WHITMAN — The Board of Selectmen on Tuesday, Oct. 26 discussed the potential direction for a financial policy for the town.
Forest Street resident Shawn Kain had indicated that he would like to see some additional financial policies instituted for the town, according to Town Administrator Lincoln Heineman who said he appreciated the suggestion.
Selectmen asked Kain, who attended the meeting to sit in on discussion of the issue.
Heineman said the policies now followed are very good ones, but that he appreciated Kain’s bringing up the topic for further consideration and possible revision — the disposition of surplus property, in particular.
The town’s auditor has also recommended revising of the town’s federal awards and procurement policy.
“The current policies that we have are a cash receipt and petty cash handling policy, a fund-balance policy, an investment policy statement for investment funds and, as I mentioned, the disposition of surplus property,” Heineman said. “What Mr. Kain had been talking about having some policies dealing with the appropriate level of debt for the town and what an acceptable level of debt, in the policy view of the town, is.”
Heineman said Whitman does not have a lot of debt in comparison to other towns of its size and valuation in Massachusetts, and that many towns do not have an acceptable debt policy.
“We had a great conversation,” Kain said of his discussions with Heineman concerning the number of reasons why such a policy makes sense. “I think why this is important now … is that financial policy helps guide your spending and borrowing practices.”
These practices can affect bond ratings and set limits and signals the public that town leaders are making decisions that will maintain the town’s financial health and good standing.
“I think it’s relevant now because there are a couple of big projects on the horizon,” Kain said, noting that a new Whitman Middle School and DPW building could be on that list. “Immediately people get concerned [about] borrowing more money, another debt exclusion, that kind of thing, and I don’t think people have a good frame of reference of how much debt do we have currently on the books. Are we in good shape or are we not in good shape?”
A debt policy would provide a good frame some of the difficult financial decisions that may lie ahead, Kain said. Without it, making the arguments for needed projects when they crop up.
Heineman noted that a recommended debt level policy would effectively raise the town’s acceptable level of debt.
“Our level of debt is so low right now, as compared with similar communities, that effectively, if we … wanted a policy that laid out an acceptable level of debt — presumably somewhere around the average of like communities — then … we would be saying it was fine to have relatively significantly more debt than we do now.”
Selectman Justin Evans, a member of the budget working group in 2018, said that group drafted some financial policies, including a limit of excluded debt service costs at less than 12 percent of tax levy at all times, and that general fund debt service should be limited to 1 and 2.5 percent of general fund operating revenues.
“I don’t know if the board ever adopted those policies,” he said. “But that might be a place to start.”
Neither Kain nor Selectmen Chairman Dr. Carl Kowalski recalled that happening, either.
“We have to be careful and clear that the levels that we recommend have some data behind them,” Kowalski said.
Heineman reminded the board that Proposition 2 ½ limits debt to 5 percent of the total assessed value of property — whether residential personal property or industrial/commercial property – in a town.
“We’re nowhere near that,” he said.
Selectman Dan Salvucci noted that past practice was to keep in mind the conclusion of one bond before borrowing to do another project.