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Tammy, an NHMA presenter, tells Wolfeboro Budget Committee how fund balance and state law shape local budgets
Summary
Tammy (NHMA) told the Wolfeboro Budget Committee that New Hampshire law and Department of Revenue Administration oversight constrain municipal spending, described lawful uses and GASB categories of fund balance, and recommended maintaining an unassigned fund balance in roughly the 5%–17% range to protect cash flow and credit ratings.
Tammy, speaking as the presenter from NHMA, told the Wolfeboro Budget Committee that New Hampshire statutes and Department of Revenue Administration (DRA) oversight strictly limit what towns can do with municipal funds and warrant articles. "No spending without an appropriation," she said, stressing that local governments may act only when state law authorizes them.
She walked members through fund-balance concepts under GASB 54, distinguishing nonspendable, restricted/committed, assigned and unassigned categories and explaining why unassigned fund balance is not simply "cash in the bank." Tammy said there are three lawful ways a town can use unassigned fund balance: a legislative vote at deliberative session, emergency spending approved by DRA, or a governing-body action to offset taxes. "No means no," she added when describing how a deliberative session can zero out a warrant article for a single year.
Tammy cited guidance from national finance officers and DRA that recommends keeping a town operating fund balance roughly between 5% and 17% of gross appropriations (the upper figure equates to about two months of operating expense). She said the reserve helps avoid short-term borrowing, steady the tax rate, and preserve credit strength for better bond terms. "If our fund balance is high, there's a strong correlation to the cash to pay bills," she said.
The presenter also warned that DRA can disallow improper or illegal warrant articles and that emergency fund uses require DRA approval: "Only DRA can make it" in an emergency spending situation, she told the committee. She invoked RSA 32 and related sections of state law while explaining that voter petitions and petitioned warrant articles go to the legislative body regardless of a budget-committee recommendation.
Tammy closed by noting practical implications for Wolfeboro: smaller municipalities often carry larger fund-balance percentages; federal grantors increasingly require reserves for grant-funded projects; and policy should state how the town returns to the desired fund-balance range if it falls outside it. The presentation concluded with an invitation for follow-up questions and a reminder to consult town counsel on legal questions Tammy flagged as outside her role as a finance presenter.
