Arlington's reserves: Where they stand, Aug. 2, 2003
Source: Allan Tosti, Finance Committee chairman, reporting to the Arlington e-mail list on Aug. 2, 2003:
"The basic fact of the town's fiscal 2004 budget was that we were spending more money than we were bringing in.
"This was caused by factors largely beyond our control. To solve this problem, we either had to raise more money (override) or reduce expenditures.
"The use of reserves is a stopgap, temporary solution to get us through the tough period to a hopefully improving economy. But it cannot fill the gap completely or for very long.
"The [fiscal 2004] budget presented to Town Meeting and approved by that body included the use of $5.9 million of reserves to cushion the blow to town services, but without the override, services had to be further reduced.
"Next year we will use another $3.6 million of reserves and in fy06 another $1.4 million (see chart below).
"At that point our reserves will be almost exhausted. Our interest income on town funds will be substantially reduced, we might have to borrow temporarily for operating expenses because of cash flow problems, and our credit rating will be in severe jeopardy.
"The hope is by that time an improved economy will allow us to stabilize services and begin to rebuild these reserves in preparation for the next recession. This plan to utilize
reserves to carry us over a multiyear problem is responsible and was not challenged by a vote of any of the major Boards involved in the process.
"Without the override, expenditures had to be reduced. That is a fact of life. To throw all of our reserves against our budget would have resulted in a disastrous situation for the next fiscal year and would have been irresponsible. The State would have looked at us and declared that we were a basket case of our own making. They would not take funds from others who
had made the tough descisions to give to us who didn't.
"I will let Mr. Bilafer [town treasurer] speak to the pension issue. I will just make the
point that the full funding of our pension system has been moved back from 2012 to 2022. I think that indicates that the Retirement Board has been responsive to the town's financial situation.
"I hope this clarifies some of these issues."
In an explanation to Selectman Diane Mahon Aug. 3, referring the chart on this page, Tosti wrote that the Elementary School Fund comprises the interest income from the borrowed funds used to rebuild the elementary schools. "It can only be used for those projects," he wrote.
Lottery and Additional Assitance were both reduced in fy03 and fy04.
Total local aid is estimated at $15,274,383 in fy04, he wrote.
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