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Posted on May 1, 2019 at 4:31 PM by Rita Boland
In the past year, we’ve learned that the Board of Education will be proposing a long term capital maintenance plan estimated initially at $100 million over the next 14 years. Recent discussions have indicated that it could be much higher. How do we deal with expenditures like this, in addition to other Town Facility’s needs, without greatly increasing taxes? The first thing we need to do is develop a plan that will guarantee the Town’s investments in Capital Assets are maintained and preserved.
We should look at our annual Debt Service and our Annual pay-as-you-go financing as one stream that invests in our Capital Assets and separates the Operational Budget from the Capital Budget. This is will ensure that our operating budget will not affect or be affected by our capital budget.
Ideally, parameters and guidance would be established in order to assist the Town in making decisions for its capital spending. These parameters would develop a target % that would be spent annually on debt service and pay-as you-go financing.
As both debt service and pay as you go fluctuate in the future, the capital funding as a whole will remain consistent. This will eliminate large peaks and valleys in our Budget and Mill Rate and will help support a long range financial plan.
We have reached out to our Bond Advisor and he is supportive of this approach. He added that the bond rating agencies view debt/capital regulations as a demonstration of good financial management. Additionally, rating agencies prefer that official policies are in place to provide transparency and ensure consistency across varying terms of office and changes in elected officials.
I recommend that the BOF establish written guidance regarding our capital funding so that we can continue improving our Town, while keeping our taxes predictable.
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