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As we enter the seventh month of fiscal year 2014, here is an update on the Town’s financial outlook, including projected reserve funds. At the end of this message, I have included some graphs that will help you better visualize the Town’s current financial situation.
The Town is on track to receive approximately $4.3 million in revenue this year, while we expect to spend approximately $3.5 million from the operating and capital budgets. At the end of the year, we expect to realize a surplus of approximately $800,000. This amount will supplement the Town’s general fund balance, which is projected to be about $9 million on June 30, 2014. As the Town reduced its property tax to zero in FY14, it no longer receives any monies from this tax. The Town’s primary revenue sources now consist of a portion of residents’ state income tax, which is based on a formula established by state law, as well as highway user revenues. The Town has no control over these distributions.
As the Council considers ways to use available Town reserves for new or expanded programs and services, some of the available monies will need to be saved for future capital expenditures and emergencies. Over the years, the Town has been fortunate to be able to fund all capital projects from its available reserves without the need to set aside annual operating revenues. It would be sensible to continue to save for future capital projects, especially due to the recent volatility in revenues. The Town’s 5-year capital improvement plan estimates that the Town will spend approximately $3.7 million on capital projects between July 2015 and June 2019.
In addition to a capital project reserve, the Council has in the past saved additional monies as a contingent reserve, which provides funds to respond to emergencies such as snowstorms, hurricanes, etc. Historically, the Town has earmarked the equivalent of 30% of the Town’s annual operating revenue for such a purpose. In FY14, the amount earmarked for a contingent reserve is $1.2 million.
In the March Forecast, the Town will publicize its FY15 budget schedule, including specific dates for public hearings on the proposed budget. I encourage you to participate in the budget development process by sharing your thoughts with the Council. Of course, I also hope to see you at the planned forums this Sunday, February 9 from 2 to 5 p.m. or Tuesday, February 11 from 5 to 8 p.m. so the Council can hear your thoughts.
Best regards,David LublinTown Treasurer