Rule Loving Commentary: FUNDING UNDER LEVY LIMIT IS NOT A PRUDENT DECISION
On Jan. 26, at Special Town Meeting, an amendment to Article 3, Construction Funding for New Center Fire Station, will be proposed by this voter to exclude the debt and require ballot approval for the Article. An argument will be made based on pages 52 and 53 of the proposed budget for 2014. I hope all those attending town meeting will review the budget, especially these two pages and pay particular attention to the line item on page 53, Other Post-Employment Benefits, and the effect this item has on the Surplus/(Deficit) at the bottom of the page.
Also, please review pages 232 and 233. These pages itemize the current excluded debt costs that will be retired. In 2016 $45,941 will be reduced from the tax rate, in 2017 $264,460 will be reduced and in 2019 $167, 780 will be reduced totaling $478,181.
At the Jan. 7 Selectmen's meeting with the Finance Committee, Mr. Haddad explained that the Other Post-Employment Benefits line item is the beginning of a process to accrue for the $7.1 million current unfunded Retirement Liability that Groton is facing. It was stated that new government requests are that cities and towns begin to accrue for this unfunded liability in a method outside any stabilization fund and this unfunded accrual can only be used to fund this liability. Not only is the government requesting this, but bonding companies are requiring this accrual in order to receive the lowest interest rates. Mr. Haddad stated that there are towns that have already begun to accrue for this liability. Even a modest beginning to fund this liability, as shown on page 53, will eliminate any projected surplus in FY2019.
We have just survived one of the most difficult periods in the town's financial history. Thanks to sound management, a healthy Stabilization Fund, a Capital Stabilization Fund and a surplus to help mitigate the impact of the recession, and the school district not requiring any increases the last two years, Groton survived without any overrides. Simply to be in a position to say the fire house can be funded under the levy limit is an accomplishment. This does not mean funding it under the levy limit is a prudent financial decision over the long term.
The $447,000 annual debt expense for the Surrenden Farms purchase is paid for through the Community Preservation Funds (thank you Mr. Haddad for the correction), which is a surtax on the levy limit and not under the levy limit. Just because the farm purchase was not under the levy limit does not add or subtract value for this investment. The value of the fire house is not determined by being over or under the levy limit. I ask that those attending Special Town Meeting review the proposed 2014 budget material and vote to support an amendment to exclude the fire house debt.