Hamilton Town & School Budgets - A Hamilton Town & School Budgets - A Historical Context.Historical Context.

Is Hamilton Spending Beyond its means?Is Hamilton Spending Beyond its means?

We used to be fiscally conservative. Have We used to be fiscally conservative. Have we gone crazy on town government we gone crazy on town government

spending ?spending ?

Why Pull Together This Data?Why Pull Together This Data?Wanted to answer whether the town can afford the

quality of services we provide.

Wanted to know whether our spending was crazy & disproportionate to our historical patterns and to other town & state norms

How hard should we fight to cut costs vs how hard should we fight to raise revenue?

What long term expense growth rate is practical to for the town to sustain?

Will better facts help us fight for more state reimbursements?

Historical Context is CriticalHistorical Context is Critical Suppose it is announced that Hamilton now has 20 vehicles in the DPW? Should we applaud? Should we cry out for heads to roll? Are we apathetic?

The only way to have a handle on managing our town is to put expenses & revenue in a historical context and to establish ways to evaluate the quality of service we get for our money.

Hamilton Population 1970-2007

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Population (Annual Reports & Census)

Hamilton Population 1970 - 2007Hamilton Population 1970 - 2007

Hamilton School Population Hamilton School Population 1970-20071970-2007

Hamilton School Population 1970-2007

500

700

900

1,100

1,300

1,500

1,700

1,900

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Hamilton Total Assessed Values 1970-2007

5,000

200,005,000

400,005,000

600,005,000

800,005,000

1,000,005,000

1,200,005,000

1,400,005,000

1,600,005,000

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Residential Assessed Values (DOR) Commercial & Industrial Assessed Values (DOR)

Personal Property (DOR) Total Assessed Value (DOR & Assessor's Office)

Homes Built By Year

0

20

40

60

80

100

120

140

160

180

200

2008 2003 1998 1993 1988 1983 1978 1973 1968 1963 1958 1953 1948 1943 1938 1933 1928 1923 1918 1913 1908 1903

Nu

mb

er o

f H

om

es B

uil

t

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Per

cen

t o

f 20

07 H

om

es

# Built % 2008 Res Inventory Built

Existing Housing Stock By Year BuiltExisting Housing Stock By Year Built

We have not added much new residential or commercial

development to our tax base

Frequency of FY 2005 Assessed Values per Assessor's Files

0

50

100

150

200

250

Freq

uenc

y (U

p to

Val

ue in

dica

ted

on X

axi

s)

Year # Sales

% 2008 Res Inventory Traded

% 2008 Res Inventory Traded

Weighted Avg Yrs Tenure Jan 2008

0 2008 0 0.0% 100.0% 0.0% 14.81 2007 9 0.4% 99.6% 0.4%2 2006 169 6.6% 93.0% 7.0%3 2005 151 5.9% 87.1% 12.9%4 2004 184 7.2% 79.9% 20.1%5 2003 150 5.9% 74.0% 26.0%6 2002 124 4.9% 69.1% 30.9%7 2001 111 4.4% 64.8% 35.2%8 2000 96 3.8% 61.0% 39.0%9 1999 93 3.6% 57.4% 42.6%10 1998 126 4.9% 52.5% 47.5%11 1997 103 4.0% 48.4% 51.6%12 1996 99 3.9% 44.5% 55.5%13 1995 54 2.1% 42.4% 57.6%14 1994 84 3.3% 39.1% 60.9%15 1993 65 2.5% 36.6% 63.4%16 1992 76 3.0% 33.6% 66.4%17 1991 58 2.3% 31.3% 68.7%18 1990 42 1.6% 29.7% 70.3%19 1989 41 1.6% 28.1% 71.9%20 1988 49 1.9% 26.1% 73.9%21 1987 44 1.7% 24.4% 75.6%22 1986 58 2.3% 22.1% 77.9%23 1985 39 1.5% 20.6% 79.4%24 1984 46 1.8% 18.8% 81.2%25 1983 29 1.1% 17.7% 82.3%26 1982 25 1.0% 16.7% 83.3%27 1981 29 1.1% 15.6% 84.4%28 1980 15 0.6% 15.0% 85.0%29 1979 37 1.5% 13.5% 86.5%30 1978 38 1.5% 12.0% 88.0%31 1977 30 1.2% 10.9% 89.1%32 1976 22 0.9% 10.0% 90.0%33 1975 23 0.9% 9.1% 90.9%34 1974 14 0.5% 8.5% 91.5%35 1973 18 0.7% 7.8% 92.2%36 1972 25 1.0% 6.9% 93.1%37 1971 16 0.6% 6.2% 93.8%38 1970 17 0.7% 5.6% 94.4%

Analysis of Tenure As of Jan 2008

2007 Assessor’sfile records

date of last sale for each house & provides a

rough approximation

of tenure

Tenure by year last sold

0

20

40

60

80

100

120

140

160

180

200

Num

ber

of H

omes

Sol

d

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Per

cent

of 2

007

Hou

sing

Sto

ck

# Sales % 2008 Res Inventory Traded

Tenure By Last Year SoldTenure By Last Year Sold

Town & School BudgetsTown & School Budgets

Total Town & School Budgets 1986-2008Total Town & School Budgets 1986-2008

School Spending as a Percent of Total Town Budget 1988-2008

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Average Residential Single Family Valuation (DOR)Average Residential Single Family Valuation (DOR)

Hamilton Average Single Family Residential Valuation 1988-2007

5,000

105,000

205,000

305,000

405,000

505,000

605,000

Single Family Average Value (DOR)

Hamilton vs State Single Family Tax Bills 1988-2007

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

State Median Single Family Tax Bill Model #1 Hamilton Single Family Avg Tax Bill

Hamilton State

Avg Single Family Tax Bill (DOR) $6,846. $3,962Appreciation Since 1988 (CAGR) 6.4% 5.1%Appreciation Since 1996 (CAGR) 6.8% 5.2%

Total Town & School Budget as a Total Town & School Budget as a percent of Assessed Valuation percent of Assessed Valuation

1986-20071986-2007Total Town & School Budget as a percent of Assessed

Valuation 1986-2007

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Cherry Sheet Proceeds as a Cherry Sheet Proceeds as a Percent of Total Town Budget Percent of Total Town Budget

1986-20071986-2007

1,424,341,800. Residential Assessed Values (DOR)

55,870,500. Commercial & Industrial Assessed Values (DOR)

9,134,403. Personal Property (DOR)

1,489,346,703. Total Assessed Value (DOR & Assessor's Office)

95.6% % residential

3.8% % residential

Total Assessed Valuation of Hamilton Shopping Center39008 sf

1996 1997 1998 1999 2000 20011,719,490 1,830,000 1,830,000 2,423,900 2,650,600 2,654,400 AV

44 47 47 62 68 68 $ PSF

6.4% 0.0% 32.5% 9.4% 0.1% Annual

6.4% 3.2% 12.1% 11.4% 9.1% CAGR since 1996

2002 2003 2004 2005 2006 20073,282,800 3,693,100 4,083,900 4,335,700 4,452,500 5,441,900 AV

84 95 105 111 114 140 $ PSF

23.7% 12.5% 10.6% 6.2% 2.7% 22.2% Annual11.4% 11.5% 11.4% 10.8% 10.0% 11.0% CAGR since 1996

Consistency Necessary for Consistency Necessary for Proper BenchmarkingProper Benchmarking

• Finance Committee, Treasurer’s Office, Town Clerk & School Committee should meet to standardize data presentation & catagories for proper year-to-year consistency.

• Recommend:– 3 years actual historical data– 1 year current budget– 1 year proposed budget

• Annual Reports should include all financial data from warrants since they are the book of record

• School Data must be included in Annual Reports

A database is importantA database is important

Each department should identify metrics that it thinks are important to provide its service function

(eg # Children in schools; # Police Hours; Miles Roads Plowed, Minutes to Get to Alarm calls)

Track & report those metrics to Selectmen/Public to keep and gain public confidence.

Comparative Growth RatesComparative Growth RatesAverage Residential Single Family Valuation

8.1% Appreciation Since 1988 (CAGR)

9.3% Appreciation Since 1996 (CAGR)

Median Household Income

3.1% Appreciation Since 1989 (CAGR)

Single Family Tax Bill (DOR)6.4% Tax Bill CAGR Increase Since 1988

6.8% Tax Bill Since 1996 (CAGR)

Town Government (excluding debt P&I)

6.0% Town Only CAGR Since 1986

5.7% Town Only CAGR Since 1996

Hamilton Share of Net School Budget

6.6% School Only CAGR Since 1986

7.2% School Only CAGR Since 1996

12.0% SPED CAGR Since 1996

State Personal Income Tax Growth to 2005

4.3% Appreciation Since 1996 (CAGR)

CPI Index All Urban Consumers - MetBoston3.4% CAGR Increase Since 19883.0% CAGR Since 1996

Petroleum & Petroleum Products - BLS

9.0% CAGR Increase Since 198812.2% CAGR Since 1996 (CAGR)

Private Health Benefits Index -BLI

6.9% CAGR Since 1986

6.4% CAGR Since 1996

Employment Cost Index Private Northeast -BLS

3.4% CAGR Since 2001

Is Hamilton Spending Beyond Its Means?Is Hamilton Spending Beyond Its Means?•We have the assessed valuation to support town and school budgets at ~ current levels

•The ratio of our spending to our assets has not changed much in 20+ years.

•Our income growth is likely around 3-4% CAGR

•Not all residents experience same income growth so that thay can afford tax increases.

Not spending beyond our means but that Not spending beyond our means but that does not mean everyone can afford 6.8% does not mean everyone can afford 6.8%

tax increases with income ~3-4%tax increases with income ~3-4%

Is Hamilton Spending Beyond Its Means?Is Hamilton Spending Beyond Its Means?

•Historically our debt level has been negligible for a town our size, but the debt is up slightly.

•Further research would indicate whether we have debt capacity - but should not be used to pay for operating expenses.

We used to be fiscally conservative. Have we We used to be fiscally conservative. Have we gone crazy on town government spending ?gone crazy on town government spending ?

•Town spending rates have been around 5.8 - 6.0% •School spending rates have been around 6.6 -7.2%•Very similar growth rates.•Percent allocated to schools - constant for decades

•Consolidated spending ~6.8% CAGR (since 1986) is only slightly higher than state CAGR 5.2% but we demand better services.

Not Gone CrazyNot Gone Crazy

What Growth Rates Are Possible?What Growth Rates Are Possible?

•Hard to imagine reducing long term growth rate to match state average of 5.2%.•We can hit the brakes in any one year, but too much of the budget expense catagories are out of our control.•Find sources of income that do not demand services •Commercial development will help moderate the burden to residential taxpayers - but will not generate an enormous amount of new revenue. Any bit helps.•Senior housing would also help on the margin.