The Selectboard is grappling with two major concerns with the 2020 budget: a possible 8% tax increase and an underfunded Undesignated Fund Balance (UFB) . Add to the mix is the matter of paying for the $4 million in road repairs from the July 1 Storm Event, of which only 87.5% will be reimbursed 'sometime' in the future. See Norwich awaits federal repayment for 2017 storm damage.
Saying this is "not a normal budget year and we should not be budgeting as though it were," Selectboard member John Langhus has made a bold proposal to favorably address the tax increase and the UFB issues. Since there is no free lunch on budget issues, Mr. Langhus finds the money by suspending or eliminating contributions to Designated Fund Balances. The Langhus Proposal is in this week's Selectboard packet
at unnumbered page 24.
Every year the Town socks away money for future purposes, such as saving for a new fire truck or for resurfacing the tennis courts. See chart below. The Town Manager’s proposed budget calls for $616,160 to be placed in reserve in various designated funds, says the Langhus Proposal. That is approximately 14% of the 2020 budget.
Source: Selectboard packet 12/12/18
Under the Langhus Proposal, the $275,000 contribution to the road paving reserve would be eliminated. "This fund has been built into substantial surplus in recent years and can be unfunded for one year without unduly harming the services our citizens expect in terms of road maintenance."
The remaining $341,160 planned for other designated funds would instead be used to replenish the UBF. "This will return the Undesignated Fund, which exists specifically to guard against unforeseen funding emergencies, to a healthy level above 15% of the total Town budget."
With some additional, specified reductions to line item expenditures, no tax increase would be needed, according to the Langhus Proposal.
After FEMA reimburses the Town, the proposal posits that some surplus money will be available to 're-fund' the designated funds. How much? Since the reimbursement rate is 87.5%, the surplus could be nothing, unless the Town finds money elsewhere to pay for road repairs. For the Langhus Proposal to be properly evaluated, the amount of the probable surplus needs estimating.