Andrew Maylor Town Administrator November 16, 2009

$2Billion State Structural Deficit in FY2010 will likely lead to additional local aid cuts in FY2011 if State Revenues don’t increase significantly. Significant Service Rollbacks Have Been Required During The last several years and Additional Service Cuts and Staff Reductions Should Be Expected in FY The Town has Implemented A Significant Number of Cost-Cutting Measures And Revenue Enhancements During The Past Several Years. We Must Continue the Commitment to Restoring our Reserves to Appropriate Levels and Decreasing our Reliance on One-Time Revenue or we will Jeopardize the Town’s Bond Rating and Cost of Capital.

State Aid is Projected to be Cut 10% in FY11 and Remain Level in FY2012 with Slight Increases Through FY15; Tax Levy and Levy Limit will Grow Approximately by 3% Through FY2015; Charges, Licenses, Fees and Miscellaneous Revenue Projected to be Decline in FY2011 and in FY2012 with Minimal Increases Through FY2015; The Use of Free Cash is Expected to be $200,000 for Years FY2011 Through FY2015. Nahant Tuition has been Lowered to $1,125,000 for the Next Five Years. Other Sources of Revenue Include: Enterprise Fund Indirects ($760,000).

Salaries and Operating Expenses (Including Schools) Projected to Increase 1.3% for FY11 and 2.5% Annually Thereafter; Health Insurance Costs Projected to Increase By 5% Annually; Due to the Current State of the Economy and Loss on Investments, the Retirement Appropriation is Expected to Increase by 10% in FY2012 and 5% Each Year Thereafter; State and County Charges and Cherry Sheet Offsets are Expected to Increase 10% Each Fiscal Year; Debt Service Based Upon Current and Future Capital Improvement Programs; Includes Sewer Debt Exclusion through FY FY2014 Will be Last Year of Payment;

Thoughts for the Future  Chapter 70 Equity;  Increased State Revenue;  Change in Enrollment Migration Trend;  Limited Increases to CBA’s;  Regionalism;  Expanded Revenue