001[Music] hello and welcome to Around the Clock I'm your host yand Greaves today in studio we have Michael Herbert the town manager for the town of Ashley Michael welcome back to Around the Clock hey Yanda thanks for having me it's been a little bit since we've had you here at around the clock I know my feelings were getting a little hurt no don't please we know you're busy yes so it's we don't always want to take your time but today we've brought you here to start talking about the budget process right we're we're getting to be in the thick of it Town meetings coming up in May we're looking at what our departments are are needing to be able to do their jobs so we brought you in to really talk through what is the
002budget process for a town like Ashland but why don't you start with giving us a little bit of your Finance background that people may not be aware of right so Yolanda you know I was I'm Town manager now I just celebrated my ninth anniversary going in my 10th year and uh a lot of people you know who moved into town during that time they don't know that before that I was the finance director and uh I I always I kind of chuckle you know when you were interviewing me for Town manager you know you know I'm known now as kind of like this creative you know Vision type of guy but I was known as the the numbers guy back then and you were like well how are you going to transition from being you
003know the numbers guy to more the big picture guy so uh before I came here was the finance director I worked in the city of Newton I was the Performance Management director there and worked on the budget in then uh before that I was in the city of LOL and that's really where I learned Municipal Finance from a guy who uh who's a genius his name's Tom Moses um and he moved on from the city of L to become Town Administrator in Hudson so so that seems to be a path you do Finance for a few years you become an assistant Town manager and eventally a town manager somewhere and I mean for municipal government that's a path yeah and and this will lead me into an important point I want to make because originally
004when I got into municipal government or I was studying government I was studying to be a planner that's my undergrad um and that was really kind of the focus of my masters and then at some point I had no interest in the money piece and then I started realizing when I was doing my Master's thesis that you know what you need the money to actually do the things that you think about and want to do and so that's how I got interested into into Finance so you know Finance is boring it really is hey unless you're a special kind of person right but it's the most important aspect of a community of an organization definitely because you talk about Services you talk about doing infrastructure projects what underpins all of that is funding and the
005ability the financial ability to do anything that you want to do in a community is so important correct correct any operation you see has some kind of dollar attached to it definitely definitely yeah okay so that's your background let's start big picture sure right we're we're talking about the budget where does it all start and I know it's a fluid thing right it's not like we start and start and start you know it's it keeps going it's cyclical every year so where would a where would you know we're heading into fiscal year 26 when did you start having these discussions right so um so for fiscal year 26 which is actually starts it starts on July 1st of 2025 um that's fiscal year 26 for so for that budget uh which is coming up we
006actually started work in November and uh so basically that starts with you know basic uh Revenue estimates uh very very early Revenue estimates uh just some general thoughts and ideas about the budget um and that in turn goes out to the department heads and the school department and uh so they start developing their budgets at that point in time and from there they submit the budgets at least the non-school Departments what we call the municipal departments so that's like police fire DPW um so those they those departments usually submit their budgets by December or at some point in December right and uh from that point our finance director you know who is Britney I capony uh she starts assembling those and really that's when in January is when you really start crafting a a budget
007a full budget with Revenue estimates and expenditure estimates and so you basically follow that process which is laid out partially in the charter and partially through policy which has a heavy public input component as well you follow that process throughout the winter and spring until May which is when we have town meeting and town meeting is uh the actual um expenditure Authority for appropriated expenses y um in as how does the process end what's the the back half of it okay so it's important to note that even at town meeting what town meeting is voting on is still at that point an estimate of not only the revenues but the expenditures and another important point I should make is that they're only voting on The expenditures um they don't vote uh there's no vote on
008a revenue estimate okay so from that point um it's uh the uh Town accountant who's also our finance director because you they do two jobs they do two things y um so she starts working on closing out the the fiscal year that ends June 30th you know going into July 1st so that process takes a while because you know you're making sure that you're counting every invoice that gets in you know making sure you're trying to get every invoice in trying to you know get every encumbrance which is you know permission to spend into the next fisal year all of that taken care of um get that done and close out the books because at that point hopefully at that point we have a BAL balance at the end of the year meaning that our
009Revenue was more than our expenditures as we've gone throughout the year and so what happens at that point is that gets sent to the State Department of Revenue and they do something they call Certified they call certify it and if you have a balance it's called free cash um not really sure which is not free and it's not cash really it's not free it's not cash it's a number on a spreadsheet somewhere but uh it is real money um and can be appropriated once the state uh certifies it okay um and then uh you a town doesn't have to have a town meeting in the fall but we have traditionally done that and in some cases we um have adjusted expenditures uh for that fiscal year or made new expenditures um just like we did
010this past uh fall yep and um so at that point you basically have all of your expenditures everything in place your planned expenditure for that fiscal year um and then you send all of that to the state and they certify what they call your tax rate which is uh basically a multiplier uh that they use in calculating your tax bill and once that is certified we can send out the tax bills that are due in January okay now the tax bill you see in January is going to be different than the one that you see in September or October excuse me Britney don't kill me um or Cindy I should say um and you know that sometimes causes a lot of confusion probably won't get into it right now but so just real quick though
011so the first half so from July through December that's called an estimated tax bill based on maybe what you paid last year or what your rate was the year before and then after we've certified the free cash and we've been able to set the new tax rate which happens in November or December with the select board meeting then the actual tax bills can come out in January and they might be slightly different either higher or lower based on the tax rate that's been set and the potential value of the home right I mean those are some things to think about cor and the expenditures um so that that those are the controlling features of you know calculating your tax bill right and yes um so we do quarterly tax bills here um and like you
012said first two um well the first two in the fiscal year which is actually the ones in the latter half of the calendar year um our estimates and then yes you have what the actual bills are in the okay so that's sort of the budget and finance process as people are watching us have these discussions at select board meetings at Finance meetings at Schoolboard meetings there's different terminology that we hear we hear Chapter 70 we hear ugga uh circuit breaker cherry sheet excluded debt included debt um different things like that let's start with um the cherry sheet right because that's information coming from the state how does that impact us yeah so the cherry sheet is um actually what uh they call the the basic basically the instrument that tells you what your state aid
013is or the money that you're getting from the state it also has what the money that you have to give back to the state as well we can't forget that um and so it was actually back in the day printed on act red paper so um that's why they call it the cherry sheet and so that is part of the revenue component in the town budget and somewhat of the expense too right correct correct if it is correct on the expenditure side correct right and if you're watching you can actually go see what our cherry sheet is by going to to the State website and you know mass.gov and looking what our potential incoming funds from the state are going to be yeah and on that cherry sheet what are the some what are some
014of the funds or what are some of these things that we're going to see yeah I think your two biggest ones uh that you're going to see uh the first one's going to be chapter 78 um now chapter 78 is Aid that is given based on um a very complex formula uh that the state put together after the education Reform Act was passed in the '90s and uh so basically it get gives you money for your your schools and your school children um and you know I will have to say again that that formula there's always opportunities when you have 351 cities and towns and several school districts you know there's going to be some towns that do not make out that well um Ashland was enfor one of those in the initial formula initial
015formula um big kudos to our Senate President uh Karen spilka who you know a few years ago was able to change that and uh she worked very hard yeah yeah and uh so you know I think we're still a little bit behind but she made great great strides well and there's been a new there was a new law pass three or four years ago the child this I'm sorry the student Opportunity Act which also we've seen some increase in funding because of that formula as well correct correct that and then also you know there is a per student component of that and uh so as enrollment has increased you know we do get more money that way as well right okay so that's Chapter 70 we also hear about ugga or unrestricted government Aid right
016so what does that mean yeah and that's that's probably your other biggest category on your cherry sheet and um and so that is is a just given you know for General government services and um it's usually significantly smaller yes yeah okay so those are some of the revenue things so now you you've talked a little bit about the budget we as a select board we're getting ready to do what's called our tri board meeting so we're having discussions with select board finance committee school committee what do you foresee in those discussions part of it's what the school needs are and if if I if watching from the public I hear about a tri board meeting if I were to sit on one sit in on one what what can I expect um boy that's a
017loaded question Yolanda now what could you expect um well you know I think the the first part of the meeting we would talk about Revenue really and that's probably going to be the focus uh of the first part of the meeting and then we talk about the expenditures and when we do talk about Revenue on a local budget it's really broken down into four components so we talked about state aid yep that's one one big one the other big one of course is property taxes yep and a town like Ashland and you know some of these Suburban towns you're going to see property taxes make up a significantly larger portion of the revenue than a place like a city like a Gateway City or or you know Boston or Framingham even right and um so
018property taxes are are a little bit complex in Massachusetts because of a couple laws that have been in place for a while um and some of the rules in place but you know the first I you know I should say that every uh property is assessed a tax um called a property tax uh for businesses that have equipment and things that they utilize uh in the operation of their business they have something called personal property tax um and so that is assessed a value U by the Assessor the city or town that you live or work in and um so that uh you know basically that cannot equal that total assessed value for the community cannot total well excuse me now now I'm getting confused even me I've been doing this forever um so that's
019basically how you get your property value it's called equalized valuation total and so from there um you have your first limit on what your property taxes can be and that's called your property tax ceiling U which can never be more than 2.5% of the full eqv of the Town equalized valuation in town it can't be more than two and a half% or you can't raise it from year to year no it can't be more than two and a half percent I don't think a lot of people understand that well that is that is one component of prop that a lot of people do not understand right because most people think of the second component right which says the tax levy which is usually far far below that 2 and a half% ceing okay um the
020tax levy can't increase year-over-year more than two and a half percent okay and um it it can be done in two exceptions right so actually three uh but I'll take I'll say two um so the first one is called a debt exclusion yep and a debt exclusion is a a vote by the community to tax over and above that Levy limit um an amount equal to what it takes to pay down the debt associated with a large capital expenditure so in the past couple of years we had two large ones we did the public safety building and we did the Mendes rebuilding of that correct and about years ago we had four projects that we did so that is called that's the excluded debt correct okay and if I'm looking at my tax bill am
021I going to see those separated on my tax bill or not you will not see that separ so it's all just into one one bill it's all just into one um so on the budget so that amount though on excluded debt though so that's not folded into your regular Levy right so you'll see that as a separate number and that's because that goes away once that bond is paid off so if you have a 30-year Bond 30 years that goes yeah so for a lot of communities though like Ashlin right we had these projects that we did 20 years ago and we were looking at all that debt and said okay when it's done it's going to go away but then we had more Capital needs and we had to do more of that excluded
022debt to do some of those projects yeah and maybe you know maybe we need to rephrase that because you know at the end of 30 years that that the dollar amount associ the taxes that you pay Associated to that project from 30 years ago goes away right now you might have voted new projects along the way which uh you that would be reflected right right but you know it's not like at the end of 30 years it's not like the tolls on the Pike for those of you that know that were supposed to go away that were supposed to go away once the pike was paid for but instead they decided to move it towards the big dig sorry anyway well but I think that's important to note right because people have looked at excluded
023debt here in Ashland and said okay we have this debt that's going along and all and it's going to drop off so our tax are going to go down but as a as a community we made the decision to say okay well because we know this other debt is going to be dropping off we are as a community voting to add new debt so that as this drops off this new debt comes on right and I will say that um you know if you remember when we we were doing the public safety building in the Menda school we tried to time it and set it up and I tried to structure the bonds to where um or the debt to where it would uh you know as some was falling off that's when the bulk
024of the new was coming on it was all at the same time yeah you wouldn't try to get a huge Spike yeah so we've talked about the process we've talked about some of this terminology we've talked a little bit about uh you know the tri board meetings and those discussions if I've watched this where can I go on the website to say okay what did we spend in 2025 what are we expecting to spend in 2026 and how else can I follow up on this discussion yeah I think the best thing to do probably the um the the one web page that has the most comprehensive information would be uh Britney's page the accountant and finance director page okay so if you just go to the web page you look at departments accounting Finance um
025you know click on if you look at the menu on the left you're going to find uh access to the budgets um our financial policies the audits U that are done each year um and a number of other Financial related things and then uh I would suggest people start with the actual budget document for the fiscal year uh our finance team spends a significant amount of time putting together a budget document that is very comprehensive you know usually when we have the capital plan rolled into it it's 400 pages right you know now it's a light you know went on a diet it's like at 300 Pages now um but you know people I don't want them to think that they have to read 300 Pages because Britney does a really good job of doing
026like an executive summary kind of give you you know kind of the bird's eyee view of what's going on um but that has everything you're going to want to know about the town um work charts Staffing levels all that good stuff good good well Michael I don't want to take up too much of your time but I think this has been very helpful and to those of you watching check out the website go look at things and if you have questions reach out to Michael reach out to his team reach out to any of the select board members or Finance member finance committee members uh because we are here to work for you and take us through this budget process yeah don't be don't be shy I love talking about Finance I'm probably one of
027the few people that do so take advantage of it great well Michael thank you so much for coming on around the clock oh my pleasure uh that wraps up this interview with Michael Herbert the Ashland Town manager regarding finances and the budget process here in Ashland thanks for [Music] watching e e e