Few towns can afford to pay for a major school project within its operating budget, let alone three, but Town Manager Michael Driscoll announced that the town would be able to finance the renovation or reconstruction of all three elementary schools without having to add to tax bills by passing a debt exclusion, Tuesday night.
Driscoll discussed the financing of the Building for the Future school building program when he presented the Fiscal 2019 Preliminary Budget overview to the Town Council. His budget drew applause from the audience in the Town Council Chamber.
“I am pleased to inform you we are proposing a plan which you will see whereby financing of the potential Elementary Schools Project estimated at $80 million t0 $120 million is included in the Debt and Interest Forecast beginning in Fiscal Year 2020, all of this to be done within the confines of Proposition 2 ½ and all of this to be done without the need to request debt exclusion financing from the taxpayers of Watertown,” Driscoll said.
The announcement left grins on the faces of all the Town Councilors and the department heads at the meeting. Town Council Vice President Vincent Piccirilli estimated that paying for the project with money borrowed through a debt exclusion would have added $500 annually to the property tax bills of the average Watertown residential property owner.
School Committee Chairman John Portz was also very pleased.
“I want to thank the Manager and the Council for the education funding, but I am really up here to thank the Manager,” Portz said. “Hopefully, we can deal with the elementary schools within the confines of the budget, which is very exciting. I know he said there would be a lot of conversations, but I will be happy to see a rabbit come out of the hat – it’s a big rabbit!”
Driscoll added that the town also plans to renovate or rebuild Watertown High School through the Massachusetts State Building Authority (MSBA) program, in which a large portion of the cost – almost half – would be reimbursed by the state.
The Town has room in its budget to pay for the school project because it has been aggressively paying down its unfunded pension costs and other post employment benefits (OPEB) for the last 9 years. From Fiscal 2009 to Fiscal 2018 the amount spent on pension costs has increased 131.24 percent, an average of 14.58 percent.
In Fiscal Year 2019 the budget calls for spending $18.49 million on pension costs. The next year, FY’20, the same amount will be split between three areas: $7.4 million for pension costs, $3.4 million on OPEB and $7.6 million on the school projects. The unfunded pension costs would be paid off by FY’21 and more would be used to pay down the OPEB debt, while $7.6 million would again be spent on school construction.
The projected budget is $139.4 million, but the projected revenues would fall $2.2 million short of that, Driscoll said. Town officials will have to balance the budget before submitting it for approval from the Council in April.
“What will happen is either the revenue will go up, expenses will go down or a combination there of,” Driscoll said.
The budget includes 2.5 percent increases for municipal departments and, as with the last few years, the school budget will increase by 5 percent.
Driscoll assumed the state aid will be at the same level as the current budget year, FY’18. Because the town will not get state reimbursement for the 1995 debt exclusion, which will be paid off this year, the town will not get the $913,208 it received in FY’18.
Local receipts will be down more than a million dollars because the town got $1.2 million from the sale of the former East Branch Library this year. Also, Driscoll budgeted for $186,000 less from parking meters in Fiscal 2019 compared to the prior year.
The next step in the budget process is for the Town Council to make its budget priorities, which will be completed by November.
See the entire Fiscal 2019 Preliminary Budget Overview document by clicking here.