As the budget committee conducts its hearings, we are learning that the town does not have the cash reserves to cover the large capital expenditures that will be needed over the next 5 to 10 years. Some are estimating that it will take at least a decade before the town can get back on a solid financial footing by the time we pay for needed capital improvements and build a reserve to cover future needs. However, we need to do a detailed analysis to determine the true extent of our financial situation.
Like most of us, the town has been focused on the short-term, but it is clear now that we must also develop a long-term plan. The Planning Committee is developing a Master Plan that will contain both short-term and long-term goals and objectives, but the town needs to coordinate the activities of all the departments and commissions in order to implement the plan. Implementing the plan will be difficult because we currently do not have the reserves to meet up coming needs, and it will be difficult to raise taxes or find new revenues.
The town will need to establish priorities based on need. This process would be difficult under normal circumstances, but it will be more difficult because the town's departments and commissions are not coordinating their activities. We have to realize that decisions made by one department can have an impact on other departments and the town. For example, if the Water and Sewer Department needs to spend $2.5M over the next 5 years to replace equipment, the town will have to borrow money to cover the cost. We will have to raise taxes, find new revenues, or cut services. But, what if during the same period, the town has to borrow money to repair roads, buy new equipment for the transfer station, or repair or build facilities?
Planning may not make these problems go away, especially in the short term. But, it can help us prepare to deal more effectively with them, and it can help us minimize the cost. Planning can also help us get back on a solid financial footing in the future. Our Selectmen and Commissioners can help by working together and making their financial situation transparent to the public. The public can help by taking time to understand the situation and participating in the planning process. We can also help by taking care of our own responsibilities and our relationships with our neighbors rather than burdening the town. Working together to solve the big issues will help resolve the smaller ones.
THE WATER AND SEWER DEPARTMENT IS FUNDED BY REVENUE FROM RATES NOT TAX DOLLARS. THE TOWN DEPARTMENTS ARE FUNDED BY TAX DOLLARS ONLY. THE UTILITIES HAVE ALWAYS HELD OPEN PUBLIC MEETINGS AND HAVE ALWAYS PROVIDED ANY FINANCIAL INFORMATION REQUESTED IN A TIMELY MANNER.
ReplyDeleteThis is true, at least to a certain extent. The Electric Department and Water and Sewer are funded by revenues from rates. Water and Sewer also generates revenue from dumping. Both departments hold open meetings and provide financial reports; however, the reports do not always tell the full story of how the departments actually operate. For example, both departments claim depreciation in their budgets but do not actually put this money aside for capital replacement. Instead, they use this money to operate their departments and keep rates the same. The result is that there is not enough money in reserve to cover anticipated equipment replacement. Water and Sewer is facing replacing $2.5 million in equipment over the next 5 five years. They have $500K in cash, but they are using this money to make up for approximately $10,000 in losses per month, so that over the next 5 years that cash will be gone unless the department raises rates substantially. Who will pay the $2.5 million? It is very likely that tax payers will have to pay this bill since rates will not cover this cost. This includes tax payers who do not use water or sewer. Water and Sewer is planning a new Receiving Station that will hopefully generate enough revenue to cover its operating costs and depreciation, but tax payers will have to fund the Receiving Station and may have to fund equipment replacement if the Receiving does not generate enough revenue.
ReplyDeleteWhen the budget committee released the figures from Water and Sewer, the news came as surprise to the Select Board. The town is also facing financial problems because it has not enough money in reserve to cover equipment replacement, facilities repair, and road repair. Who will have to pay both bills? Tax payers. Not only will we have to raise taxes, we will have to raise rates, and take out long term loans during a time of economic hardship. If the town, the Electric Department, and Water and Sewer worked together on long term planning, established priorities, looked at their budgets together rather than separately they might have spared tax payers and rate payers at least some of the burden they are now facing.