LOCAL RECEIPTS SUMMARY

Local Receipts, estimated to add $34.5 million to the Town's revenue stream, represent 11% of total General Fund revenues. They include motor vehicle excise, local option taxes, fees, fines, charges for licenses and permits, investment earnings, and other similar non-tax type items. These items are reviewed by departments to ensure that they continue to cover their fair share of the related administrative costs and are in accordance with the policies adopted by the respective oversight boards and commissions. They are projected to increase $4.75 million (15%) over the FY20 budgeted amounts. A summary of the changes are as follows:


1.) Motor Vehicle Excise (MVE) - increases $122,853 (2%) to $6.27 million.


2.) Local Option Taxes - increase $1.8 million (51.5%) to $5.24 million.


3.) General Government - this category increases $753,662 (16.5%) to $5.3 million due primarily to an increase to the Registered Marijuana Dispensary (RMD) Host Community Agreement Revenue ($983,896), Building Permits ($25,503), and offset be a decrease in Collector's Fees ($255,737).


4.) Interest Income – this category increases $24,374 (2.5%) to $999K.


5.) Payment in Lieu of Taxes (PILOTs) - increase $520,210 (51.5%) to $1.53M due to a new agreement with Brigham and Women's Hospital along with scheduled increases in negotiated PILOT agreements.


6.) Refuse Fees- this category reflects the proposed increase to fees generated from the Hybrid Pay-as-you-Throw (HPAYT) Program, which is projected to generate $3.6M, an increase of $749K (26.3%).


7.) Departmental and Other - increase $791,642 (10.4%) and primarily due to the proposal to increase meter rates from $1.25/hr to $1.50/hr. which is expected to generate $750,000 in new revenue. In addition, there are increases in the Medicaid Reimbursement ($97,182), Parking Fees ($90,000), Health and Sanitation fees ($5,500), and Public Works Fees ($3,000) offset by a decrease in the Online On-Line Parking Ticket Convenience Fee ($104,040). and the Cable TV Franchise Fee ($50,000).


Further details of these and other revenue sources are discussed on the following pages.

Local Receipt History

Motor Vehicle Excise

State law establishes the Motor Vehicle Excise (MVE) tax rate. Proposition 2 ½ set the rate of $25 per $1,000 in automobile value. In the first year of ownership, the rate of $25 per $1,000 is assessed on 90% of the value of the vehicle; in year two, it is 60%; in year three, it is 40%; in year four, it is 25%; and in year five and thereafter, it is 10%. The actual billings are prepared by the Registry of Motor Vehicles (RMV) and then turned over to the Town for printing, distribution, and collection. The MVE tax is the Town's largest local receipt source and is expected to generate $6.3 million in FY21, an amount that is $122,853 (2.0%) above the FY20 budgeted amount.

Local Option Taxes

This category of local receipts consists of the Lodging Excise Tax, the Meals Excise Tax, and Recreational Marijuana Tax. These three revenue sources are made available to Massachusetts municipalities via local option, which, in Brookline, requires a vote of Town Meeting to enact. The Lodging Excise Tax was first adopted in 1985, the Meals Excise Tax was first adopted in 2009, and Recreational Marijuana Excise Tax was adopted in 2018.

LODGING EXCISE TAX


In 1985, legislation was enacted that enabled communities to impose a local option excise of up to 4% on gross receipts from room rentals of hotels and motels, in addition to the state excise of 5.7%. Brookline adopted the local option excise tax, at 4%, by a vote of Town Meeting in November, 1985. In 2009, as part of the FY10 State budget, cities and towns were authorized to increase the local option excise tax on room occupancies from a maximum of 4% to 6%. In August, 2009, Town Meeting increased the excise tax to 6%, which took effect on October 1, 2009. In FY21, this revenue source is expected to generate $2.3 million, an increase of $289,882 (14.5%) from the FY20 budgeted amount.

MEALS EXCISE TAX


As part of the FY10 State budget, the meals tax was increased statewide by 1.25 percentage points (from 5% to 6.25%). In addition, municipalities were provided the local option to increase meals taxes by another 0.75 percentage points. In August, 2009, Town Meeting adopted the 0.75% local meals tax, effective October 1, 2009. In FY21, this revenue source is expected to generate $1.1 million, which represents a $21,755 (2%) increase.

MARIJUANA EXCISE TAX


In November, 2016, voters of the Commonwealth approved a law legalizing and regulating the cultivation, manufacture, processing, distribution, sale, possession, testing and use of recreational marijuana, which was amended by the legislature in July 2017. The local adoption statute permits a municipality to impose a sales tax of up to 3% on local sales of marijuana and marijuana products by marijuana retailers operating within the community. Town Meeting adopted this local option in May, 2018. Town Meeting also adopted the state’s minimum cap necessary to avoid a Town-wide referendum for Marijuana Retailers at 20% of the number of package store licenses issued in the Town. In FY21 this revenue source is projected to generate $1.85M.

Refuse Fee

For FY21, the Refuse Fee reflects a recommended increase to the Hybrid PAYT (H-PAYT) Program. While the overall program has been a success the town subsidy has increased over the past few years. The recommended increase would bring the General Fund subsidy back to 25% as shown in the chart. Variable sized wheeled carts of 35, 65 and 95 gallon capacity are available for residents to choose from at $230, $304, and $376 respectively per year. This should generate $3,598,654 which represents a $748,654 (26.3%) increase from the FY20 budget amount.


The Residential Refuse Fee was first instituted in FY89 when the Town was faced with a 300% increase in refuse disposal costs. The Proposition 2 ½ override of 1994 included restoring a portion of the fee back to the tax levy. The amount of $460,000 was added to the override and reduced from refuse fee revenue, resulting in a fee reduction from $200 to $165. The fee was then increased to $200 in FY08 as part of a budget balancing plan to close a $3.2 million deficit. The fee was then changed as part of the implementation of the new H-PAYT program in FY2018. The fee revenue covers approximately 75% of the service costs, as shown in the below left graph.


The Town relies on the revenue generated by the refuse fee to offset a portion of the total costs of solid waste collection and disposal, recycling collection and materials processing and yard waste collection and disposal. Over the past decade the cost recovery through the user fee has ranged from a low of 66% to a high of 79%. Due to dramatic increases in recycling processing caused by the loss of the Chinese markets for recycled materials, it is anticipated that the refuse fee cost recovery for this fiscal year (FY2020) will drop from 73% to 68%. Adoption of the new rates will restore the cost recovery of the Sanitation Program to previously accepted levels and provide the Town with the additional revenue needed to fund cost increases for the additional recycling processing costs and to fund the provisions of new contract extensions. As recycling costs hopefully decrease in the next few years, as new markets open, the cost recovery rate will increase but still remain below a comfortable 80%.



Licenses and Permits

The majority of the revenue from Licenses and Permits is derived from fire prevention permits, liquor licenses, dog licenses, and licenses from a variety of food establishments. For FY21, revenues from this category are expected to total $1.18 million, which is a $10,000 (0.9%) increase from FY20.



Parking and Court Fines

Parking and Court Fines are the third largest local receipt of the Town. Approximately 85% of the revenue is derived from parking tickets for expired meters, violation of the Town's overnight parking ban, and violation of 2-hour parking restrictions. In September of 2002, the Select Board increased the fines for certain parking violations, including doubling the Overnight Parking fine from $15 to $30 and increasing the fine for expired meters from $15 to $25. This was made possible by the passage of Home Rule legislation, approved by the 2001 Annual Town Meeting and signed into law in November, 2001, that allowed the Select Board to raise parking violations to a maximum of $50. In March, 2007 and July, 2007, the Select Board further revised the schedule by adopting additional fine increases, including doubling the fine for violating the 2-hour parking rule from $15 to $30 and increasing the late fee from $10 to $15. The FY21 estimate of $3.3 million reflects a level funding from the FY20 budget.


The Town has recently implemented pay-by-cell technology and rolled out credit card enabled meters, which have made compliance easier and contributed to a decline in issuance. There has been a decrease in issuance since the FY02 peak, when 204,000 tickets were issued. Since then, the number of tickets written has dropped to approximately 115,000 in FY19. This represents a decrease of 44% since the peak in FY02 and a 28% decline since FY08.



General Government

Revenues derived from this category are expected to increase $753,662 (16.5%) from the FY20 budgeted amount, due primarily to an increase in the Host Community Agreement revenue.


As shown in the graph to the right, Building Permit collections are a large revenue source and are quite volatile. The increase in FY18 was largely due to the permits filed for 2 Brookline Place, filed at the end of the year. The increase in FY17 was due to projects like the BU theater and the new Target on Commonwealth Avenue. Damage/Legal Recovery revenue results from the receipt of reimbursements for storms or from certain legal actions undertaken by the Town. The amounts collected vary greatly year-to-year because they are derived from unpredictable events that are the basis for the Town's recoveries. The estimate is level funded at $10,000. Town Clerk Fees include fees for records and certified copies and the budget for those are level-funded at $90,000. The budget for Collector's Fees, which consist primarily of Municipal Lien Certificates (MLC's) and Tailings, is reduced by $255,737 due to a one-time adjustment made in FY20 related to the conversion of the Newbury College site to a taxable site. Plan Design Review fees are charged by the Building Department when a project requires approval from the Zoning Board of Appeals (ZBA). That revenue source is level-funded at $25,000.


The Payments from the two companies that have built Distributed Antenna Systems (DAS) in town are expected to total $100,000 in FY21. The All Others category is comprised of Community Host payment from the Registered Marijuana Dispensary (RMD), rental payment from the Fallon Ambulance contract, Zoning Board of Appeals fees, fees for copying documents of various departments, and many one-time reimbursements for miscellaneous expenditures.


Interest Income

Interest Income is comprised of revenue from two sources: interest penalties on delinquent property taxes and fees and monies earned on the Town's available cash. The Town Treasurer regularly invests any cash not required for current disbursements and the amount of investment income earned in any given year is dependent upon a number of variables, the most important of which are available cash balances, anticipated cash flows, cash management policies and practices, and market interest rates. Investment income accounted for only 46% of the interest income earned in FY20, a significant change from the 62% it represented in FY09.


The estimate for interest earned on investments for FY21 is increased to $458,483 (2.5%). This reflects an incredible $2.3 million (84%) decrease from the FY07 actual. The large decrease is the result of actions taken by the Federal Reserve Bank to help improve the nation's economy. For historical context, between January, 2001 and June, 2003, the Federal Reserve lowered the Federal Funds Rate 13 times, from 6.5% to 1%. Since funds available for investment in FY04 were earning only approximately 1%, actual earnings were well below the levels realized during FY's 00-02. From FY00 to FY04, there was a downturn of $2.6 million, or 78%. Between June, 2003 and June, 2006, the Federal Reserve increased rates 17 times, bringing the rate to 5.25%. The Town's earnings increased in conjunction with those actions.


The rate stayed at 5.25% until September, 2007, when the rate was dropped 50 basis points to 4.75%. Since then, it has been lowered nine more times to virtually 0%. This included an extraordinary week in late-January, 2008 when the rate dropped 75 basis points on January 22 and another 50 basis points on January 30. With such a dramatically reduced rate of return, the Town cannot expect to earn as much as it did during the FY07 - FY09 period. The $458,483 estimate continues to reflect the current projection. The two graphs below show the changes in the Federal Funds rate (left) and the historical Investment Income earnings (right).




Payment In Lieu of Taxes

This category of Local Receipts consists of payments made by corporations that have entered into a State authorized Chapter 121A agreements and payments made in lieu of taxes (known as "PILOTs") by tax-exempt institutions.


In 1945, the Massachusetts General Court approved legislation that allowed cities and towns to enter into contracts with certain corporations in order to encourage development considered to be in the public interest. The corporations formed to carry out those projects are taxed as Urban Redevelopment corporations under Chapter 121A of the General Laws. Urban Redevelopment corporations pay an excise to the Commonwealth in lieu of a local property tax imposed by a city or town and in lieu of the general corporate excise. The Urban Redevelopment excise is applied by the sum of: 5% of gross income for the preceding calendar year and $10 per thousand upon the fair cash value of real and tangible personal property as determined by the assessors. The amount of the fair cash value can be agreed upon within the provisions of section 6A of the chapter. A tax supplement payment agreement made directly to the town is also permitted. All 121A excise amounts collected by the Commissioner of Revenue are distributed back to cities and towns within the fiscal year. In FY17, the Town’s remaining Ch. 121A agreement: 55 Village Way converted into property tax.


PILOTs are agreements the Select Board has entered into with non-profits in Brookline, the purpose of which is to help cover a portion of the cost of public safety and public works services. They are estimated to yield $1,580,719 for FY21, an increase of $570,210 (56.4%) from FY20 budgeted amounts, due primarily to a new agreement with Brigham and Women's hospital and the continuation of the agreement with Boston University.



Departmental and Other

All other local receipt sources combined are expected to total $8.44 million, an amount that is $791,642 (10.4%) more than the FY20 budget primarily due to a recommended increase the rate for parking meters. A summary of the items in this category are as follows:


- Public Safety Fees - these include Towing Fees and Firearms Licenses and are level-funded at $62,000.


- Parking Meter Receipts- are increased by $750,000 (14.3%), based on the anticipated rate increase for parking at a meter from $1.25/hr to $1.50/hr.


- Health and Sanitation - these fees, which include Tobacco and Asbestos Fees, are collected by the Health Department. They are increased by $5,500 (12.4%)


- Public Works Fees - these consist primarily of street cutting permits and are increased by $3,000 (3.9%) to $80,000.


- On-Line Parking Ticket Convenience Fee - this was derived from the $1.99 convenience fee charged to users of the On-Line Parking Ticket Payment application. (The fee was added to the fine amount in an effort to fully recover the costs of the application.) This is eliminated in FY21 in anticipation of the vendor charging for these expenses directly (there is a corresponding reduction in the Police Department as a result).


- Parking Fees - these fees include revenues from various parking permits, including the residential and commercial permit parking programs and municipal parking space rentals. They are anticipated to increase by $90,000 based on recommended fee increases proposed by the Department of Pubic Works.


- Medicaid Reimbursement (Schools) - this is the Medicaid reimbursement for medical services provided to qualified Brookline special education students. It is increased $97,182 (15.3%) to $731,678.


- Library - these consist of overdue fines and miscellaneous fees and are level-funded at $80,000.


- Detail Surcharge - this represents the 10% surcharge imposed on private police detail rates, the maximum percentage allowed under Massachusetts General Law, Chapter 44, Section 53C. It is level-funded at $200,000.


- Cable Television Franchise Fee - this is a 3% tax on the gross receipts of the local cable television companies. It is reduced by $50,000 to $550,000.


- Pension Reimbursement - this includes the annual reimbursement from the State for cost of living adjustments (COLA's) for Brookline's non-contributory retirees. It is level-funded at $3,000.