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3 <br /> <br />Board of Selectmen <br />Minutes <br />January 9, 2017 <br /> <br />APPOINTMENTS AND HEARINGS <br /> <br />Finance Team review of pros/cons of taxing to levy limit: (continued) <br /> <br />It was explained the excess levy capacity, an amount which is determined more than one year in <br />advance of the budget planning phase is the amount of money that is not taxed to Mashpee <br />taxpayers. To expend up to the levy limit, it is necessary to determine an accurate estimate of <br />excess capacity needs one-year in advance. And, during the recap process, it is not possible to <br />significantly alter the excess levy capacity. <br /> <br />The Financial Team’s ten-year budget analysis estimates the excess levy capacity will most <br />likely be zero by the year 2021 as a result of rising fixed costs and future borrowing for projects <br />such as the Quashnet School window/roof project and the Technical School assessment. <br /> <br />When asked why the Town did not raise an additional $750,000 allowable under the levy limits <br />as a budgeted line item for unforeseen expenditures and pending infrastructure projects, it was <br />explained this would be a drop in the bucket. Excess levy fluctuates each year. Over the next <br />three years, the revenues are anticipated to be minimal. Spending up to the levy limit can be <br />difficult and it can lead to sudden deficits. If the excess levy was used, it would have done <br />nothing to create revenue, and it would have increased the tax rate. If all of the excess levy <br />capacity was budgeted the single tax rate would have been $9.23 per $1,000 valuation. The <br />current budget with $753,000 in excess levy capacity represents a single tax rate of $9.08 per <br />$1,000 valuation in FY2017. <br /> <br />In discussing this matter, it was agreed the financial stability of the Town of Mashpee has been <br />excellent. The Financial Team was commended for their efforts and conservative budgeting and <br />estimating practices. It was noted the bond rating agencies review a town’s levy limit and excess <br />levy. A town’s interest rate is also tied to its rating. Excess levy capacity as well as reserving in <br />stabilization are considered the same however, if monies go out the door, it is not beneficial for a <br />bond rating. In addition to maintaining a favorable bond rating, members of the Financial Team <br />indicated their objective is to maintain the $750,000 as a safety net for planning purposes and to <br />control property taxes. <br /> <br />It was disclosed that certified free cash is significant this year, a reflection of prudent budgeting. <br />It is the intention of the Financial Team to start planning with cash in hand. In the Capital <br />Improvement Program (CIP) there has been discussions to utilize a percentage of free cash to <br />begin a capitalization fund, depositing monies into an account on a yearly basis to plan ahead <br />and to fund future projects. Mashpee ranks highly with respect to free cash, and it is something <br />the town should be very proud of. <br /> <br />With regards to the Quashnet School window project and Cape Cod Technical School project a <br />debt exclusion or an override is under consideration.