Yarmouth capital plan and FY26 operating budget: committee urges restraint, flags free cash use

The town's Capital Budget Committee and the town administration presented the town's preliminary five-year capital plan and a FY2026 operating budget overview to the Select Board on Wednesday, warning that the municipal budget faces inflationary wage pressures and that the capital program remains heavily dependent on free cash.

Sandy Fife, chair of the Capital Budget Committee, said the committee used a cloud-based portal to gather departmental requests, applied significance and readiness scoring, and recommended $16,674,497 in project funding for the upcoming annual town meeting. The committee's recommended free cash allocation for FY26 stood at $3.5 million in the draft materials presented to the board.

"We'd like to see departments pursue more state and federal grants," Fife said, noting that free cash should not be used for repeated annual items. The committee recommended raising the capital request threshold from $10,000 to $25,000, developing a rolling-stock replacement plan and a 10-year capital maintenance plan based on a recent facilities assessment.

Town Administrator Bob Rittnauer and Finance Director Jennifer Mullen walked the board through the FY26 operating overview. The town's recommended total budget, including enterprise funds, was $116,237,169, up 3.01% from the prior year. Rittnauer and Mullen said the bulk of budget pressure stems from wages and personnel costs amid higher inflation, while nonproperty-tax local receipts have returned to more normal pre-pandemic trends.

The presentation highlighted the town's effort to maintain an undesignated fund balance (free cash) target in the range that rating agencies expect; Rittnauer said maintaining adequate reserves is critical to long-term fiscal stability. "The amount that we have in undesignated fund balance at all times should never go below 10%," he said, noting the reserve level is a factor in bond ratings. Mullen echoed the need for conservative revenue estimates and said free cash should be used for primarily one-time capital items, not recurring operating expenses.

The recommended budget includes a proposed Proposition 2''' 1/2 override request of $617,726 to add four firefighter/paramedic-EMTs and a second deputy chief to increase minimum staffing and departmental management. Rittnauer said the town funded four of eight planned firefighter positions last year and is proposing the next increment in FY26 to move toward minimum staffing targets. The Select Board and Finance Committee will continue detailed budget deliberations in January and February, with the board and the finance committee launching a joint budget review process.

Select Board members praised improvements to the town's budget documents and the creation of an annual comprehensive financial report but asked administrators to return with clear policy proposals on free cash use and long-term capital maintenance. Several board members said they wanted more public explanation of free cash and reserve policy before any large appropriations are finalized.

The town will continue budget hearings with department heads and the finance committee; the Capital Budget Committee said it will finalize its recommendations and publish full project profiles online ahead of town meeting.