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Richmond board weighs borrowing, reserves as flood costs push reserves low
Summary
At a Nov. special meeting the Richmond Select Board reviewed FY24 quarter-end finances and the impact of two recent floods, concluding that reimbursements from FEMA and FHWA are substantial but slow. Members debated using reserves versus short-term borrowing to avoid a steep FY26 tax increase and to preserve cash for future storms.
The Richmond Select Board met in a special session to review fourth-quarter FY24 finances and to weigh options for covering sizable flood-related expenses while minimizing next year's tax impact.
Finance Director Connie Bono told the board that interest income outperformed expectations ("we had budgeted 14,000; we made 203,000"), but that extraordinary flood-related costs have consumed much of the town's available reserves. She said the town has paid roughly $1.89 million in 2024 flood expenses to date and is still awaiting multiple reimbursements from federal programs.
Bono outlined the mix of federal reimbursements: much of the July 2023 flood-related work was processed at an initial FEMA reimbursement rate of 75%, with some categories recently adjusted to 90% and additional FHWA funds expected for roadwork such as Hinesburg Road. She cautioned that administrative and state-portions of reimbursements (EA/Z categories) arrive on a multi-year timetable and that timing, not only amount, drives budget risk.
Board members probed the town's accounting presentation and fund structure, with concerns that the current chart of accounts makes departmental totals hard to read. The finance director said auditors require some end-of-year fund movements ("the Auditors require that we move it out of fund 42 and over there") and that multiple spreadsheets feed the presented numbers.
The board focused on the effect of using unassigned and restricted reserves to pay eligible flood costs before reimbursements arrive. Connie presented audited FY24 unassigned balances (~$1.175 million) and the FY25 budget plan that had anticipated using $433,000 of those funds. After accounting for reimbursable flood expenses and timing, the finance presentation showed a material reduction in unassigned reserves and a projected shortfall in the highway fund unless reimbursements or bridging finance arrive.
Select Board members explored two broad paths: (1) use reserves now to fund repairs and accept a larger tax-rate increase in FY26, or (2) pursue short-term borrowing (a bond-bank bridge loan or commercial credit) sized to anticipated reimbursements so the town can smooth taxes and retain cash for future storms. Jim and other members urged staff to test multiple borrowing scenarios (for example, $750,000, $1 million and $1.5 million) and to request preliminary pricing and borrowing-authority requirements from lenders and the Vermont Bond Bank.
Several members stressed timing and eligibility uncertainties: though FEMA reimbursements have historically arrived, the schedule is unpredictable. One member warned that not holding a cash buffer could leave the town unable to act quickly if another storm arrives before reimbursements are collected.
On next steps, board members directed staff to develop cash-flow scenarios, estimate the cost of short-term borrowing, and report back at a near-term meeting (the board discussed scheduling options the week before Thanksgiving). The board also debated presentation options for the municipal budget — whether to submit a consolidated budget or break it into departmental items on the ballot — and generally favored a consolidated presentation to avoid procedural complications.
The meeting ended with the board adjourning after setting follow-up work to refine borrowing scenarios and reserve-use impacts. No formal vote on borrowing or reserve transfers was taken at the special session.
