FROM THE TOWN ADMINISTRATOR’S DESK
By Gregory T. Federspiel
Over the last couple of weeks I have discussed options for funding the proposed new elementary school and strategies for funding our capital needs well into the future. This information hopefully will give voters a better sense of how the proposed new elementary school project fits into our other needs as a community and the potential costs associated with going forward with the project. As outlined below, the Town also has a set of guiding fiscal principles that inform our decisions about expenditures.
First, to summarize the earlier articles, funding for the new school will require a new debt exclusion, that is, a tax hike above Proposition 2 ½ limits. If this is the only funding source we utilize, taxpayers can expect a tax increase of about 6.5% once the project is completed. This means the owner of a median home (valued at $735,000) will need to pay an additional $530 a year or about $72 more per $100,000 of assessed property value. It is possible to reduce this new tax impact by various methods including directing some of our non-committed local receipts toward the new debt payments, seeking savings in operational expenses and redirecting the funds towards the bond payments and encouraging new development that results in new taxes while not requiring a host of municipal services. Obviously if we use these alternative funding sources for the school debt they will not be available for other needs.
Our funding strategy for non-school needs aims for no increase in excluded taxation. We do this by capping our amount of excluded taxation at the current level and moving toward a cash basis as old debt is retired. Yearly capital exclusions replace debt exclusions. This will allow us to spend $3 million yearly on capital projects for the next fifteen years and beyond. By the early 2030’s the high school debt will be paid off along with all other non-school debt allowing us the option of issuing new bonds for larger projects in the future.
These specific strategies fit within the larger fiscal guidelines the Selectmen and Finance Committee operate under. The highlights of these guidelines are:
1) Keep operating expenses within the parameters of Proposition 2 ½ (in other words, avoid operating override votes -- we have had three in the past 20 years)
2) Target annual debt payments for both the Town and the School District so as not to exceed 10% of total operating expenses (we currently are at 8.5%; adding the new school project when it is completed in 3 years may put us a few tenths of a percent above 10%)
3) Maintain reserves equal to 10% of total operating expenses (we have exceeded this target with just over 16% in our rainy day accounts – about $2 million more than the target which could be used for one time expenditures)
4) Fund our retiree benefit obligation liabilities with a target date for full funding by 2034 (we are currently on track.)
These four key elements to our fiscal approach coupled with our strategies for funding our capital needs provide an overview of our fiscal position now and into the future Of course, any projections into the future are only as good as the assumption that are made about what might happen. Never-the-less, this information should help guide voters in the decisions about the school project and future budgets.