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Milford Officials Have an Enviable Task; How the Projected $5M in Free Cash Could Be Used

With its "free cash" account projected to be $5 million for FY17, town financial officials last week discussed how to allocate it at October's Special Town Meeting. Selectmen Chairman William Buckley, Town Administrator Richard Villani and Finance Director Zachary Taylor met with the Finance Committee on September 14 to advocate using the funds to lower the property tax burden and pay off debt.

"Free cash" is a municipal finance term that encompasses money appropriated for town departments' budgets but not completely spent, as well as local revenues from permits and fees coming in higher than originally anticipated. Taylor noted that while $91.2 million was appropriated for Fiscal Year 2016 – which ended on June 30 – only $87.3 million was spent. And local revenues also came in $2.5 million more than estimated, he said.

The state Department of Revenue (DOR) has yet to certify the exact amount of free cash, Taylor explained, but added it should be $5 million or slightly higher.

The spending plan he advocated included items already in the Fiscal Year 2017 budget and using the free cash:

• Using $2 million of the free cash and $2.5 million in excess levy capacity – an amount the town could spend, but chooses not to – to lower the property tax burden. Basically, by using the free cash to pay for things rather than raising taxes to pay for them and by not spending another $2.5 million that could be raised through taxes, a total of $4.5 million in spending based on property taxes is avoided. By spending less, the overall amount of money funded by property taxes is reduced, which means tax bills will not go up as high as they could have.

• Spending $1.5 million on large and/or expensive capital items.

• Using $1 million to pay off the final local share of the cost for the new Woodland Elementary School, rather than borrowing that money.

• Putting $500,000 in the town's Stabilization Fund – which, basically, is its savings account for future projects.

• Contributing $1 million to the town's unfunded pension liability for retired employees, which would reduce the annual amount the town has to pay into this account.

• Contributing $250,000 to bring the town's self-funded Liability Claims Trust back to its previous level.

• Paying off $710,000 of long-term debt, which will save the town $145,000 in future interest costs.

• Using $250,000 to create an "Injured on Duty" fund for police officers and firefighters.

• Using $1.1 million of free cash to buy a new Fire Department ladder truck.

• Spending $290,000 on non-capital items, including $28,000 for an opioid epidemic treatment program, funding a Fire Department collective bargaining agreement, and setting aside money for future easements and land-takings associated with the planned 2018 or 2019 state project to repave Main St. (Rt. 16) from Water St. to the Hopedale town line.

Even with those allocations, there still would be another $1.8 million in unspent free cash that would be carried over until next spring, Taylor explained. "I think we are in killer position right now," he exclaimed.

Finance Committee Chair Christopher Morin commented on the free cash by saying, "It's a big number, five million." That translates into the town being five percent off its revenue and spending targets, meaning it was 95 percent accurate, he said. "If you get 95 percent on a test, you're doing a good job," Morin said.

Buckley said some towns have a culture of "spend to budget," while in Milford, "the department heads don't feel the need to do that."

"We get to pay off more debt," Alberto Correia, vice chair of the Finance Committee said. "I'm feeling the best I've felt about capital [spending] in a long time."




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