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Finance committee hears that delayed budgets and grant reimbursements have cost Bolton interest revenue
Summary
Officials told the finance committee that delayed referendums and reimbursements for state grants have reduced interest income (the town budgets to a 98% collection rate and aims to avoid dropping below a $5,000,000 balance that affects interest), and staff will show committee members signed bank documents in office.
Town finance staff warned that the town lost interest income after the budget delay earlier in the year and that grant-funded projects that are reimbursement-based also reduce funds available to earn interest.
"We lose all of the interest payments when our account drops below $5,000,000," a committee member summarized during discussion of banking arrangements; staff explained some municipal funds are placed in less-liquid state trust accounts that earn higher yields but are not available the same day. Staff said the bank presentation to the Selectmen showed options for maintaining a $3 million or $5 million minimum balance tied to different interest rates; the committee was told a signed agreement exists but that the full agreement contains personally identifiable information and is available for inspection with finance staff.
Members pressed for clearer contractual terms and asked to have the town's banking partner and the auditor available at future meetings to explain how interest and fees are calculated. Committee members also discussed that most state STEAP and LOTSIP grants require the town to spend up front and seek reimbursement, reducing funds available to earn interest while projects are under way.
The committee agreed to review the signed bank documents with finance staff and to invite the auditor and bank representatives for further explanation during the budget season.
