Finance director: revenues lag timing of property tax bills; board discusses formal fund-balance policy

Cheryl, the town’s finance director, briefed the select board on Jan. 28 on the fiscal year midpoint financial results and a proposed fund-balance policy.

Cheryl told the board the quarterly report covers October through December 2024 and that the departments use a 50% benchmark for both revenues and expenditures at midyear. She said revenues were a little below that 50% benchmark in part because property tax bills went out later than normal, which also reduced interest income for the month. Expenditures were generally under budget, with the exceptions of insurance (annual premiums paid at the start of the year) and legal services, which were ahead of expectations.

The board then discussed a proposed fund-balance policy drafted at a select-board request. Members said a formal policy should explain the factors that influence how much the town holds (disaster exposure, revenue predictability, bond rating, one-time outlays) and recommended adopting a percentage range rather than a fixed dollar amount so the policy scales with changing budgets and assessments. Members cited guidance from the state DRA and the Government Finance Officers Association (GFOA) as useful references; attendees discussed GFOA’s rough recommendation of about two months of general fund operating revenues as one way to think about a reserve.

Cheryl and other staff agreed to provide more concrete examples and calculations — including the effect of different percentage targets and the mechanics of applying unassigned fund balance in the annual tax-rate setting — and to circulate revised language for the board and the selectmen who requested the policy. The board did not adopt a final fund-balance policy that night.

Ending: Board members asked for more detail and examples, and staff said they will prepare revised policy language and updated numbers for a future meeting and for the public hearing on the budget.