Town expenditures are back on track after a nearly three-month, department-wide spending freeze, Town Manager Kevin Smith told the Budget Committee last week.
“Town-wide, on the expenditure side, we should be just over 91 percent expended at the end of May, and we’re at 90 percent today. It’s better than what we were looking at when the freeze was put in place. We were anticipating at the end of May being 3 to 4 percent overexpended,” Finance Director Doug Smith said at the Committee’s May 28 meeting.
When the spending freeze was implemented in March, the Town was overexpended by 4 to 5 percent.
Post spending freeze, expenditures are “trending pretty nicely” on a town-wide basis, Smith said.
And although June tends to be a month where employees use vacation time, Smith said Fire Chief Darren O’Brien is optimistic that overtime expenses for the department, which significantly contributed to the need for the spending freeze, are trending well.
On the revenue side, Smith said the Town will have no issues in FY15.
“We’re at 97 percent for the end of May. We’ll clearly be over our total town-wide revenue estimate for this year,” he said, noting the estimate doesn’t include the amount the Town will receive for Land Use Change Tax. The Conservation Commission now shares that tax with the general fund for 60 percent of funds exceeding $100,000.
Smith said the excess revenues are due in large part to building department revenues, which are approaching $500,000.
“It’s a sign the economy is doing well in Londonderry,” he said.
Member Dana Coons asked Smith if they have any thoughts on putting surplus money in a rainy day fund.
Smith said any surplus to the Town’s undesignated fund balance is essentially a rainy day fund for a catastrophic event.
“I don’t think we’ve ever used it to offset the budget,” he said. “You don’t want to have the big swings in the tax rate. That fund is usually used for one-time expenditures.”
Smith noted restricting use of the undesignated fund balance to offset the budget also forces department heads to effectively manage their budgets.
The spending freeze has not yet been lifted, but Smith said he planned to meet with department heads this week to review the numbers and determine the appropriate course of action.
Additionally, the Town Manager said they plan to begin preparing for the FY17 budget.
“We’re going to internally start our process earlier than we have done in the past so we can do forensic looking at all the line items moving forward, particularly as it relates to the default budget. Some departments pay electricity costs that have remained flat, or in this case have gone up,” he said. “Department heads have said some lines need adjustment based on inflation and costs going up. We will be looking historically at line items in each department to see if they have been trending over or under. If in the last five years an item has been performing 10 percent under budget, we shouldn’t keep funding it at the full rate; or if something is tipping over, we can reallocate the money elsewhere.”