Selectmen adopt fund balance policy (8—14%) after CIP review; library AC and cistern noted as funding concerns

Cheryl (Finance Director) presented the towns unaudited year-end figures and led a discussion on a formal fund-balance policy during the Bow Town Board of Selectmen meeting on Sept. 23. The board voted to adopt a policy that sets a minimum unassigned fund-balance threshold and a target range of 8% to 14% of annual revenues.

Cheryl told the board that operating revenues for the past fiscal year were at approximately 93% of estimates and that expenditures were below budget at roughly 95.7% (figures presented as pre-audit). She reported an anticipated surplus in the general fund of about $202,130 (pre-audit) and noted the town's revolving fund balance appeared strong as of June because of summer camp and seasonal revenues.

On the fund-balance policy, the finance director walked the board through comparative guidance and options. The board discussed whether to choose a single percentage or a range. After public discussion, Selectwoman Colby and other members favored a range to provide flexibility for future budgeting and to reflect the town's relatively strong cash position. A motion to adopt a fund-balance policy setting a target range of 8% to 14% of annual appropriations carried in a roll-call manner at the meeting (motion and second recorded in the public minutes).

During the Capital Improvement Program review the town's CIP committee reported an updated and higher cost for a library HVAC/air-handling project: the committee's earlier $90,000 estimate was revised to about $250,000 after updated quotes. The committee recommended that the selectmen and Budget Committee evaluate options and, if needed, designate emergency funding. Cheryl said the library cistern also needs replacement and that the committee recommended taking $29,000 from an emergency fund and $17,000 from the library capital reserve (roughly $46,000 total) to address the problem; the board discussed designating the work as an emergency expenditure.

Why it matters: adopting a formal fund-balance policy provides the town with clearer guidance for tax-rate stabilization, tax-year volatility and capital planning; the unexpected increase in the library HVAC estimate and the cistern repair represent near-term capital pressures that the board will need to fund either from reserves or through the budget process.

Ending: The board adopted the 8% to 14% fund-balance range and instructed staff to return with recommended language for an overlay/tax-rate stabilization approach and with cost estimates for the library HVAC and cistern work for budget follow-up.