Why is a plan needed?

We have been having a little discussion here about what plans are required and which are being worked on at present. I would like to take a step back and address why I believe this fiscal plan is needed. Up to this date, the town has been reacting to shortfalls in the yearly budget. First, we took our reserves and spent them to fund on-going operations of the town. When the reserves were gone, we starting asking the voters for overrides, warning that services would be deeply cut if the override failed. It did and some cuts were made. A large part of the DPW expense was moved to the Solid Waste Enterprise fund. Fees for that service and others in the schools and town were introduced. Finally, other overrides were put forward amid the same warnings of deep cuts to services. This spring, a modest override passed and the town has a few months of breathing space ...

...before next year when we will face another shortfall. All these activities share a common feature. They are reactive. The shortfalls are at hand and measures are taken that react in the short term. But our fiscal problem is not a temporary situation, it is due to the fact that our expense growth is exceeding our revenue growth year after year. For reasons which I have written about here and here, it is difficult to raise revenue to meet the expenses. The solution is to cut the rate of growth of expense to within that of revenue. If you will concede that point for the sake of argument, then the next question is how much do we need to cut the rate of growth of expense? What is does that reduction of the rate of expense growth equal in dollars and where can we find that in the budget? That's where a forward looking plan is crucial. By estimating our revenues and expenses right now, we can begin to proactively make changes to our spending in order to avoid future shortfalls. It will tell us how much of a deficit to expect and where we can focus our efforts to eliminate it. For example, changing to biweekly payroll can save the town some expense. That savings will be modest and should be pursued but it will not cover our FY10 shortfall. Negotiating a less expensive health care package could save a lot. So when making decisions for collective bargaining, a fiscal forecast can inform what we ask for. (Let me caution that, to my knowledge, these are examples and not a position that the town is taking in current contract negotiations) In a few short months, the Fall Town Meeting will be upon us and I think that there will be requests to use reserved funds and departmental turn backs for on going operational expenses. Back to the reactive mode! A fiscal forecast will allow us to take a longer perspective on the use of those funds. How does spending that money this year affect the next? Will we need those funds for FY10? I can't tell you right now because that information is not readily available. A multi-year fiscal forecast is needed to answer these questions and that is why it must be completed as soon as possible.