Orono council calls public hearing after manager warns $1M draw could push fund balance below policy

The Orono Town Council on July 13 voted to call a public hearing on Aug. 10 after Town Manager Clint told the council that spending an additional $1 million from the town’s unassigned fund balance for the proposed public safety building could lower reserves below the minimum threshold and create a short-term negative cash-flow risk.

Clint said the town’s benchmark reserve target is roughly 16 percent of revenues and that the recent audit and close of the fiscal year put the unassigned fund balance at approximately $4.4 million; using another $1 million, he said, would take the town below that benchmark and could force the town to consider a tax anticipation note or a line of credit next August. “The million dollars I’m discussing is the million dollars of fund balance or unassigned fund balance that is going towards the police station construction,” Clint said, noting that drawing that money could require a formal plan to restore reserves.

The public hearing will let staff present comparative analyses of two main options: increase the bond authorization now (add the $1 million to the capital bond issuance) or pursue a short-term borrowing instrument the town could draw only if needed. Clint told the council that bonding the extra $1 million would spread debt service costs over time and produce predictable annual debt payments, while a line of credit or tax anticipation note would only carry interest if drawn but could be costlier if used for months at higher commercial rates.

Councilors raised questions about both fiscal prudence and public transparency. Councilor Jacob said late additions to the bond total can look like last-minute decisions and “erode trust,” arguing that the council should prefer a contingency line if that avoids immediate bonding costs. Other councilors asked staff to present an apples-to-apples comparison of the interest and cash-flow implications at the hearing so voters and the council can weigh tradeoffs.

Council action: the body voted 6–1 to call the Aug. 10 public hearing on the $1 million addition; one councilor opposed calling the hearing. At the hearing staff will present detailed fiscal scenarios, and the council may vote on whether to add the $1 million to the bond authorization, pursue a short-term borrowing option, or adopt another path.

Next steps: the town manager and finance staff will prepare packets comparing the likely rate and annual cost of bonding $1 million versus setting up and using a tax anticipation note or line of credit. The hearing is intended to allow public comment and to give the council the information it requested before deciding the town’s financing approach.