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Town council adopts FY 2025-26 budget after debate on use of fund balance and transfers
Summary
After a lengthy public hearing and discussion, the South Kingstown Town Council approved the town's FY 2025-26 final budget, including amendments to reflect updated health-care costs and revised bond anticipation assumptions; council debated but declined to increase use of undesignated fund balance beyond amounts already proposed.
South Kingstown's Town Council approved the final fiscal year 2025-26 budget after a public hearing that included debate over several late amendments, health-care cost adjustments and whether to increase the one-time use of the town's undesignated fund balance to reduce the tax rate.
Finance Director Brian (presenting for the manager) summarized four technical amendments: an increase to employee health and dental costs (total townwide impact about $138,000 across all funds, net $46,502 to the general fund after an available trust credit), an addition of previously omitted operating-line items (professional services and regional planning dues), an adjustment in the debt-service transfer related to a reduced first-year bond-anticipation note borrow ($61 million originally projected, revised to $55 million, lowering next-year interest by about $75,000), and a projected net reduction in the tax levy tied to anticipated post-certification net additions to the assessment roll.
Council members extensively debated whether to increase the proposed use of undesignated fund balance to reduce the tax rate. One councilor proposed using an additional $750,000 from the fund balance to lower the levy; proponents linked the request to community affordability concerns and argued the town's fund balance exceeded typical best-practice targets. Opponents cautioned that reducing the fund balance ahead of a rating call with Moody's could risk the town's bond rating and that future school-project borrowing and interest-rate uncertainty counsel a more conservative approach.
After discussion the council declined to add the proposed additional use of fund balance. Council members did approve the amendments described by the finance director and moved to adopt the amended final budget. The council vote to approve the final budget passed unanimously.
Key figures and context: the amended budget projects a townwide tax rate of about $8.98 per $1,000 assessed value (a modest change from earlier drafts), incorporates higher health and dental premiums, and adjusts the debt-service schedule based on a lowered year-1 bond anticipation note projection of $55 million. The finance director said the town remains in a strong fund-balance position (approximately 18.4% of operating revenues in the most recent audit) but recommended caution against further drawdowns ahead of planned multi-year debt increases.
Why it matters: the budget funds town operations, funds planned capital transfers (including school project borrowing), and sets the tax rate for the coming year. The council's decision to keep its proposed fund-balance usage unchanged preserves a larger reserve as the town moves into a high-debt period for the school project.
What happens next: the budget is adopted; the council will continue to monitor grant opportunities and the financing timetable for the high school project. Council members asked staff to return with routine quarterly financial reports and to provide additional materials for the upcoming Moody's rating call.
