This section summarizes the revenue that makes up the Town’s FY 2023 Budget.

Voters may decide to increase taxes above the 2.5% levy by voting to “override” Proposition 2½ by a specific amount of money. The Town has relied on periodic tax overrides to meet the “structural gap” in its budget, most recently in 2019 when a 3-year override plan was passed by voters. This plan allocated the additional tax revenue authorized by the override vote over three fiscal years concluding in FY 2022. Effects of the pandemic and the availability of federal funding under ARP has deferred discussions about a future override, but the Town must begin these discussions for FY 2024 and beyond. While the FY 2023 budget does not include new tax revenue from an override, the budget does include temporary tax overrides that add the cost of debt service for specific capital projects (called a debt exclusion). The Town’s tax levy includes multiple debt exclusions, mostly for school expansion and renovation/replacement. The FY 2023 tax levy includes $20.5M for debt exclusions which includes Florida Ruffin Ridley, the High School and Driscoll School Projects.

Overall, the property tax levy will increase in FY 2023 by $9,117,418, or 3.4%. This includes the allowed 2.5% growth under Proposition 2½, new debt service from excluded capital projects and an additional sum projected to be generated in taxes resulting from new construction (referred to as New Growth). New Growth tax revenue is not capped by Proposition 2½ and is therefore essential to help fund the increasing cost of local government services. New growth amounts can vary widely depending upon the timing and intensity of development projects. As a result, without specific projects in the pipeline we are projecting $2.5 million from this source in FY 2023.

A new source of revenue will materialize in FY 2023 resulting from the voters’ passage of the Community Preservation Act (CPA). This assessment is a 1% surcharge on property taxes, projected to raise $2.6 million in FY 2023. The CPA funds are separate from other general revenue and may only be spent for open space protection, historic preservation, affordable housing and outdoor recreation. The Town will account for these funds separately as a grant.

This is the category of Town revenue that is generated through a variety of locally generated licenses, permits, and other fees for municipal services. This category includes excise taxes on motor vehicles, building permits and other regulatory licensing fees, and the local portion of state excise taxes on the sale of meals, hotel rooms and recreational cannabis.

In FY 2023, Local Receipts represents 7.3% of the Budget. Local receipts is the revenue category most impacted by economic forces. Last year’s budget reflected reductions in many local receipts that were impacted by limitations on physical gathering and interaction. In particular, local receipts generated through Brookline’s healthy retail and hospitality sectors suffered greatly during the pandemic. Buoyed by resilient business owners, a loyal customer base and a supportive local government, this industry has rebounded and will generate increases in local revenues for FY 2023. Overall, Local Receipts will grow by $2.3 million in FY 2023, an increase of 9.0%.

It should be noted that the Town continues to defer a plan to increase parking meter rates that was a component of the Tax Override plan in 2019. Prior to the pandemic, a proposed increase of $.25 per hour was estimated to generate approximately $750,000 in additional general revenue. Under current conditions that estimate is revised to $400,000 due to the depressed nature of parking related activity. The policy implications of this increase will be discussed further during deliberations over the FY 2023 budget. The Town reduced its Payment in Lieu of Taxes (PILOT) program in FY 2021 to account for the economic fallout from the pandemic. We are pleased that most of our non-profit partners will continue to meet their obligations under the PILOT program, and we were able to restore our revenue projections.

This category of revenue represents general and programmatic aid provided to the Town from the Commonwealth of Massachusetts. In FY 2023, State Aid represents about 6% of the Town’s Budget.

As previously noted, we were disappointed with the Governor’s overly conservative projections of state revenue that its local aid revenue sharing commitment is based upon. A 2.7% increase in state revenue translates into a $178,000 increase to Brookline in the Unrestricted General Government Aid (UGGA) formula. According to the Massachusetts Municipal Association, cities and towns have been disadvantaged by the variation in actual state revenue during the pandemic. The past two years have seen an unprecedented divergence between state revenues and local aid funding. In fiscal years 2021 and 2022, actual state tax collections have increased by $6.32 billion, 21.3% over the amount collected in fiscal 2020. During this time, UGGA has been left behind, receiving only a 3.55% increase of $39.5 million.

For the Chapter 70 Education Aid formula, the Town is considered a minimum aid community, targeted to receive an additional $203,970 in FY 2023. This represents a modest 1.3% in school based aid. It is interesting to note that over 40% of Massachusetts school districts will receive minimum aid in FY 2023, reflecting a wide disparity in state education funding.

Brookline’s state aid is reduced off the top by state and county assessments. Most prominent to Brookline are its MBTA assessment at $5.8 million and the Norfolk County assessment at $1.1 million. The effect of increases in these areas eliminates any growth in net state aid for FY 2023. Of particular concern is a 9% increase in the MBTA assessment, totaling an additional $481,000. We will be following up on the basis for this large increase in assessment and will also be advocating for greater amounts of state aid during the legislative process this spring.

This category of revenue includes funding from the Town’s Enterprise Funds or other special funds to support general government or other expenses. This category of revenue represents $4,307,848, or 1.1% of overall revenue. It is the Town’s policy that, to the maximum extent possible, all direct and indirect costs of enterprise activities should be borne by the users of these services rather than the general revenue of the Town. For example, revenue generated by the Water/Sewer fund, the Lynch Golf Course and the Recreation Revolving Fund is used to cover the costs of their share of the Town’s Pension and OPEB funding.

A change in the accounting of Marijuana Host Community Agreement (HCA) revenue skews the Other Available Funds category this year. Beginning in FY 2023, over $1 million in HCA revenue from a special account will be applied to Other Available Funds and serve as an offset to an equal amount of eligible expenditures included in various departmental budget accounts. As a result, there is a one-time infusion to Other Available Funds in FY 2023, representing a 29.4% increase over FY 2022.

The Town accounts for its enterprise activities separate from the General Fund. It is the Town’s policy to recover 100% from the cost of its Water/Sewer and Golf enterprises while the Recreation Revolving Fund supports 82.7% of its costs (with general tax supporting the remaining 17.3%). In FY 2023, revenue from the Enterprise category is $34.8 million, representing a 7% increase over FY 2022. All revenue generated from enterprises is accounted for separately and is offset by the same amount of expenditures for these activities, ensuring that there is no net financial impact on the Town’s General Fund.

Finally, the Town is the recipient of a multitude of federal and state grants for specific purposes. These are accounted for separately and the expenses are not appropriated through the annual budget process. While these funds are accounted for separately from the general budget, they are essential to provide for important public services and must be fully understood when allocating municipal funds. The School Department is projecting nearly $6 million of education grants that will be used off-budget in FY 2023 in accordance with relevant grant requirements. Last year, the Town was granted $5.2M from the federal CARES program to cover direct COVID expenses through December 31, 2021. This year, ARPA funding will provide a total of $44 million over a two year period. The Town is also an entitlement community eligible for about $1.5 million annually in federal Community Development Block Grant (CDBG) funding. These funds are restricted for the benefit of low and moderate income residents of the Town.