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Select Board debates changing free‑cash distribution to rebuild town stabilizations
Summary
Board members questioned use of unassigned ‘free cash’ to balance budgets and discussed raising the share allocated to stabilization and capital funds after years of transfers reduced reserves; no policy change was voted but members asked for more analysis.
Select Board members spent extensive time discussing the town’s policy for distributing free cash — unspent appropriations and unexpected revenue — and whether the current allocation undermines long‑term savings and capital planning.
A board member reviewed the policy history: in 2019 the policy allocated 50% to working capital; in 2022 the board added an infrastructure stabilization fund and moved to 60%; after advisory committee review in 2023 the allocation was set at 67% reserved for working capital with smaller shares for capital stabilization, infrastructure stabilization, a general stabilization fund and OPEB (retiree health insurance). The current split referenced at the meeting was 67% working capital, 10% capital stabilization, 10% infrastructure stabilization, 8% general stabilization and 5% OPEB.
Speakers warned that relying on free cash to plug recurring budget gaps reduces stabilization balances, lowers investment income that could otherwise finance capital items, and harms long‑term planning. One board member suggested switching to a much higher savings ratio — e.g., a 70/30 or 80/20 split favoring stabilization and capital — to build reserves, earn investment income and reduce the need to use free cash for recurring costs. Others said advisory and public input should be part of any redistribution and noted state guidance and Department of Revenue recommendations against relying on free cash to fund recurring general‑fund expenses.
Board members did not adopt a new formula at the meeting; several asked that the topic return for further study with input from advisory and staff and that the board consider a formal proposal to change distribution percentages.
