Finance Committee Meeting Minutes 3/3/21

Finance Committee Meeting   March 3, 2021  @ 4PM

Jon Sylbert, Michele Miller, and Rebecca Wolin present

Agenda items to be discussed:
The finance committee will be discussing
the 2021/2022 budget to be presented at town meeting,
the warrants that have been submitted for inclusion in the budget,
approving minutes of past meetings

Jon presented a letter he wanted the finance committee to send to Fire Company regarding not filing their 990 and/or filing the wrong form.  Jon also read his letter to the select board to be sent on the feelings of the Finance Committee regarding the Fire Company.

Rebecca made a motion was made to send the letter, Jon seconded the letter, Michele voted no  Motion passed  see letters sent below the minutes

Jon presented the tax levy analysis.  This will be presented at the joint selectboard meeting later.  Rebecca made a motion to accept the tax levy analysis to present to the selectboard, Michele second, Motion passed

Meeting Adjourned at 5PM so that the joint meeting could start.

See all attachments below

March 3, 2021 

Shawn Tryon, President 

Monterey Fire Company, Ltd. 

Re: Noncompliance regarding request for public inspection of returns Dear Shawn Tryon, 

On November 4 and 5, 2020, Rebecca Wolin of the Finance Committee requested copies  of the Monterey Fire Company, Ltd.’s tax filings for the last 10 years on the Committee’s  behalf. (See attached emails.) 

She received no response. 

On November 30, 2020, Ms. Wolin again requested the Monterey Fire Company, Ltd.  send the last 10 years of the charity’s 990 filings. (See attached email.) 

She received no response. 

The Monterey Fire Company, Ltd. has not complied with the IRS “Taxpayer Bill of  Rights 2” regulations. The IRS regulations state:  

A tax-exempt organization must make the applicable documents available for  public inspection at its principal, regional, or district offices during regular  business hours.  

There are penalties for charities which fail to comply with requests for public inspection  of its annual information returns:  

Should the tax-exempt organization or its agent fail to provide the documents as  required under IRC 6104(d), the responsible person of the tax-exempt  organization may be liable for penalties pursuant to three provisions, IRC  6652(c)(1)(C) and (D), failure to allow public inspection of annual returns and  exemption applications, and IRC 6685, willful failure to allow public inspection  of annual returns and exemption applications. See Regs. 301.6104(d)- 3(d)(1)(iii)  and (f)(3), and Announcement 99-62, Internal Revenue Bulletin 1999-25.  

Please make the requested documents available as soon as possible. They should include  the Monterey Fire Company, Ltd.’s 2019 tax forms. 

Thank you, 

Monterey Finance Committee

On 11/4/20, 4:46 PM, "Rebecca Wolin" <rwolin320@gmail.com> wrote: 

Hi Shawn 

As the finance committee is gearing up for next years budget can the fire company  please send me the last 10 years of your 990. As a non profit 501c3 who receives a  large donation from the town we need to do our due diligence prior to this years budget  meeting. 

If you do not have access to a file share program I can always drop off a memory stick  at the fire company 

Thank you in advance for help with this matter. If you have questions please give me a  call. 

Rebecca 

Sent from my iPad 

From: Rebecca Wolin <rwolin320@gmail.com> 

Date: Thursday, November 5, 2020 at 2:33 PM 

To: "Shawn Tryon, Dir of Ops" <dpw1@montereyma.gov> 

Cc: Jon Sylbert <jons@montereyma.gov>, Michele Miller <michele@bolagranola.com> Subject: Re: 990 

In my last email I forgot to add that we would like to see your financial  statements as well for the last 10 years. 

As you are aware as a 501C you have to furnish this information to anyone  who asks. As I said before if you need me to give you a portable drive stick  or if you would like me to just scan them from your office I can do that as  well. I have enough time to take off this month, so please let me know at  your earliest convenience when I will be able to come to the fire house and  pick up the requested documents. 

Hope all is well with you 

Rebecca

From: Rebecca Wolin <rwolin320@gmail.com> 

Date: Monday, November 30, 2020 at 9:14 AM 

To: <montereyfirecompany@gmail.com> 

Cc: Jon Sylbert <jons@montereyma.gov>, Michele Miller <michele@bolagranola.com> Subject: Financial statements and tax returns 

Good Morning Shawn and Chris: 

I am not sure who answers these emails. I had emailed you Shawn at the  dpw email address and have not heard back from you. 

I am again requesting from the finance committee copies of your last 10  years of 990's and financial statements that go along with your return. 

As Monterey purchases your services and donates funds to you to use as  you wish every year, the finance committee would like to see your  informational returns and statements. 

Due to covid and the fact that if I want to see my daughter the State of MA  requires that I need to reduce my contact with people especially indoors, I  will not be able to go to the fire company to review these records. Is it  possible for you if you have these digitally if you could email them to  me. As a finance director for a non profit we have this information digitally  from our CPA firm. I don't know if the copier in town hall scans but that  could be another option. 

Hope you all had a wonderful Thanksgiving. 

Rebecca

March 3, 2021 

Analysis of the Federal and State tax filings of the Monterey Fire Company, Ltd., and the position of the Finance Committee on appropriations to the charity 

Summary 

The Monterey Fire Company, Ltd. is a 501(c)(3) charity doing business in Monterey,  Massachusetts. It owns two properties: a firehouse, assessed at $668,800, and a pavilion,  assessed at $340,100. The total assessed value of these properties is $1,008,900. In  figuring their annual tax returns, charities with gross receipts less than $200,000 and total  assets less than $500,000 may file form 900-EZ. If either amount is over these limits,  form 990 must be filed. The Fire Company must file form 990. Charities in Massachusetts must also file FormPC and an Annual Report. This is required for all  nonprofits in order to maintain their charitable status in good standing. 

Between the years 2009 and 2017, the Fire Company filed the wrong Federal tax forms.  They filed a 990-EZ, and on p. 1, Part II, line 23, Land and Buildings, the amount listed  was almost always $0. (It was listed at $8,232 in 2009 and $46,278 in 2010.) So not only  did the Fire Company use the wrong tax form, they omitted declaring the two properties  they owned. 

In 2018, the Monterey Fire Company, Ltd. filed the correct form 990, but still did not list  both its properties. 

Moreover, in order for the Monterey Fire Company, Ltd. to qualify for a tax exemption  on their properties under G.L. c. 59, § 5 Clause 3 as a charitable corporation, it must file a  timely, complete and correct Form 3ABC with the Monterey Board of Assessors. 

Between 2009 and 2016, the Fire Company did not file a form 3ABC. The law states that:  

If the organization does not file a timely and complete return, it is not exempt from  taxation for the year. To be a complete, a true copy of the organization’s most recent  annual report to the Public Charities Division of the Office of the Attorney General  (Form PC) must be attached unless the organization is a religious, fraternal or  veteran organization not required to file Form PC. These filing requirements cannot  be waived by the assessors for any reason.  

Nevertheless, in direct contradiction to the law, between 2009 and 2016, the Monterey  Board of Assessors granted the Fire Company an exemption each year. 

For the years 2017 and 2018, the Monterey Fire Company Ltd. submitted incomplete and  incorrect 3ABC forms; they listed only one property they owned, and in the wrong  assessed amount. Again, according to the law, the Monterey Board of Assessors could  not legally grant the Monterey Fire Company Ltd. a tax exemption. But the Board did.

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All charities in Monterey—and in Massachusetts, for that matter—must be treated  equally under the law. How is it possible for at least ten years the Monterey Board of  Assessors has exempted one charity—the Fire Company—in direct contradiction to the  law? 

In addition, the Finance Committee has repeatedly requested the Monterey Fire  Company, Ltd. produce its 2019 forms 990 and PC. The Monterey Fire Company, Ltd.  has not responded to these requests. This is against the law. (See complaint, submitted  separately.) 

Position of the Finance Committee 

The Finance Committee, which is responsible for protecting the interests of the taxpayers  of Monterey, is concerned that the Monterey Fire Company Ltd. has put its nonprofit  status in jeopardy because it is not in compliance with tax filing laws. The Committee  also is concerned that contributions and donations to the Monterey Fire Company Ltd.,  including those made by taxpayers through appropriations on the warrant at town  meetings, may not be properly managed. This is not only a liability to Monterey Fire  Company Ltd., it is a liability to the town and to taxpayers. 

Furthermore, the Finance Committee is concerned that the Monterey Board of Assessors  has broken the law for at least 10 years by granting the Monterey Fire Company, Ltd. exemptions without filings or proper filings. This is an additional liability to the town and  to taxpayers. If the Monterey Fire Company, Ltd. is out of compliance with the  Massachusetts Department of Revenue, it may have to pay back taxes and penalties for  all the years it did not file a form 3ABC or filed an incorrect or incomplete form 3ABC.  This expense cannot be covered by the tax dollars of Monterey taxpayers. 

For these reasons, the Finance Committee cannot recommend appropriating funds to the  Monterey Fire Company, Ltd. while it is out of compliance with the Charities Division of  the AG’s office and at risk of a tax liability with the Massachusetts Department of  Revenue. 

In order for the town to have a legal, risk-free, and transparent association with the  Monterey Fire Company, Ltd., the Company must first get its house in order.  

Signed,  

Monterey Finance Committee

March 3, 2021 

Analysis of proposed FY22 budget impact on FY22 tax levy* 

*2^nd revision 

At the 2/27/21 joint meeting between the Finance Committee and the Select Board, the Select Board made the following recommendations to the special articles: 

Add $11,000 to Stabilization Fund Approp 

Keep $20,000 in Bridges 

Keep $35,000 in FD Stab 

Keep $30,000 in Monterey Fire Company, Ltd.* capital 

Raise Ambulance to $10,000 from $5,000 

Add $6,500 to Community Center Lighting 

(* Please note, the line item “Fire Department Capital Improvements/Expenses” is mislabeled. The  appropriation is not for the Fire Department, it is for the charity “Monterey Fire Company, Ltd.”) 

The result of these adjustments proposed last week was to increase total special article requests by  $26,500, from $480,614 to $507,114. 

After the use of $252,241 in free cash and $54,873 in stabilization to offset these special article  requests (a total of $307,114), the result was a reduction in the estimated tax levy of only $66,000  from the previous budget revision of 2/17/21. The estimated tax levy for FY22 was reduced to  $4,171,946, but this still results in an estimated levy increase of 7.08%—or $294 on the Average  Single Family Tax Bill—to $4,453. 

This is still double our target tax levy increase of 3.5%. 

In order to meet our target, we still need to reduce the total tax levy another $139,255 to $4,032,690,  after factoring in a reduction in the estimated educational operating budget of $3,255. 

Revisiting the special articles, reductions can be made as follows: 

1) Remove requested appropriations for stabilization funds: 

Remove $11,000 to Stabilization Fund Approp 

Remove $20,000 in Bridges 

Remove $35,000 in FD Stab 

This recommendation comes with the understanding that committing your entire budget to  expenses leaves nothing for savings. We added nothing to stabilization last year; instead we  spent $1,000,000 of reserves. This is clearly unsustainable. 

2) Remove the $30,000 requested appropriation for the Monterey Fire Company, Ltd. capital  improvements. I explain this in a separate note. (See “Analysis of the Federal and State tax filings of  the Monterey Fire Company, Ltd., and the position of the Finance Committee on appropriations to the  charity.”)

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3) Reduce the ambulance services request back to $5,000 from $10,000. 

4) Remove the $6,500 Community Center Lighting request. This should come out of the revolving  fund, which had a balance of $14,760.61 as of January 25, 2021. This is the purpose of the revolving  fund. There is no justification for making an appropriation. 

These revisions reduce special article requests from $507,114 to $399,614, a savings of $107,500. 

We can further reduce the impact on the tax levy by reallocating the use of free cash that has been  freed up by the above reductions. (See the green cells in the table on p. 3.) This results in the use of  $254,741 in free cash. (See free cash and stabilization balances in the table on p. 3.) 

Plugging the $399,614 in special article requests into our tax levy estimator on the expense side, and  plugging the $309,614 use of free cash and stabilization into the revenue side, we still need to reduce  the budget another $26,000 to meet our target tax levy increase of 3.5%. (See table on p. 4.) 

Three of the largest discretionary operating increases in FY22 budget requests are in the following  line items: 

Fire Dept Compensation, an increase of $22,700, from $94,500 to $117,200 

Highway Operations, an increase of $15,000, from $176,870 to $191,870 

Highway Capital, an increase of $25,000, from $115,000 to $140,000 

Splitting the $26,000 cuts between these will get us to our target tax levy increase of 3.5%. 

Please note: this is not a reduction in the budget for these line items, it is only a reduction in the  increase in the budget request. 

Fire Dept Compensation, lower the requested increase of $22,500 by $5,000 to $17,700 Highway Operations, lower the requested increase of $15,000 by $10,000 to $5,000 Highway Capital, lower the requested increase of $25,000 by $11,000 to $14,000 

This will result in the following budget requests: 

Fire Dept Compensation, add $17,700 for a total of $112,200 

Highway Operations, add $5,000 for a total of $181,870 

Highway Capital, add $11,000 for a total of $129,000 

With these $26,000 in reductions, we have met our target tax levy increase of 3.5%. 

Caveat: if the Fire Department does not win the grant for its Self Contained Breathing Apparatus, the  FY22 tax levy will increase an additional $113,000 to $4,145,690 (a total increase of $249,486), which  will result in an increase in the tax levy of 6.40%, or $266 on the ASFTB and a total ASFTB of $4,425.  In effect, it will nearly double back the tax increase on taxpayers.

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Fund Balances 

free cash green balance $290,415 

Stabilization yellow balance $546,955 

free cash used $202,500 $159,614 $214,614 $252,241 $254,741 stabilization used $68,873 $0 $0 $54,873 $54,873 total free cash & stab. used $271,373 $159,614 $214,614 $307,114 $309,614 free cash remaining $87,915 $130,801 $75,801 $38,174 $35,674 stabilization remaining $478,082 $546,955 $546,955 $492,082 $492,082

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Tax Levy Estimator 

FY21 FY22 FY22 FY22 FY22 

actual initial revised revised TARGET 

request 2/17/22 2/24/21 3/3/21 

Total to be raised $5,524,162 $5,360,967 $5,052,560 $5,079,060 $4,942,305 Total Tax Levy $3,896,204 $4,489,594 $4,237,946 $4,171,946 $4,032,572 Levy increase $593,390 $341,741 $275,741 $136,367 Percent Levy Increase 15.23% 8.77% 7.08% 3.50% 

Table below shows detailed data: 

Comparison of FY21 actual and FY22 estimated budgets and tax  

levy 

Fiscal Year FY21 FY22 FY22 FY22 FY22 actual request revised revised TARGET 

12/30/20 2/17/21 2/23/21 3/3/21 

Appropriations (Expenses) 

Operating budget $4,155,466 $4,321,753 $4,307,846 $4,307,846 $4,278,591 Debt service $326,133 $229,100 $229,100 $229,100 $229,100 Special articles $931,305 $775,114 $480,614 $507,114 $399,614 Subtotal $5,496,419 $5,325,967 $5,017,560 $5,044,060 $4,907,305 Other amounts to be raised $27,743 $35,000 $35,000 $35,000 $35,000 Total to be raised $5,524,162 $5,360,967 $5,052,560 $5,079,060 $4,942,305 

Revenues 

Cherry Sheet $300,138 $300,000 $300,000 $300,000 $300,000 Local receipts $313,000 $300,000 $300,000 $300,000 $300,000 Total cherry and local  

receipts $613,138 $600,000 $600,000 $600,000 $600,000 Free Cash $728,422 $202,500 $214,614 $252,241 $254,741 Stabilization $286,398 $68,873 $0 $54,873 $54,873 Total Free Cash &  

Stabilization $1,014,820 $271,373 $214,614 $307,114 $309,614 Total receipts and revenues $1,627,958 $871,373 $814,614 $907,114 $909,614 

Levy Calculation 

Total Tax Levy $3,896,204 $4,489,594 $4,237,946 $4,171,946 $4,032,690 Levy increase $593,390 $341,741 $275,741 $136,486 Percent levy increase 15.23% 8.77% 7.08% 3.50% Tax Rate 7.27 8.39 

Average Single Family Tax  

Bill $4,159 $4,799  $4,524 $4,453 $4,305 Dollar increase in ASFTB* $633 $365 $294 $146 *revised to reflect actual percent increase from FY21 dollar amount