollars annually. And I would say it has gotten worse since then:

Fifty children in the Elementary Schools from Umass tax-exempt Grad Student housing at an average education cost next year of $12,700 comes to over $600,000 annually (and that cost always goes up every year)

Fire protection (Umass has a police force—perhaps larger than our own—but has no Fire Department and relies on our $3.4 million operation). Chief Hoyle estimates at least 25% of his runs are to Umass. So when you also factor in the $588,189 Communication Dispatch Center the cost per year easily exceeds $1 million.

Avoidance of the Hotel/Motel Tax, paid by everybody else including the Lord Jeff (owned by tax exempt Amherst College).

This from a 2/15/2003 study commissioned by the state legislature under the wordy title: ‘A Report of the Special Committee to Recommend Mitigation for Local Aid cuts’: “Eliminate Umass Amherst Campus Center exemption from Hotel/Motel tax (that tax doesn’t cost the state anything, doesn’t cost the university anything and shouldn’t be an edge in competition against local hotels/motels. This could be a significant ($70,000+) help to Amherst.”

And any moment now Umass will announce (they have a PR department that consumes almost a half million annually) that the University has purchased Frat Row thus taking $2 million of currently taxed properties off the tax rolls. $30,000 that will not come into the town coffers next year.

And how much time did we spend fighting over a $30,000 Dispatcher not too long ago?

So yeah, we need to get considerably more money out of Umass (#2 landowner in town)…and more from Amherst College (#1 landowner in town) and Hampshire College as well (#4 landowner in town).

However, I was pleased to hear yesterday that our brave, courageous and bold Assessor will tax Amherst College for the $4.3 million Dakin Property purchased two years ago. The President of the college was bold enough to tell the Daily Hampshire Gazette that they did it to prevent development (immediately abutting their successful nine-hole Golf Course). Hardly an “Academic” use.

Larry

Jonathan O'Keeffe said...

While your points are interesting, Larry, they hardly constitute a valid cost-benefit analysis. Sure, the presence of the University costs the town a bunch of money, in many different ways. But the presence of the University also provides many benefits, tangible and intangible. How much does the presence of the students contribute to the success of local businesses - restaurants, shops, and fitness centers? How much of the town's $30+ million property tax levy comes from property that is owned or rented by students, faculty, and staff?

I can't say whether the University is a net benefit or not, but just citing random costs is not the way to approach the problem. If we applied the same reasoning to the town budget as a whole, we would be forced to conclude that the Communications Center, for instance, is a huge drain on town resources, costing us over $400K per year.

Just looking at the costs is not the appropriate way to measure the value of a program or project - in exactly the same way that just looking at the benefits is not the appropriate way to measure the value of a program like the outreach bus routes. You always have to look at both sides of the coin.

Anonymous said...

Good points. And I don’t disagree that Amherst would not be Amherst without Umass. However, if our commercial tax base was a bit better than 10% I think the argument that Umass staff and students stimulate business would have more resonance.

I remember when Governor Weld was answering criticism after he cut the “Elevator Inspectors Budget’ and they were complaining that their office makes money (thru inspection fees), he replied that if making money were the main goal he would only fund the Department of Revenue.

And I too am still trying to figure out how giving Umass a break on water prices would encourage conservation. That is like arguing the state and feds should nix gasoline taxes, thus cutting the price in half, in order to encourage less driving

Larry

Anonymous said...

your blog is getting better all the time

even though we don't always agree, your moderation and thoroughness is appreciated
(stephanie for moderator? ;)

and thanks for 1 of your 2 votes on the TEF budget

combining bikes with buses boost ridership in
low density areas like ours - let's take larry up
on his offer to get some bikes, but rather than
replacing the buses, let's coordinate them - racks
on buses for 6 rather than 2 bikes would be a good start - perhaps larry, and a well-known
bike shop owner (from whom this household has
purchased 5 - count 'em! - high-end mountain bikes over the years) could team up with PVTA
in a promotional effort - the environment, fitness, business, transit... all promoted in concert

music to my ears,

professor helmet hair, sb

Anonymous said...

Good idea!

I would be the perfect candidate for a new bicycle to get me to the PVTA bus stop. I live 3 miles from the center of town but just a 1/2 mile from the South Amherst Common.

I am looking at the Redline Monocog mountain bike - retail price $400.

thanks

Chris

Anonymous said...

Two observations from last night's transportation discussion:
1. To borrow from a popular anti-war bumper sticker: What if they gave out parking tickets and nobody paid?
2. I find relying on parking tickets to pay for buses ironic. Now we're even more dependent on people driving and parking in order to fund the very thing that is supposed to get us out of cars!

Anonymous said...

It just shows how successful the parking garage has become. Not only does it pay for itself but, it provides additional revenue to the town. Is it time to build another garage?

Anonymous said...

Yes, it is.

And fortunately, because the ARA was smart enough to require the garage be expandable before donating the property upon which it sits, we can easily add another parking deck in a cost efficient manner.

Anonymous said...

actually, the garage itself contributes only a tiny
fraction of the TEF revenue - much more comes
from meters on the stteets and surface lots around
town - about the same comes from parking fines -
perhaps a wiser solution is simply to add a few more meters in areas which now are permit zones near the town center - and (as the town does with the
unitarian meeting house lot) it may also make sense for the town to lease several other private lots, meter them, and help the businisses served by those lots monitor who parks there - it seems
some of the carriage shops, for example, have been having problems with folks who "free park"
there all day and shop (or work or go to school)
elsewhere - building more garages, or adding levels to the existing garage, is not very cost effective either - unless someone else is willing
to pay for it, as happened with a big part of the boltwood garage project - in these times, that
outside money is going to be bet on public tranist, not private cars....

Jonathan O'Keeffe said...

> actually, the garage itself contributes
> only a tiny fraction of the TEF revenue ...


Are you sure about this? In FY06, parking meter fees contributed $412,000 of the Transportation Fund revenue - by far the largest revenue category. I'm not sure how this revenue splits between the garage and meters on the streets, but the garage has to contribute a significant portion of this.

Anonymous said...

yes, it is tiny, though it's hard to get the figures pinned down exactly, since the town has yet to try distinguishing these - of course, that depends
on how the term is defined - so if we can agree that something less than half the rest (i.e.
less than 1/3 the whole) is "tiny", then we can
avoid sematics (should we quibble, let me subsitute "minor" for "tiny", please :)

here's my back-of-the-laptop-guestimate:

1) there are a lot of metered spaces on the streets and in town-owned or -leased lots -
the exact figure is not at my fingertips, but
its at least five times as many as at the garage

2) there are many "reserved" spaces on the garage lower level, and they don't bring in huge permit fees, and they need to be heavily discounted - so let's guestimate number of unreserved spaces in the garage is between 10 and 20% of the overall number of metered spaces in the town center

3) though enforcement hours are slightly longer at the garage, and the hourly rate is slightly higher, the use of the garage isn't that much more freqent to get the fraction up very high

again, one can only "guestimate" for now, but 1), 2), 3) make it plausible that the garage itself contributes no more than 25-30% of the parking meter revenue, and I'd be very, very surprised if it were more.... (there are quite a few town staff vehicles parked there at the garage all day with free-parking placards, and the lower level is nearly empty save for some evenings and special events)

also the meter revenue is only about half the TEF
revenue overall, so i'd say 10-15% max comes from garage fees (and perahps another 10-15% from the fines and permit fees at the garage)

in fact, if it were true (as the previous paragrph assumes) that fines and fees are collected at about the same rate in any geographic area of the town parking system, analyzing the locations of the parking fine tickets would give some indication of in what locale the meter fees originate as well....

anyway, this justifies my assertion that the garage is only a minor contribution to TEF revenue

(and, at the risk of sounding like someone
else, i wonder if the garage alone is servicing its debt from garage meter fees any better than cherry hill fees do/did amortizing the golf course's debt?!? ;)