1996-Annual Town Report - Laserfiche WebLink

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Emir- Fiscal Policies of the Town of MashPee A. General Fund 1. The town will pay for all current operating expenditures with current operating revenues. The purpose of this policy is to maintain a financially sound operating position for the town by pro. moting Mashpee's ability to 1)balance its budget on a current basis, 2) maintain reserves for emergen. cies, and 3) have sufficient liquidity to pay bills on time to avoid short term borrowing. The will avoid budgetary procedures that balance current expenditures at the expense of meeting future years expenses,such as postponing expenditures,accruing future years' revenues or rolling over short. term debt. �1 2. The town should maintain undesignated fund balance at 10% of its general operating fund revenue,It is this fund that bond rating agencies scrutinize most. A level of 8-10% is widely considered very healthy and shows a good financial standing.Undesignated Funds represents the town's"net worth"and is a measure of the ability of the Town to live within its means. A declining balance means that the town is spending more annually than it is collecting on revenues. Within this account "Free Cash," as certified by the Commonwealth of Massachusetts, should be no more than 1% of the general operating budget as a reserve for emergencies and contingencies or for appropriation at special or regular town meetings. Any amount so certified by the Commonwealth as in greater than of the town's operating budget should be used to either reduce the tax burden or be trans- ferred to the Stabilization Account. i 3. The town should use Free Cash greater than the goal for non-recurring or emergency expenditures or appropriated to the town's stabilization fund for future capital projects, equipment purchases, or to lower the tax rate. I This goal, combined with Policy 2, above, will provide a strategy to avoid creating future operating deficits by over reliance on free cash to subsidize the operating budget. The policy should allow,once the town attains a reasonable level of free cash, for a contingency reserve (either appropriated or unap- propriated)to be used for expenditures on a non-recurring nature, capital and equipment purchases,or unexpected small increases in public service costs. 4. Annual budget should include a Capital Improvement Projects fund from current dollars to maintain an equipment replacement and facilities maintenance schedule equal to 3-5% of general fund operating budget. Much of the town's government wealth is invested in our capital plant, i.e., buildings, fields, infra- structure,equipment, and vehicles.Long-term debt is an appropriate source of funding for certain types of projects while current revenues should be used for those assets with a short(less than ten ears)use, ful life. 5. The town should review fees and user charges annually in relation to the costs of providing the service, I' As state and federal assistance has declined and/or been eliminated the town's local non-property tax revenue base has provided more funding for local services. To continue to provide these services with- out an added burden on the property tax,the town should review these fees to cover, when appropriate, any cost increase or decrease associated with delivering that program or service. B. Capital Planning L The annual operating cost of a proposed we recommend any long-term bonded capital alo ai project, and debt service costs,will be identified before i P project. 12