Mark Haddad Response to Rule Loving: DEBT EXCLUSION NOT NECESSARY AT THIS TIME
Mr. Rule Loving was kind enough to provide Selectmen and me with a copy of his Letter to the Editor that appears in this week's paper. It is his intent to propose an amendment to Article 3 at the Jan. 26 Special Town Meeting to require the debt service associated with the new Center Fire Station be excluded from Proposition 2½, which would require a (Proposition 2½) debt exclusion override ballot vote. I note that the objection is to the financing rather than to the project. While I understand Mr. Loving's concerns with paying for this project within the levy limit, I would like to inform the residents and voters as to why Selectmen and I are proposing to fund this project without seeking a debt exclusion override.
The new Center Fire Station project has been in the planning stage for the last several years. While there has been great debate as to the location of the new station, the need has always been evident. Based on this, three years ago, I developed a financing plan to pay for the new station that would not increase taxes beyond the normal two and half percent allowed under Proposition 2½. I proposed to the Finance Committee and Selectmen that we begin setting aside levy capacity each year by utilizing a portion of the tax levy to fund one-year, non-recurring items in the operating budget. By doing this, these funds would be part of the yearly operating budget, but would not be committed to on-going services. For example, in FY12 and FY13, we used approximately $400,000 each year of available levy capacity to fund the town's Capital Budget, which is ordinarily funded through the Capital Stabilization Fund. In addition in Fiscal Year 2013, we used $150,000 of available levy capacity to pay for a portion of the land on Farmers Row designated as the site of the new Center Fire Station. The FY13 budget provided for more than $500,000 in one-time costs that would not be repeated in FY14. This funding can be used to pay for debt service on the new Center Fire Station without seeking additional tax revenues.
All of this has been accomplished while maintaining services on the town side and setting aside funds for the Regional School District without the need of an override of Proposition 2½. Even with this amount designated for debt service, the town's budget has more than $500,000 of unexpended tax capacity that can be used to fund a variety of important issues that may come to the forefront in the future. To seek a debt exclusion override at this time is unnecessary, and in my opinion, not in the best interest of residents and taxpayers who expect Selectmen and Town Manager to provide strong financial management to the town of Groton.
Mr. Loving is also concerned with the town funding its Other Post-Employment Benefits Liability, or OPEB. OPEB are those benefits other than pension that the town is responsible to continue providing to the employee after he or she has retired or left town service. Groton's liability as of the beginning of FY13 is $7,150,656. Currently, the town funds this on a "pay-as-you-go" basis and appropriates the necessary funding each year to meet our annual obligation. While there is no requirement to begin to fund the liability at this time, prudent financial planning requires the town to start planning for it in FY14. I have proposed a plan to use some of our unexpended tax capacity to start this funding, but it does not have to be funded at the level presented and we do not need to use all our unexpended capacity at this time. Should the need arise to fund this liability on an annual basis, Selectmen can always propose to exclude the Fire Station debt at a later time. I would urge the town to consider the financial plan developed to fund the new Fire Station and not seek a debt exclusion override for this project.
Mark W. Haddad