Finance Committee proposes new budget, will depend heavily on ‘free cash’

  • Orange Town Offices. Staff File Photo

Staff Writer
Published: 9/11/2019 9:41:48 PM

ORANGE — Using the inaptly named “free cash” to cover the town’s operating expenses is generally “bad financial management,” Finance Committee member Tony Leger said Tuesday night.

But neither is asking town departments to make “excessive” cuts to balance the budget, he added.

The Finance Committee voted Tuesday night to recommend a new budget for the 2020 fiscal year, which began July 1. The previous budget — adopted by residents at the June 17 Annual Town Meeting — was nullified in July after voters shot down a proposed tax override that would have allowed the town to raise an additional $513,972.

Barring any further revisions, the new recommended budget is $21,224,264.07, and it will be presented to voters at a Special Town Meeting on Thursday, Nov. 7, at 7 p.m. at Town Hall.

If passed, the new budget represents a roughly 5.6 percent increase over the previous year’s budget.

And the new budget still exceeds the town’s revenues by roughly $284,000, so there is still a monetary gap that needs to be closed, just not with a tax override. Now, the gap will be closed using $50,000 from the assessors overlay account and $235,000 from “free cash,” the remaining, unrestricted portion of a town’s budget.

“We’re going to present this budget, but we’re not out of the woods,” Leger said.

Much of Tuesday’s meeting was spent talking about free cash and the proper uses thereof. Generally, free cash is thought of as the town’s rainy day fund — used for “Oh, crap” moments, Finance Committee member Kimberly Emond said.

Orange has $692,739 in free cash. Each year, much of that goes toward snow and ice removal, which the town is legally bound to provide as a service — Finance Committee Chair Keith LaRiviere estimated $150,000 to $170,000 will be taken from free cash for that purpose.

With another $235,000 used to balance the budget, the concern Tuesday night was that free cash will be seriously depleted. Furthermore, the town should not continue to rely on free cash, which is never guaranteed and fluctuates.

“If we have a year without it, we are facing huge budget cuts,” said Town Administrator Gabriele Voelker.

But given the circumstances in Orange, there is not much of a choice — the town’s revenues have not kept up with increasing costs in areas like health care and, especially, education, and the proposed tax override to cover at least part of those costs this year failed with 672 opposed compared to 295 in favor.

“Using free cash to pay for operational expenses is a bad way to do business, but the choice is do it or cut another $235,000 from the budgets of every department in town,” LaRiviere said. “I think we all agree that’s irresponsible.”

Even with the transfer of free cash, the new proposed budget contains cuts to departments’ operating budgets.

“A whole bunch of departments will take cuts under this budget, from as little as $100 for the agricultural commission to $4,400 for the airport expenses; sanitation expenses are going to be cut by $6,500,” Leger said.

The Orange elementary schools, while not taking a cut, are receiving a significantly smaller increase than they requested. The elementary schools’ budget will increase by around $259,000 to approximately $6,634,680. In the spring, the schools had originally asked for about an $600,000 increase.

In addition, armory maintenance, town counsel and building department expenses have received cuts.

“These cuts are going to hurt. There is no doubt about it,” Voelker said. “It’s just we have no choice.”

LaRiviere has described starting off next year’s budget cycle “in a hole,” due to the override’s failure and subsequent reliance on free cash.

Finance Committee member Kathy Reinig pointed out at Tuesday’s meeting that there is no concrete evidence of any new revenue sources coming to town in the next year, and that the town is starting “in the negative.”

On a positive note, Leger said the prospect of a new school in town is exciting, and that residents should support the project as a potential revenue-increaser. Architects are currently in the design phase for a preschool-to-sixth-grade-school, which will be made by constructing a three-story addition to Fisher Hill, and will be 80 percent funded by the state if the project is supported by Orange voters next year.

“If we actually build a school that’s based on what the kids need, things are going to be better,” Leger said, “which means we probably won’t have as many people choicing out, which means we will have more money.”

Reach David McLellan at dmclellan@recorder.com or 413-772-0261, ext. 268.




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