Andrew Maylor Town Administrator

October 19, 2010

• $2Billion State Structural Deficit in FY2011 Will Likely Lead to Additional Local Aid Cuts in FY2012 if State Revenues Don’t Increase Significantly.

• Significant Service Rollbacks Have Been Required During the Last Several Years.

• Regionalization Initiatives, Participation in the State’s GIC health Insurance Program and the Reduction of Debt Service Should Prevent Additional Service Cuts and Staff Reductions in FY 2012.

• The Future Focus Will Be on Enhancing Non Tax Revenue and Reducing our Energy Costs.

• We Must Continue the Commitment to Increase our Reserves to “Best Practice” Levels while Eliminating our Reliance on One-Time Revenues or We will Jeopardize the Town’s Bond Rating and Cost of Capital.

• State Aid is Projected to be Cut 5% in FY12 and Remain Level in FY2013 with Slight Increases Through FY16;

• Tax Levy and Levy Limit will Grow Approximately by 3% Through FY2016;

• Charges, Licenses, Fees and Miscellaneous Revenue Projected to be Decline in FY2012 and in FY2013 with Minimal Increases Through FY2016;

• The Use of Free Cash in the amount of $200,000 for FY2012 Through FY2016 will be Used to Fund the Town’s Rainy Day Fund.

• Nahant Tuition is Expected to be $1,231,000 for the Next Five Years.

• Other Sources of Revenue Include: Enterprise Fund Indirects ($760,000).

• Salaries and Operating Expenses (Including Schools) Projected to Increase 2.5% for FY12 and 2.5% Annually Thereafter;

• Health Insurance Costs Projected to Increase by 10% in FY2012 and Increase By 10% Annually through FY2016 Based on the Presumed Cost to Implement the Affordable Health Care Bill Adopted by Congress in 2010;

• Due to the Current State of the Economy and Loss on Investments, the Retirement Appropriation is Expected to Increase by 10% in FY2013 and 5% Each Year Thereafter;

• State and County Charges and Cherry Sheet Offsets are Expected to Increase 5% Each Fiscal Year;

• Debt Service Based Upon Current and Future Capital Improvement Programs;

• Includes Sewer Debt Exclusion through FY 2014. FY2014 Will be Last Year of Payment;

FY11-TM Adopt FY12-EST FY13-EST FY14-EST FY15-EST FY16-EST

Property Taxes 36,892,755 38,096,949 39,254,373 40,440,732 41,656,750 42,903,169

New Growth 275,000 200,000 200,000 200,000 200,000 200,000

Debt Exclusion 3,979,720 3,969,245 3,879,639 3,132,136 2,574,752 2,350,725

Total Tax Revenue 41,147,475$ 42,266,194$ 43,334,012$ 43,772,868$ 44,431,502$ 45,453,894$

Local Receipts- 3,981,783 3,731,783 3,756,783 3,781,783 3,806,783 3,831,783

State Aid 3,828,844 3,637,402 3,637,402 3,710,150 3,784,353 3,860,040

Free Cash 200,000 200,000 200,000 200,000 200,000 200,000

Other Available Funds 760,000 760,000 760,000 760,000 760,000 760,000

49,918,102$ 50,595,379$ 51,688,196$ 52,224,801$ 52,982,638$ 54,105,717$

Base Operating Expense 34,512,499$ 35,375,311$ 36,259,694$ 37,166,187$ 38,095,341$ 39,047,725$

Group Health 4,201,000 4,621,100 5,083,210 5,591,531 6,150,684 6,765,753

Other Personnel Benefits 3,809,512 4,190,463 4,399,986 4,619,986 4,850,985 5,093,534

Debt Service - CIP 5,095,345 4,905,905 4,738,632 4,687,148 4,388,165 4,084,271

Sewer Debt 1,154,884 1,170,986 1,188,358 498,902 - -

Non- Appropriated Exp. 1,040,441 1,060,243 1,113,255 1,168,918 1,227,363.51 1,288,732

49,813,681$ 51,324,008$ 52,783,136$ 53,732,671$ 54,712,539$ 56,280,014$

SURPLUS (DEFICIT)- 104,421$ (728,630)$ (1,094,939)$ (1,507,870)$ (1,729,901)$ (2,174,297)$

EXPENSES

REVENUES

TOTAL REVENUE

TOTAL EXPENSES

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Net State Aid Assuming 2.5% Inflation

0200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,000

FY05 FY06 FY07 FY08 FY09 FY10 FY11

Nahant Tuition Regional School Cost Charter School Cost

68.0 67.3 68.6 66.6 67.6 69.9 71.7 71.8 82.3

11.6 10.6 8.7 8.2 8.0 8.2 8.5 8.97.816.6 15.9 18.3 20.3 18.1 18.8 18.1 18.3 8.0

3.8 6.2 4.4 4.9 6.4 3.2 1.7 1.0 1.9

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

FY 2002 – FY 2010Tax Levy State Aid Local Recipts Other