Town finances improving but uncertainties remain

Compared to a few months ago, the town of Canton appears to be on a sturdier financial footing; but a full return to pre-COVID economic conditions will depend on a variety of factors, including final FY21 state aid determinations, extension of the federal CARES Act spending deadline, and rebounding local receipts.

According to Finance Director Randy Scollins, the town of Canton has been and continues to be a well-managed, fiscally responsible town. He said the town remains quite solvent and is faring well in meeting its day-to-day expenses while maintaining sufficient cash reserves.

Scollins does not foresee any immediate financial concerns or anticipate any layoffs, but he will be monitoring the School Department as it grapples with significant cost increases associated with the COVID-19 pandemic. As it stands, School Business Administrator Barry Nectow is projecting a shortfall of nearly $2 million in the current fiscal year — and that is after utilizing all available state and federal grant funding. What could potentially reduce the shortfall, said Nectow, are savings in other areas, such as utilities, transportation, and special education tuition costs.

On the plus side, Scollins said local revenues have seen a boost with increased real estate tax collections. Due to the COVID-19 emergency, the town had extended the deadline for tax payments from May 1 to June 30, and since that time, collection rates have improved from 98.3 percent to over 99 percent.

Over the past few months, Scollins has been working on closing out the town’s books for the 2020 fiscal year and has determined that overall revenues declined by $429,000. However, the town did not use $1.6 million in appropriations, resulting in a net savings of $1.1 million. Scollins said that savings goes into the treasury and cannot be used until a future town meeting vote.

In the meantime, local officials continue to await a final determination on state aid for FY21 as the fiscal year approaches its fourth month. Due to the difficulty in projecting tax collections and unanswered questions with regard to federal aid, the Massachusetts legislature voted to adopt a one-month budget for July and has since added a three-month extension that runs through October 31. State leaders, however, have already indicated plans to provide, at a minimum, level funding in FY21 for two primary sources of local revenue: Unrestricted General Government Aid and Chapter 70 education aid. And some reports indicate that Canton could receive upwards of $800,000 more in total aid than what Scollins and the Finance Committee had projected in June. “We know some things but not all,” said Scollins. “State aid continues to flow, but it is now at a reduced level.”

Scollins believes the delay in finalizing the state budget is due in part to legislators’ hesitancy as they await word on possible federal relief packages. But even if there is no additional federal money, Scollins said it is even more important for Congress to extend the December 30 deadline for spending federal CARES Act monies so the town can use any unspent federal aid in the 2021 calendar year. Canton received a total of $2.083 million in CARES Act aid and has allocated $1.388 million to the School Department for COVID-related expenditures. Of the remaining $695,000 allocated for municipal expenses, Scollins estimates the unspent balance at roughly $500,000.

Another important consideration on the revenue side are the local receipts coming from hotel and meals taxes as well as new construction. Scollins said it is important for the local economy to rebound as it would bolster local receipts and strengthen the town’s cash reserves.

Overall, Scollins said the financial picture is “much more optimistic” than it was a few months ago. “The collection rate is more than 99 percent and if we get the additional state aid of $800,000, that’s even better,” he said. “Hopefully, Congress extends the federal CARES Act spending deadline into 2021. Canton has been a well-managed town for a long time and it’s helping us get through this.”

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Posted by Mike Berger on Sep 25 2020. Filed under News, Town Government. Both comments and pings are currently closed.