Author: BOA
It’s a busy time in cities and towns across the state, ending one fiscal year and starting another. Before you know it, it’ll be time to start the budget process for the next. I think our Foundations in Municipal Finance Training video really got it right when it claimed you are working in fiscals past, present and future all at once! With all that’s going on in your municipality right now, I’d like to share some tips to make the FY24 free cash submission and tax rate setting process a little easier.
First, complete as many of the required tax recap forms as you can now. If you had your annual town meeting or your council has passed the budget for the upcoming year, the city/town clerk can enter your appropriation votes on recap page 4. Have the accountant/auditor verify those entries! When the accountant/auditor signs recap page 3, “Local Receipts”, they are attesting that they reviewed recap page 4 and agree with the entries there. This is a critical step in the process and ensures that the funding sources and amounts that go into calculating your tax rate are accurate. Just this past year, multiple communities either did not raise enough or raised more than they needed from taxation due to this type of inaccuracy. Your town meeting articles, or council orders should be clear as to amount, funding source and purpose.
Did your town appropriate an amount from free cash to reduce the tax rate? If so, two things should occur. The first is that the vote must be clear that this amount was voted “to reduce the tax rate.” Second, any amount voted to reduce the tax rate should not appear on tax recap page 4. This amount belongs on tax recap page 2, section IIId. Including this amount on recap page 4 will not have the desired effect on the tax rate.
We highly recommend analyzing the revenue estimates for your enterprise now rather than later. Revenue estimates for FY24 user fees should be no more than the prior year actual plus any voted rate increases. Documentation of a rate increase should include the old rate, new rate, the date of the vote and effective date of the rate increase uploaded to the corresponding tax recap form A-2. Explanations for anticipated changes in usage should be included. We request that you use the Enterprise Fund User Charge Template found on the tax rate landing page. Looking at this and discussing any potential concerns now will make for a much easier tax rate setting later.
If your community passed a Proposition 2 ½ override, underride, debt or capital expenditure exclusion, please have the clerk enter the vote in Gateway. Not having the votes already in Gateway will slow approval of your tax rate. What better time to do this than right after town elections! Our webinar, Submitting Proposition 2 ½ Votes Using DLS Gateway explains this process.
Finally, consider holding your classification hearing as soon as your values are certified. If you’re not making any appropriations from taxation subsequent to setting the budget and prior to setting your tax rate, and not having a meeting to appropriate free cash in the fall, we suggest you consider setting your tax rate sooner this year than last.
Switching gears to fiscal year end, there are a few things you can do so you can submit for your free cash certification/excess and deficiency without delay. Staying up to date with cash and outstanding receivables reconciliations is not only a critical internal control, but will ensure you don’t experience year-end closing delays. Reconciling cash is only complete once the treasurer has balanced the treasurer’s cash book to the bank statements and the treasurer’s cash book to the accountant’s ledger.
Once you complete the documentation required for the certification of free cash, take a moment to double check your work. Do all supporting forms such as the Year-End Cash report and the Statement of Indebtedness agree to the balance sheet? Do all fund balance details agree to the combined balance sheet? Did you complete checklist question 12a regarding free cash votes correctly? Also, take the time to watch our webinar on the Free Cash Upload & Certification Process. If you are in a regional school district reading this, check out our Excess and Deficiency Upload webinar. These webinars will help ensure that your free cash/excess and deficiency certification goes smoothly.
Finally, now is the perfect time to reach out to your Bureau of Accounts field representative (cities/towns, districts) to discuss any questions you may have regarding the completion of the tax rate or free cash certification forms. We look forward to hearing from you!
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City & Town is brought to you by:
Editor: Dan Bertrand
Editorial Board: Marcia Bohinc, Linda Bradley, Sean Cronin, Emily Izzo and Tony Rassias
| Date published: | June 1, 2023 |
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