City of Northampton, MA

Fiscal Trends and Budget Projections

for the

Fiscal Year 2013 Budget

Mayor David J. Narkewicz March 1, 2012
 CITY OF NORTHAMPTON, MASSACHUSETTS
FISCAL YEAR 2012
CONSOLIDATED RESOURCES / APPROPRIATION SUMMARY
AS VOTED BY CITY COUNCIL and AMENDED BY COUNCIL ON 12/1 AND 12/15/2011

SOLID COMBINED
GENERAL SEWER WATER WASTE FUNDS
FUND FUND FUND FUND TOTAL
BUDGET BUDGET BUDGET BUDGET BUDGET
(Memo Only)
REVENUE SUMMARY:
Taxes 46,399,761 - - - 46,399,761
Charges for Services 7,031,775 5,268,904 6,205,951 3,292,000 21,798,630
Licenses & Permits 1,006,170 - - - 1,006,170
Fines & Forfeits 1,063,400 - - - 1,063,400
State Revenue - Cherry Sheet 15,971,789 - - - 15,971,789
Federal Revenue 277,504 - - - 277,504
Inter-fund Operating Transfers 4,865,504 - - - 4,865,504
Capital Reserve - 280,465 875,425 (53,452) 1,102,438
Miscellaneous 330,213 31,009 30,000 245,000 636,222
TOTAL REVENUES 76,946,116 5,580,378 7,111,376 3,483,548 93,121,418

EXPENDITURE SUMMARY:
Appropriations:
General Government 3,791,830 - - - 3,791,830
Public Safety 11,631,512 - - - 11,631,512
Education 29,701,701 - - - 29,701,701
Public Works 3,156,588 - - - 3,156,588
Human Services 1,019,027 - - - 1,019,027
Culture & Recreation 1,560,779 - - - 1,560,779
Debt Service 5,515,417 949,143 2,678,202 281,700 9,424,462
Employee Benefits 14,959,705 - - - 14,959,705
Insurance and Reserves 726,648 - - - 726,648
Capital Program 175,000 60,000 60,000 752,146 1,047,146
Enterprise Funds - 2,815,075 3,692,614 2,086,268 8,593,957
Reserve Abatements & Exemptions 400,000 - - - 400,000
State & County Assessments 3,024,170 - - - 3,024,170
Cherry Sheet Offsets 1,251,821 - - - 1,251,821
Other Amounts to be Raised 31,918 - - - 31,918
Interfund Transfers - 1,756,160 680,560 363,434 2,800,154
3/1/2012 Subtotal Appropriations 76,946,116 5,580,378 7,111,376 3,483,548 93,121,418 2
 REVENUE SOURCES for General and Enterprise Funds
Total for FY12 = $93,121,418

Interfund Operating Capital Reserve Miscellaneous

Transfers 1.2% 0.7%
5.2%
Federal
Revenue
0.3%

State Revenue -
Cherry Sheet
17.2%

Taxes
Fines & 49.8%
Forfeits
1.1%

Charges for Services

23.4%
Licenses & Permits
1.1%

3/1/2012 3
 EXPENDITURES for General and Enterprise Funds
Total for FY12 = $93,121,418
State & Cherry Sheet Offsets Other Amounts to Interfund Transfers General
County 1.3% be Raised 3.0% Government
Assessments 0.0% 4.1%
3.2%
Reserve Abatements &
Exemptions
0.4%
Capital Program
1.1% Public Safety
12.5%
Enterprise Funds
9.2%
Insurance and Reserves
0.8%

Employee Benefits
16.1%

Education
31.9%

Debt Service
10.1%

Culture & Recreation Public Works

Human Services
1.7% 3.4%
1.1%
3/1/2012 4
 Overview of revenue sources for the
General Fund…………………………….

3/1/2012 5
 REVENUES for the General Fund
Total FY12 = $76,946,116

Federal Revenue Miscellaneous

0.4% 0.4%
Interfund
Operating
Transfers
6.3%

State Revenue - Cherry

Sheet
20.8%

Fines &
Forfeits
1.4%
Taxes
Licenses &
60.3%
Permits
1.3% Charges for Services
9.1%

3/1/2012 6
 Revenue sources and trends that are most affected by economic conditions and/or
have the largest dollar impact on the General Fund Budget:

Property Taxes approx $43.2 m

State Aid (not including MSBA and offsets) approx $11.7 m
Inter-fund Operating Transfers approx $2.8 m
Motor Vehicle Excise approx $2.1 m
Parking Meter/Garage approx $1.3 m
Hotel/Motel & Meals Taxes approx. $1.0 m
Parking Ticket Fines approx $680 k
New Growth approx $650 k
Inspection Fees approx $520 k
Interest on Investments approx $120 k

3/1/2012 7
 Property Tax Revenue Trend FY03 to FY12
Source: Mass Department of Revenue Municipal Data Bank

$45,000,000
Actual Constant
$40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000
2003 2004 2005 2006 2007 2008 2009 2010* 2011 2012

Formula Property Tax Revenues (Constant Dollars)

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010* 2011 2012

Residential Property Tax Levy $ 22,234,474 $ 23,858,305 $ 25,258,916 $ 26,561,687 $ 27,789,052 $ 28,942,969 $ 29,856,224 $ 32,494,563 $ 33,469,556 $ 34,667,579

Commercial Property Tax Levy $ 4,635,353 $ 4,886,676 $ 4,792,902 $ 4,466,692 $ 4,976,264 $ 4,984,671 $ 5,253,743 $ 5,707,666 $ 5,850,598 $ 5,999,515

Industrial Property Tax Levy $ 1,109,428 $ 1,033,609 $ 1,003,082 $ 925,551 $ 954,198 $ 977,913 $ 1,020,745 $ 1,061,927 $ 1,137,507 $ 1,313,405
Personal Property Tax Levy $ 1,039,024 $ 735,286 $ 721,871 $ 689,579 $ 693,850 $ 862,616 $ 1,066,659 $ 1,102,381 $ 1,179,342 $ 1,245,463
Property Tax Total $ 29,018,279 $ 30,513,876 $ 31,776,771 $ 32,643,509 $ 34,413,364 $ 35,768,169 $ 37,197,371 $ 40,366,537 $ 41,637,003 $ 43,225,962
Less - Excluded Debt $ 2,224,367 $ 2,251,168 $ 2,031,985 $ 1,380,541 $ 1,569,870 $ 1,457,740 $ 1,342,770 $ 1,220,649 $ 1,104,422 $ 1,008,478
Net Property Tax Revenue $ 26,793,912 $ 28,262,708 $ 29,744,786 $ 31,262,968 $ 32,843,494 $ 34,310,429 $ 35,854,601 $ 39,145,888 $ 40,532,581 $ 42,217,484

CPI - U, Base Period = 1982-1984 203.9 209.5 216.4 223.1 227.4 235.4 233.5 237.3

CPI - U, Adjustment for constant

100.0% 97.3% 94.2% 91.4% 89.7% 86.6% 87.3% 85.9%
dollars (2003 dollars)

Property Tax Revenue (constant

$ 26,793,912 $ 27,507,237 $ 28,026,626 $ 28,572,475 $ 29,449,377 $ 29,719,186 $ 31,309,435 $ 33,636,100
dollars)

Percent Change - Property Tax

100.0% 2.7% 1.9% 1.9% 3.1% 0.9% 5.4% 7.4%
Revenue (constant dollars)

* A $2,000,000 override was approved by voters in June 2009 that was added to the tax levy for FY2010

3/1/2012 8
 Uncollected Property Taxes Trend FY03 to FY11
Source: City of Northampton End of Year Budget Data

3.50%

2.98%
3.00%

2.48%
2.50% 2.38%
2.11% 2.07% 2.13%
2.00%
1.71%
1.61%
1.52%
1.50%

1.00%

0.50%

0.00%
2003 2004 2005 2006 2007 2008 2009 2010* 2011

Formula Uncollected Taxes as a Percentage of Net Property Tax Levy

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Residential Property Tax Levy $ 22,234,474 $ 23,858,305 $ 25,258,916 $ 26,561,687 $ 27,789,052 $ 28,942,969 $ 29,856,224 $ 32,494,563 $ 33,469,556 $ 34,667,579
Commercial Property Tax Levy $ 4,635,353 $ 4,886,676 $ 4,792,902 $ 4,466,692 $ 4,976,264 $ 4,984,671 $ 5,253,743 $ 5,707,666 $ 5,850,598 $ 5,999,515
Industrial Property Tax Levy $ 1,109,428 $ 1,033,609 $ 1,003,082 $ 925,551 $ 954,198 $ 977,913 $ 1,020,745 $ 1,061,927 $ 1,137,507 $ 1,313,405
Personal Property Tax Levy $ 1,039,024 $ 735,286 $ 721,871 $ 689,579 $ 693,850 $ 862,616 $ 1,066,659 $ 1,102,381 $ 1,179,342 $ 1,245,463
Property Tax Total $ 29,018,279 $ 30,513,876 $ 31,776,771 $ 32,643,509 $ 34,413,364 $ 35,768,169 $ 37,197,371 $ 40,366,537 $ 41,637,003 $ 43,225,962
Reserved for Abatements &
$ 440,648 $ 457,710 $ 449,983 $ 421,286 $ 450,330 $ 384,577 $ 540,444 $ 412,448 $ 388,923 $ 393,978
Exemptions
Net Property Tax Levy $ 28,577,631 $ 30,056,166 $ 31,326,788 $ 32,222,223 $ 33,963,034 $ 35,383,592 $ 36,656,927 $ 39,954,089 $ 41,248,080 $ 42,831,984
Uncollected Taxes as of June 30 $ 634,150 $ 647,021 $ 520,095 $ 724,017 $ 877,863 $ 873,123 $ 605,336 $ 706,531
Uncollected Taxes as a Percentage
0.00% 2.11% 2.07% 1.61% 2.13% 2.48% 2.38% 1.52% 1.71% 0.00%
of Net Property Tax Levy
3/1/2012 9
 FY12 Selected Tax Rates in Neighboring Communities
per $1,000 of valuation
Source: Mass Department of Revenue Municipal Data Bank

$25.00

19.68 19.74
$20.00 19.01 18.85

17.25 16.98

$15.00
13.35 13.27

$10.00

$5.00

$0.00
LONGMEADOW AMHERST GREENFIELD EAST WEST LUDLOW NORTHAMPTON EASTHAMPTON
LONGMEADOW SPRINGFIELD

3/1/2012 10
 FY12 Excess Levy Capacity in Neighboring Communities
Source: Mass Department of Revenue Municipal Data Bank

2,515,620
$2,500,000

$2,000,000

$1,500,000

$1,000,000

593,884

$500,000

140,523
79,861
15,758 10,260 7,347 6,938
$0

3/1/2012 11
 FY12 Average Property Valuation
Source: Mass Department of Revenue Municipal Data Bank

State Average = $358,586

$400,000
352,613
$350,000
318,789
304,422
$300,000
253,656
$250,000 228,772
214,267 212,778
$200,000 184,865

$150,000

$100,000

$50,000

$0

3/1/2012 12
 FY12 Average Single Family Property Tax Bill in Neighboring Communities
Source: Mass Department of Revenue Municipal Data Bank

State Average in FY11 = $4,537

8,000

$6,939
7,000
$6,293
6,000

5,000 $4,781

$4,064
4,000 $3,696 $3,613 $3,514
$3,036
3,000

2,000

1,000

3/1/2012 13
 State Aid Trend FY03 to FY13
Source: Mass Department of Revenue Municipal Data Bank

16000000
State Aid (actual) Adjusted State Aid (constant dollars)

15000000

14000000

13000000

12000000

11000000

10000000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Formula Net State Aid / Cherry Sheet Receipts minus Cherry Sheet Charges (not including offsets)

Fiscal Year 2003 2004 2005 2006 2007 2008 2009* 2010 2011 2012** 2013***

State Aid (actual) $ 15,477,606 $ 12,955,067 $ 12,850,984 $ 13,472,634 $ 14,833,599 $ 15,219,591 $ 13,872,891 $ 13,513,223 $ 12,047,764 $ 11,698,895 $ 11,520,757

CPI - U, Base Period = 1982-1984 203.9 209.5 216.4 223.1 227.4 235.4 233.5 234.5 235.5

CPI - U, Adjustment for constant dollars (2002 dollars) 100% 97% 94% 91% 90% 87% 87% 87% 87%

Adjusted State Aid (constant dollars) $ 15,477,606 $ 12,608,774 $ 12,108,667 $ 12,313,178 $ 13,300,663 $ 13,182,985 $ 12,114,272 $ 11,749,877 $ 10,431,164 $ - $ -

* FY09 state aid reflects mid-year "9C Cuts" of $533,060

**FY12 state aid does not include the supplemental appropriation released in October 2011 of $268,800
3/1/2012
***FY13 state aid is an estimate based on the Governor's Budget Proposal 14
 State Aid as a Percentage of Operating Revenues Trend FY03 to FY12
Source: Mass Department of Revenue Municipal Data Bank

40.0%

35.0%

30.0%
24.0%
25.0%

20.0% 18.8% 18.7% 18.0% 18.1% 17.7%

15.6% 15.0%
15.0% 13.3% 12.7%

10.0%

5.0%

0.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year

Formula State Aid / Operating Revenues

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Gross Operating
$ 66,712,201 $ 71,340,504 $ 70,633,201 $ 76,365,337 $ 83,664,117 $ 87,286,459 $ 90,065,639 $ 91,303,543 $ 91,673,464 $ 93,121,418
Revenue
Less - Excluded
$ 2,224,367 $ 2,251,168 $ 2,031,985 $ 1,380,541 $ 1,569,870 $ 1,457,740 $ 1,342,770 $ 1,220,649 $ 1,104,422 $ 1,008,478
Debt
Net Operating
$ 64,487,834 $ 69,089,336 $ 68,601,216 $ 74,984,796 $ 82,094,247 $ 85,828,719 $ 88,722,869 $ 90,082,894 $ 90,569,042 $ 92,112,940
Revenue
State Aid $ 15,477,606 $ 12,955,067 $ 12,850,984 $ 13,472,634 $ 14,833,599 $ 15,219,591 $ 13,872,891 $ 13,513,223 $ 12,047,764 $ 11,698,895

State Aid as a %
of Operating 24.0% 18.8% 18.7% 18.0% 18.1% 17.7% 15.6% 15.0% 13.3% 12.7%
Revenue

3/1/2012 15
S
 Inter-fund Operating Transfers from Water, Sewer and Solid Waste Enterprise Funds
FY03 to FY12
Source: Northampton End of Year Budget Data

$3,400,000

$3,200,000

$3,000,000

$2,800,000

$2,600,000

$2,400,000

$2,200,000

$2,000,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Formula Interfund Operating Transfers

Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Interfund Operating Transfers 2,393,069 2,442,330 2,491,223 2,562,681 2,589,948 2,667,142 2,773,719 2,962,521 2,990,513 2,883,592 2,800,153

Change from previous year 49,261 48,893 71,458 27,267 77,194 106,577 188,802 27,992 (106,921) (83,439)

Perecentage change from previous year 2.06 2.00 2.87 1.06 2.98 4.00 6.81 0.94 (3.58) (2.89)

3/1/2012 16
 Motor Vehicle Excise Tax Trend 2003 to 2011
Source: Northampton Year End Budget Data

$2,300,000

$2,250,000

$2,200,000

$2,150,000

$2,100,000

$2,050,000

$2,000,000
2003 2004 2005 2006 2007 2008 2009 2010* 2011

Formula Motor Vehicle Excise

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010* 2011

Motor Vehicle Excise 2,214,602 2,154,231 2,230,637 2,276,569 2,077,680 2,204,379 2,091,330 2,063,029 2,173,355

Change from previous year 90,971 (60,371) 76,406 45,932 (198,889) 126,700 (113,049) (28,301) 110,326

Perecentage change from previous year 4.28 (2.73) 3.55 2.06 (8.74) 6.10 (5.13) (1.35) 5.35
3/1/2012 17
 Parking Meter and Garage Revenue Trends FY03 to FY11
Source: Northampton End of Year Budget Data

$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011

Formula Parking Meter and Garage Revenues

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011

Parking Meter and Garage Revenues to General Fund 1,103,333 1,001,147 1,136,991 1,216,026 1,333,602 1,382,232 1,374,126 1,349,701 1,393,875

Change from previous year 20,699 (102,186) 135,843 79,036 117,576 48,630 (8,106) (24,426) 44,174

Perecentage change from previous year 1.91 (9.26) 13.57 6.95 9.67 3.65 (0.59) (1.78) 3.27
3/1/2012 18
 Parking Ticket Fines Revenue Trends FY03 to FY11
Source: Northampton End of Year Budget Data

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011

Formula Parking Meter and Garage Revenues

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011

Parking Ticket Fines 839,485 947,209 1,065,380 907,750 790,698 759,494 676,451 626,670 684,392

Change from previous year (54,484) 107,724 118,171 (157,630) (117,052) (31,204) (83,043) (49,781) 57,722

Perecentage change from previous year (6.09) 12.83 12.48 (14.80) (12.89) (3.95) (10.93) (7.36) 9.21
3/1/2012 19
 Hotel, Motel and Meals Tax Revenue Trends FY03 to FY11
Source: Northampton End of Year Budget Data

$1,200,000

Meals Taxes Hotel-Motel Taxes

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011

Formula Hotel, Motel and Meals Tax Revenues

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011

Hotel-Motel Taxes 313,224 336,309 329,332 359,388 368,770 352,264 334,406 407,727 481,230

Meals Taxes 389,700 549,624

Total 313,224 336,309 329,332 359,388 368,770 352,264 334,406 797,427 1,030,854

Change from Previous Year (52,567) 23,085 (6,977) 30,056 9,382 (16,506) (17,858) 463,021 233,427

Percentage Change from Previous Year -14.37 7.37 -2.07 9.13 2.61 -4.48 -5.07 138.46 29.27

3/1/2012 20
 New Growth Revenue Trend FY03 to FY12
Source: Mass Department of Revenue Municipal Data Bank

$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0

Formula New Growth

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010* 2011 2012

New Growth 737,153 809,930 772,535 766,958 786,917 671,636 685,701 375,927 420,416 653,585

Total Change in New

Growth from Previous Year 384,494 72,777 (37,395) (5,577) 19,959 (115,281) 14,065 (309,774) 44,489 233,169

Percent Change in New

Growth from previous year 52.15 9.87 (4.62) (0.72) 2.60 (14.65) 2.09 (45.18) 11.83 55.46
3/1/2012 21
 Total FY12 New Growth Applied to the Levy Limit in Neighboring Communities
Source: Mass Department of Revenue Municipal Data Bank

$1,600,000
1,493,132

$1,400,000

$1,200,000

$1,000,000

$800,000

654,501

$600,000
516,715
473,730
393,785
$400,000 352,207

197,525
$200,000
115,613

$0
WEST NORTHAMPTON GREENFIELD AMHERST LUDLOW EAST LONGMEADOW EASTHAMPTON
SPRINGFIELD LONGMEADOW

3/1/2012 22
 Inspection Permit Revenue Trends FY03 to FY11
Source: Northampton End of Year Budget Data

$700,000
Permits - Weights & Measures Permits - Wire Inspector Permits - Plumbing Inspector Permits - Building Inspector
$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011

Formula Permits Revenues - Building, Plumbing, Wiring and Weights and Measures

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011

Permits - Building Inspector 244,548 266,239 350,306 247,814 357,892 242,533 200,964 348,789 289,164
Permits - Plumbing Inspector 54,702 63,770 70,202 77,485 68,553 95,057 83,584 82,820 97,330
Permits - Wire Inspector 85,320 100,752 93,878 142,996 98,768 123,050 100,624 132,439 104,376
Permits - Weights & Measures 16,294 37,478 30,700 31,711 29,035 29,444 25,427 26,417 29,352

Total Permit Revenues 400,864 468,239 545,086 500,005 554,248 490,083 410,599 590,465 520,222

Change from Previous Year 108,848 67,375 76,847 (45,081) 54,243 (64,165) (79,484) 179,866 (70,243)

Percentage Change from Previous Year 37.27 16.81 16.41 (8.27) 10.85 (11.58) (16.22) 43.81 (11.90)
3/1/2012 23
 Interest on Investments Revenue Trends FY03 to FY11
Source: Northampton End of Year Budget Data

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011

Formula Investment Income

Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011

Investment Income 240,203 200,166 341,974 556,430 623,188 458,686 210,258 119,975 123,556

Change from previous year (160,624) (40,037) 141,808 214,456 66,758 (164,502) (248,428) (90,283) 3,581

Perecentage change from previous year (40.07) (16.67) 70.84 62.71 12.00 (26.40) (54.16) (42.94) 2.98
3/1/2012 24
 Overview of expenditures in the
General fund………………………..
3/1/2012 25
 Expense areas and trends that we will look at either because they are variable,
affected by economic/market conditions, and/or have the largest dollar impact on
the General Fund Budget include:

Education – largest functional area of the budget

Personnel Costs/Wages - largest part of the GF budget - $40 m
Public Safety – second largest functional area of budget
Employee Health Insurance
Other Employee Benefits
Retirement Assessment
Debt Service
Insurance – WC, Prop, GL, Auto
Snow and Ice and Veterans Benefits
School Choice & Charter Sending Tuition

3/1/2012 26
 EXPENDITURES for the General Fund
Total FY12 = $76,946,116
Reserve Abatements & State & County Cherry Sheet Offsets Other General Government
Exemptions Assessments 1.6% Amounts to be 4.9%
0.5% 3.9% Raised
Capital
0.0%
Program
0.2%
Insurance and
Reserves
0.9%
Public Safety
15.1%

Employee Benefits
19.4%

Debt Service
7.2%

Culture & Recreation Public

2.0% Works Education
4.1% 38.6%
Human Services
1.3%

3/1/2012 27
 The largest programmatic expenditure in the general fund is education – for
Northampton Public Schools and Smith Vocational and Agricultural School

• Education was 53% of Unclassified

1%
Intergovernmenta Retirement
l Assessments 4%
General
Government

the General Fund Employee

Benefits
4% 5%

Budget in FY11. 6%
Debt
Culture and
Included in that total is Recreation
2%
Public Safety
the appropriation, as 2%
Human Services
15%

well as debt service and 2%

capital costs for school Public Works

department equipment 6%

and buildings, and

employee benefits, such
as health insurance and
retirement for school
Education
staff . 53%

3/1/2012 28
 Salaries and Wages make up the largest part of our general fund budget
Source: Northampton Schedule A – Fiscal Year 2011

Intergovernmental
Assessments
3%
Capital Outlay
2% Debt
Service
7%
Salary and Wages

Operating Employee Benefits and Insurance

Expenditures Operating Expenditures
14%
Capital Outlay
Salary and Wages Debt Service
Employee Benefits and 54%
Insurance Intergovernmental Assessments
20%

General Fund Expenditures for FY2011

Category FY2011 Percent
Salary and Wages 39,794,094 53.68
Employee Benefits and Insurance 14,897,435 20.10
Operating Expenditures 10,370,329 13.99
Capital Outlay 1,347,363 1.82
Debt Service 5,066,274 6.83
Intergovernmental Assessments 2,652,883 3.58
Total 74,128,378 100.00

3/1/2012 29
 General Fund Salaries and Wages FY06 – FY11
Source: Northampton Schedule A – Fiscal Years 2006 - 2011

$45,000,000

$40,000,000

$35,000,000

$30,000,000 Culture and Recreation

Human Services
$25,000,000
Public Works
$20,000,000 General Government
Public Safety
$15,000,000
Education
$10,000,000

$5,000,000

$0
2006 2007 2008 2009 2010 2011

Salaries and Wages 2006 2007 2008 2009 2010 2011

General Government 2,041,370 2,132,080 2,314,803 2,315,450 2,182,887 2,319,367

Public Safety 7,544,331 7,981,919 8,522,881 8,742,575 8,985,841 9,720,673
Education 21,088,908 22,491,976 23,189,131 22,973,759 23,137,287 23,415,088
Public Works 2,105,249 2,155,034 2,278,222 2,344,008 2,219,730 2,372,790
Human Services 306,092 321,980 335,503 352,392 391,492 439,459
Culture and Recreation 1,124,903 1,180,579 1,451,734 1,503,124 1,475,360 1,526,717
Total 34,210,853 36,263,568 38,092,274 38,231,308 38,392,597 39,794,094

3/1/2012 30
 Salaries and Wages by Major Functional Area FY06 – FY11
Source: Northampton Schedule A – Fiscal Years 2006-2011

$25,000,000

$20,000,000

$15,000,000 Education
Public Safety
Public Works
General Government

$10,000,000 Culture and Recreation

Human Services

$5,000,000

$0
2006 2007 2008 2009 2010 2011

3/1/2012 31
 Employee Medical Insurance FY03 to FY11
average increase for the past five years = 2.92 %
average increase over nine year period = 6.47%
Source: Northampton End of Year Budget Data

$10,000,000

$9,000,000

$8,000,000

$7,000,000

$6,000,000

$5,000,000

$4,000,000

$3,000,000

$2,000,000

$1,000,000

$0
FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011

Formula Medical Insurance

Fiscal Year FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011

Group Medical Insurance 5,963,231 6,533,111 7,271,107 8,169,034 8,215,517 8,953,648 8,955,458 9,111,523 9,317,382
Employee Co-Pay Reimbursement 0 0 0 0 33,900 34,639 33,364 20,350 43,700
Medicare Penalty 0 0 0 0 58,771 58,874 56,545 55,054 54,487
Total Employee Health Insurance 5,963,231 6,533,111 7,271,107 8,169,034 8,308,188 9,047,161 9,045,367 9,186,927 9,415,569

Change from previous year 559,974 569,880 737,996 897,927 139,154 738,973 (1,794) 141,560 228,642

Perecentage change from previous year 10.36 9.56 11.30 12.35 1.70 8.89 (0.02) 1.57 2.49
3/1/2012 32
 Retirement Assessment FY03 to FY13
Source: Northampton End of Year Budget Data

$5,000,000
Pensions and Annuities Non Contributory Contributory Retirement System
$4,500,000

$4,000,000

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0
FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Formula Retirement Assessment

Retirement Assessment FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Contributory Retirement System 2,541,628 2,668,462 2,992,234 3,294,187 3,409,475 3,535,959 3,665,262 3,842,388 3,989,570 4,198,899 4,359,384
Pensions and Annuities Non Contributory 76,393 77,075 83,874 83,855 70,896 63,331 36,731 35,624 36,617 37,690 40,000
Total Employee Health Insurance 2,618,021 2,745,537 3,076,108 3,378,042 3,480,371 3,599,290 3,701,993 3,878,012 4,026,187 4,236,589 4,399,384

Change from previous year 105,817 127,517 330,571 301,934 102,328 118,920 102,702 176,019 148,175 210,402 162,795

Perecentage change from previous year 4.21% 4.87% 12.04% 9.82% 3.03% 3.42% 2.85% 4.75% 3.82% 5.23% 3.84%
3/1/2012 33
 Other Employee Benefits FY03 to FY11
Source: Northampton End of Year Budget Data

$600,000

$500,000

$400,000 Employee
Medicare and
SS
$300,000
Unused Earned
Leave
$200,000

Life Insurance
$100,000

$0
FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011

Formula Other Employee Benefits

Fiscal Year FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011
Employee Medicare and SS 352,669 340,544 371,670 408,308 455,905 490,599 517,948 522,517 550,514
Unused Earned Leave 193,394 436,689 160,487 219,325 236,772 196,808 167,774 174,351 162,279
Life Insurance 42,839 47,397 45,206 46,456 44,881 40,982 41,476 41,610 38,533
588,902 824,630 577,364 674,089 737,557 728,390 727,198 738,478 751,326

Change from previous year (65,146) 235,727 (247,266) 96,725 63,469 (9,168) (1,192) 11,279 12,848

Perecentage change from previous year -9.96 40.03 -29.99 16.75 9.42 -1.24 -0.16 1.55 1.74
3/1/2012 34
 Debt Service FY03 to FY15
Source: Northampton Debt Schedule

$8,000,000
Other Sources MSBA Reimbursement Debt Excluded Levy Supported in Budget
$7,000,000

$6,000,000

$5,000,000

$4,000,000

$3,000,000

$2,000,000

$1,000,000

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Debt Excluded 1,819,615 2,363,253 1,703,420 1,929,605 1,659,870 1,507,740 1,392,696 1,220,649 1,104,423 962,960 1,640,306 1,429,386 1,278,331
MSBA Reimbursement 3,011,981 3,011,981 3,011,981 3,011,981 3,132,884 3,132,884 3,132,884 3,132,884 2,237,230 2,237,230 2,237,230 2,237,230 2,237,230
Other Sources 105,350 96,961 95,878 126,807 527,081 573,668 431,871 774,879 812,525 1,218,274 1,463,550 1,288,848 1,110,039
Levy Supported in Budget 13,148 516,607 462,008 721,186 428,340 1,104,619 1,249,780 1,384,647 1,499,228 1,555,053 1,831,042 1,838,960 1,580,274

Total Debt Service 4,950,094 5,988,802 5,273,287 5,789,579 5,748,175 6,318,911 6,207,231 6,513,059 5,653,406 5,973,517 7,172,128 6,794,423 6,205,874

3/1/2012 35
 School Choice and Charter Sending Tuition FY03 to FY13
Source: Northampton End of Year Budget Data

$3,000,000
Charter School Sending Tuition School Choice Sending Tuition

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0
FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Formula School Choice and Charter School Sending Tuition

FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

School Choice Sending Tuition 0 0 0 371,002 363,405 333,531 418,667 506,906 445,791 516,906 467,464
Charter School Sending Tuition 815,171 1,017,486 1,203,393 1,262,463 1,310,509 1,413,309 1,432,011 1,467,450 1,718,969 1,808,773 2,170,255
Total 815,171 1,017,486 1,203,393 1,633,465 1,673,914 1,746,840 1,850,678 1,974,356 2,164,760 2,325,679 2,637,719

Change from previous year (56,652) 202,315 185,907 430,072 40,449 72,926 103,838 123,678 190,404 160,919 312,040

Perecentage change from previous

year -6.50 24.82 18.27 35.74 2.48 4.36 5.94 6.68 9.64 7.43 13.42

3/1/2012 36
 Insurance – Workers Compensation, Police and Fire Accident, General Liability,
Property and Auto and Public Officials Liability Insurance FY03 to FY11
Source: Northampton End of Year Budget Data

$400,000

$350,000

$300,000

$250,000 Workers Compensation

Police and Fire Accident
$200,000
General Liability
$150,000 Property and Auto Insurance
Public Officials Liability
$100,000

$50,000

$0
FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011

Formula Insurances

Fiscal Year FY 2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011

Workers Compensation 235,418 239,297 203,543 220,990 269,798 316,060 356,033 190,647 186,560
Police and Fire Accident 64,820 61,191 27,691 30,460 33,506 44,563 49,019 107,097 93,492
General Liability 44,000 51,347 29,425 32,752 30,000 44,849 48,581 40,700 43,500
Property and Auto Insurance 100,381 118,301 127,850 145,224 152,044 174,776 172,116 187,994 184,619
Public Officials Liability 75,000 53,848 86,000 82,393 86,470 73,832 84,888 64,473 51,291
Total 519,619 523,984 474,509 511,819 571,818 654,081 710,637 590,912 559,462

Change from previous year 131,563 4,365 (49,475) 37,310 59,999 82,263 56,557 (119,726) (31,450)

Perecentage change from previous year 33.90 0.84 -9.44 7.86 11.72 14.39 8.65 -16.85 -5.32

3/1/2012 37
 Snow and Ice and Veterans Benefits FY03 to FY11
Source: Northampton End of Year Budget Data

$900,000

$800,000
Snow and Ice Veterans Benefits
$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0
FY2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011

Formula Other Employee Benefits

Fiscal Year FY2003 FY 2004 FY 2005 FY 2006 FY2007 FY2008 FY2009 FY2010 FY2011

Snow and Ice 586,903 566,550 629,233 542,135 452,894 691,017 667,077 486,403 811,540
Veterans Benefits 40,226 58,261 150,446 247,682 323,133 398,486 545,359 624,156
Total 586,903 606,776 687,494 692,581 700,576 1,014,150 1,065,563 1,031,762 1,435,696

Change from previous year 251,422 19,873 80,718 5,087 7,995 313,574 51,413 (33,801) 403,934

Perecentage change from previous year 74.9 3.39 13.30 0.74 1.15 44.76 5.07 -3.17 39.15

3/1/2012 38
 Reserves – Free Cash, Stabilization and Capital Stabilization FY03 – FY12
Source: Mass Department of Revenue Municipal Data Bank

$4,500,000
GENERAL FUND
FREE CASH
$4,000,000
GENERAL FUND STABILIZATION

$3,500,000
CAPITAL
STABILIZATION
$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

-$500,000

3/1/2012 39
 Financial Flexibility for Northampton – Comparison with Neighboring Communities
Source: Mass Department of Revenue Municipal Data Bank

$12,000,000

6/30/10 Stabilization Fund 7/1/10 Free Cash

$10,000,000

$8,000,000

$6,000,000

$4,000,000

$2,000,000

$0
West Springfield East Amherst Ludlow Longmeadow Greenfield Northampton Easthampton
Longmeadow
Financial Flexibility Compared with Neighboring Communities

LT Debt Long-
Available Moody's term Debt
FY11 6/30/10 Resources as a Bond Rating $ Change in Outstanding as
Population 2010 Excess Levy 7/1/10 Free Stabilization FY11 Available percent of as of July Free Cash Percent of
DOR Code Municipality Estimate FY11 Total Budget Capacity Cash Fund Resources Budget 2011 FY06-FY11 EQV
325 West Springfield 28,391 94,514,810 1,243,443 3,722,671 7,567,469 12,533,583 13.00% Aa3 2,012,379 1.12%

085 East Longmeadow 15,720 51,721,145 1,024,154 3,118,484 1,753,163 5,895,801 11.00% Aa2 1,242,695 1.76%

008 Amherst 37,819 72,456,981 426,947 3,300,986 1,421,401 5,149,334 7.00% Aa2 1,084,051 0.31%
161 Ludlow 21,103 56,182,229 823,546 984,493 2,142,993 3,951,032 7.00% Aa3 -1,967,093 1.14%
159 Longmeadow 15,784 56,130,477 19,312 1,455,225 2,016,344 3,490,881 6.00% Aa2 186,424 0.56%
114 Greenfield 17,456 49,863,768 8,942 824,693 1,343,925 2,177,560 4.00% A1 240,714 1.64%
214 Northampton 28,549 91,673,464 23,439 1,052,466 848,444 1,924,349 2.00% Aa2 -1,487,124 1.89%
087 Easthampton 16,053 37,683,764 13,138 565,039 1,124,311 1,702,488 5.00% A1 -586,367 0.50%
3/1/2012 40
 Financial Flexibility for Northampton – Comparison with Similar Communities
Source: Mass Department of Revenue Municipal Data Bank

$14,000,000
6/30/10 Stabilization Fund 7/1/10 Free Cash
$12,000,000

$10,000,000

$8,000,000

$6,000,000

$4,000,000

$2,000,000

$0

Financial Flexibility Compared with Communities with Similar Population and Budget Size

Available Moody's LT Debt Long-

FY11 Excess 6/30/10 Resources as a Bond Rating $ Change in term Debt
Population 2010 Levy 7/1/10 Free Stabilization FY11 Available percent of as of July Free Cash Outstanding as
DOR Code Municipality Estimate FY11 Total Budget Capacity Cash Fund Resources Budget 2011 FY06-FY11 Percent of EQV

005 Agawam 28,438 81,642,943 5,523,322 4,882,516 3,640,121 14,045,959 17.00% Aa2 425,528 0.92%
325 West Springfield 28,391 94,514,810 1,243,443 3,722,671 7,567,469 12,533,583 13.00% Aa3 2,012,379 1.12%

185 Milford 27,999 81,263,916 539,391 2,207,276 9,046,862 11,793,529 15.00% Aa2 854,614 1.19%
071 Danvers 26,493 94,756,578 45,565 3,083,190 8,428,024 11,556,779 12.00% Aa1 -4,111,541 0.96%
072 Dartmouth 34,032 81,405,713 9,911 2,149,762 5,275,621 7,435,294 9.00% Aa2 401,750 1.14%
101 Franklin 31,635 109,664,957 35,498 2,133,006 5,177,905 7,346,409 7.00% Aa2 1,476,469 1.24%
314 Watertown 31,915 109,307,498 22,614 6,075,642 1,201,566 7,299,822 7.00% Aa2 567,632 0.94%
107 Gloucester 28,789 101,124,730 4,818 1,992,293 1,542,721 3,539,832 4.00% Aa2 1,992,293 1.56%
211 North Attleborough 28,712 84,719,564 19,295 998,911 2,512,042 3,530,248 4.00% Aa2 -366,302 1.19%

171 Marshfield 25,132 84,532,681 26,282 1,223,910 1,990,645 3,240,837 4.00% Aa2 -577,548 0.73%
210 North Andover 28,352 89,712,389 13,784 690,952 2,222,033 2,926,769 3.00% Aa2 -2,228,204 1.55%
244 Randolph 32,112 87,544,622 1,935 218,715 2,497,251 2,717,901 3.00% A1 237,045 0.79%
285 Stoughton 26,962 85,354,589 3,956 2,010,542 644,853 2,659,351 3.00% Aa2 824,330 0.80%
189 Milton 27,003 88,343,671 5,138 568,531 1,406,900 1,980,569 2.00% Aa2 144,675 0.87%
214 Northampton 28,549 91,673,464 23,439 1,052,466 848,444 1,924,349 2.00% Aa2 -1,487,124 1.89%
295 3/1/2012
Tewksbury 28,961 100,095,069 20,677 1,366,035 511,140 1,897,852 2.00% Aa3 -1,319,912 3.05% 41
So what does all this information say about the financial trends affecting
Northampton? Favorable trends include……

• Consistently strong property tax collections

• Relatively low tax rate compared with comparable, neighboring
communities
• Property values remain high, even during the economic downturn
• Average single family property tax bill, at $4,064 is below the state
average of $4,537
• Certain revenue streams on the upswing including:
– Motor Vehicle Excise
– Parking meter and Garage Revenues
– Hotel/Motel and Meals Taxes
• Excellent bond rating and favorable interest rates resulting from that
rating
• Insurance Costs (Workers Comp, Police and Fire Accident, General and
Public Officials Liability, Property and Auto Insurance) are either stable or
declining
• Excellent health insurance cost containment, consistently below industry
averages

3/1/2012 42
So what does all this information say about the financial trends affecting
Northampton? Unfavorable trends include……
• State aid reductions have sharply limited the city’s ability to fund budgets and build
reserves – in the last four fiscal years, FY08 to FY12, the city has seen a reduction in
state aid of $3.5 million and FY13 will see another reduction
• State aid, as a percentage of operating revenues, declined from 24% to 12.7% of
operating revenues
• No excess levy capacity –taxing to the maximum allowed under Prop 2 ½
• The Inter-fund operating transfers declining with closure of landfill
• New growth is expected to decline in FY13
• Interest on investments has declined markedly since 2007, and has been flat for three
fiscal years
• Employee health insurance, which has been relatively stable for the last four years due
to plan design changes, may increase by 12% or $1.1 million
• Increases in fixed costs such as debt service, retirement system assessment and
medicare
• Charges for tuition for school choice and charter school students continue to rise
• Veterans benefits, which are reimbursed by the state at 75%, continue to increase
• Low reserves – free cash, stabilization and capital stabilization have been depleted to
offset losses in state aid.

3/1/2012 43
 What are the Budget Assumptions for FY13?
On the revenue side……
March 1, 2012
Estimated Estimated
Revenue Estimate Additional Revenue Revenue Estimate Additional Revenue

Preliminary Decreases to Local Receipts:

Prop 2 1/2 increase 1,055,588
Cemetery Income (5,000)
Estimated New Growth 475,000
City Clerk Misc (10,000)
Total Real Estate and Personal Property Increase 1,530,588
Dept. Rev. - BOH (5,000)

Liquor Licenses (5,000)

State Aid (178,138)
Building Permits (100,000)
Preliminary Increases to Local Receipts:
Plumbing Permits (20,000)
Motor Vehicle Excise 35,000
Wiring Permits (2,000)
Hotel/Motel Tax 10,000
Fines and Forfeits (13,000)
Meals Tax 75,000
Parking Tickets (100,000)

Interest on Tax titles 10,000 Medicaid Receipts (40,000)

Parking Meter Revenues 150,000 PVTA Reimbursement (20,000)

Collector Fees 20,000 Solid Waste Enterprise Indirect (175,000)

Municipal Liens 10,000 Total Preliminary Local Receipt Decreases: (495,000)

Total Preliminary Local Receipt Increases: 310,000

PRELIMINARY ESTIMATE OF NEW REVENUES 1,167,450

3/1/2012 44
 What are the Budget Assumptions for FY13?
On the expenditure side……
March 1, 2012

Estimated Increases
Expenditure Estimate in Expenditures Additional Information

Retirement Assessment 160,485 know number from Retirement Board

Employee Health Insurance 1,128,800 12% renewal quote
Levy Supported Debt 275,988 additional debt service
Additional Custodial Staff for Police Station 37,000 1.5 fte
Historically Underfunded Accounts:
Fire OT 130,000 brings us to 100% of 3 year average actual costs
Veterans 180,000 brings us to 100% of 3 year average actual costs
Snow and Ice 100,000 brings us to 30% of 3 year average actual costs
Legal 33,000 brings us to 30% of 3 year average actual costs
Unemployment 25,000 brings us to 30% of 3 year average actual costs

PRELIMINARY ESTIMATE OF NEW EXPENDITURES 2,070,273

PRELIMINARY ESTIMATE OF NEW REVENUES 1,167,450

PRELIMINARY SHORTFALL: 902,823

Expenses still to calculate:

collective bargaining settlements including step increases
department OM increases

3/1/2012 45
 FY13 Bottom Line:

• Revenues for the General Fund will increase approximately $1.1 million
• Expenditures for the General Fund will increase approximately $2.0 million
• Preliminary budget gap of >$900,000
• Health Insurance costs are largest unknown – anything less than 12%
renewal quote will help close the budget gap
• State aid might increase if the Governor’s planned supplemental
appropriation is included on the Cherry Sheet - $268,800 additional
however, state aid could also decrease
• Capital program will be severely constrained in FY13 – perhaps little or no
cash capital in FY13
• Low reserves – must be conserved to weather additional budget unknowns
and also should not be used for recurring expenditures
• Best case - departments will be level funded (including collective bargaining
commitments) but this still leaves a budget gap to fill

3/1/2012 46