Mild Musings About The Town Budget - Storm Damage Debt
The budget approved by the Selectboard, to be voted on by residents at Town Meeting, is less than one percent higher than last years budget, which is pretty good in the abstract. Before getting too far away from the process, thought I post some impressions. See my earlier posts about Claudette’s List and the Listers Budget
This post is about paying for the damage caused by July 1 storm. The Town will borrow to cover these expenses. The impact of this borrowing was not a topic of Selectboard budget discussions and that seems short sighted.
Although the amounts are not yet fully determined, it looks like the Town will be responsible for around $537,000 for repairs necessitated by the July 1, 2017 storm, after expected reimbursement by FEMA and by the State. Reimbursement will not be prompt, requiring the Town to borrow as much as $4.3 million. See Town To Borrow $4.3 Million Short Term, Then $537,000 For Ten Years
The amount to be paid on the borrowing is not a line item in this budget; it will be an add-on. It is a significant add-on. At $75,000 per year, that amount is $15,000 MORE than was the Town first paid on the debt service on the Tower Bond, which received rigorous debate. The annual payment will add nearly 1 cent to the tax rate and roughly 1.6% overall to the budget.
What about future budgets? Does the Town have other capital needs that may require taking on more debt during the next 10 years? Is the interest rate fixed on all current debt? What if another weather disaster strikes? Irene was not that long ago. Should there be a disaster reserve fund? What budget expenses are likely to climb faster than inflation in the next few years? For example, DPW already recommends a 70% increase in the sidewalk budget in the next budget cycle.
Storm damage repair is a legitimate expense. The point is before taking on debt, some planning and perhaps belt tightening is in order. The Selectboard considered neither before sending the budget to Town Meeting.