Chide depletion of Bridgewater's reserve fund
To the Editor:
On May 29, the Bridgewater Board of Finance met to set the mill rate for the town for the fiscal year beginning July 1, 2013.
Despite a two percent increase in budgeted spending, the board voted to maintain the current 17.5 mill rate, resulting in a difference between budgeted expenditures and revenues of $326,000.
This shortfall will be made up by depleting the town's unassigned reserve fund by more than a third. We strenuously disagree with the decision to raid the reserves to satisfy short-term interests.
Through prudent financial management by previous Boards of Finance and with approval of the taxpayers through town meetings, Bridgewater has maintained reserve funds that are to be utilized in the event of non-budgeted or emergency expenditures, or for specific purposes from designated accounts.
With no tax increase, the "unassigned" fund, which is already budgeted to be reduced from $936,000 to $683,000 in fiscal 2013, will drop to a projected balance of $357,000 by the end of the next fiscal year.
That is well below the two months of reserves recommended by the town's auditor, Charles Heaven & Co.
While Bridgewater has in the past few years depleted the reserves by less than the budgeted amounts, the Board of Finance has not been given any indication this will be true for the fiscal year ending June 30.
In fact, one data point indicating it is unlikely is the Board of Selectmen ignored the Board of Finance's recommendation for a town meeting and, we believe, spent $50,000 in unexpended town roads funds on unbudgeted litigation expenses.
Reserves are critical in that they are the only way to pay for unanticipated or unbudgeted expenses until the next budget meeting. It is worth noting replenishing the reserve fund in future years could only be accomplished by increasing mill rates, raising assessments or an increased grand list through new development.
The latter two are highly unlikely in this distressed real estate market.
It is true the town could utilize the portion of the reserve fund that has been assigned for capital and non-recurring expenses.
While the $2.2 million in this fund could be diverted from its assigned purpose to covering short-term operating deficits, these assets would be needed in the long term if Bridgewater intends to maintain and upgrade its large capital stock, which includes the town hall, Burnham School, the senior center, Burnham Library, the town garage, and the Historical Society and Grange buildings.
Trying to slow the growth in Bridgewater's property tax rate is a concern, particularly when our Region 12 partners Roxbury and Washington's mill rates are 28 and 39 percent lower, respectively.
Obviously, deferring a mill rate increase in Bridgewater for a year by depleting the town's reserves will not make much of a dent in closing the gap between our tax rate and our neighbors.
Neither of us favored a large increase in the mill rate for next year. We did propose, however, to take the fiscally responsible action and match the increase in spending by the town.
Maybe we are crying wolf and the best-case scenario will happen, in which the mill rate increase next year will have to be larger to make up for both the upcoming year and the next year of inflationary increases in the town budget.
However, the flip side of that is, if the budget is accurate, the town will end next year with a reserve fund depleted below the fiscally prudent level and an even larger tax increase required to replenish the reserve fund.
Board of Finance