Photo: The money is rolling into town’s free cash coffers (Wikimedia Commons, the free media repository)
Belmont Treasurer Floyd Carmen is fond of repeating a cautionary catchphrase when speaking about the town’s unrestricted fund account.
“Free cash isn’t free,” says Carmen.
While it may not be free, by bringing in a robust $8.1 million in its unrestricted account, Carmen’s work will likely help the town balance the fiscal year’s budget without the need of a Prop. 2 1/2 override vote that appeared all but a certainty just six months ago.
The $8.1 million is just short of the $8.4 million in free cash the town held in fiscal ’18, an amount that Carmen warned the Board last year would not likely be matched. While the state advises municipalities to have a free cash amount equal to three to five percent of its annual budget, Belmont’s account is slightly more than 6.25 percent on a fiscal year budget of $129 million.
Free cash is made up of receipts – taxes and fees – in excess of revenue estimates along with unspent amounts in departmental budget line items known as “turn backs” for the previous fiscal year, plus any unspent free cash from the previous year. Before it can be used, free cash must be certified by the state.
The Select Board applauded Carmen’s accomplishment on the haul of free cash.
“I have to say I’m delighted and also astonished that free cash came in so high,” said Select Board Vice Chair Roy Epstein.
Carmen attributed the results to the town’s “fairly conservative” budgeting, department heads who work hard to return monies not spent and a tax and fee collection rate that caused one Board member to explain “wow.”
“Our tax collection rate is 99.6 percent,” said Carmen, who praised his staff for reducing uncollected receivables from $1.7 million on May 15 to just under $200,000 today.
While good government advocates suggest a portion of free cash be restricted to paying one-time expenditures and funding capital projects, Belmont will use a major chunk of the monies to fill in an expected gap in this year’s budget.
Carmen told the Select Board that he suggested to town officials transferring $2.5 million of the $8.1 million and place it into the town’s General Stabilization Fund, a special revenue account where monies are appropriated and reserved for balancing the town budget.
Added with the current balance of approximately $332,000, the Fund will end up with around $2.8 million in the Fund, about the same amount the account held last year at this time.
This amount will make up the bulk of the funding needed to fill a $2.3 million deficit in fiscal year 2021 that was predicted in August 2018 by consultants for UMass Boston’s Edward J. Collins Center.
“Just about three weeks ago, I finally could say we will have this covered,” said Carmen about the revenue hole.
While the Prop 2 1/2 override is all but certain off the April 2020 Town Election ballot, it is increasingly likely the override will be before residents in November 2020 to find a longer term solution for the town financial structural deficit.