WILMINGTON, MA — At Monday night’s Board of Selectmen Meeting, Town Manager Jeff Hull announced that the Massachusetts Department of Revenue recently certified the town’s free cash in the amount of $21,618,024.00.
“That number is a consequence of money that is unexpended in budgets that gets turned back to the town’s general fund. It’s a consequence of conservative budgeting,” explained Hull, who pointed to the town’s conservative estimates relative to new growth and anticipated local aid.
“In the past few years, we’ve gotten additional state aid above the estimated amount, and that generates free cash,” continued Hull. In 2017, for example, Wilmington received roughly $148,000 above what was anticipated in unrestricted government aid and Chapter 70 school aid. Those monies wound up in the town’s “free cash” account.
“As much as some might consider this to be a real problem, the alternative is to be aggressive and overestimate,” cautioned Hull. “When you’re doing a budget, it isn’t surgical where you can precisely estimate revenues and have them come in spot on. It’s always your best estimate based on the information available to you at the time.”
During a previous discussion on free cash, Hull noted additional benefits to a having a healthy reserve account, including:
- Rating agencies determine a town’s bond rating, in part, by its free cash amount, which represents financial flexibility.
- Free cash allows the town to “seize upon opportunities” that may unexpectedly arise, such as the purchase of the land next to St. Dorothy’s Church several years ago.
- Another economic recession will occur eventually. The rainy day(s) will come. During the last recession, Wilmington – unlike many municipalities around the state – had enough free cash to draw upon to avoid any staff layoffs or cuts in programs and services during the downturn.
“Free Cash allows communities to address financial problems, supplement budgets and to take advantage of opportunities as they arise,” added Town Accountant Mike Morris during the previous discussion. “In recent years, the town has taken advantage of Free Cash to purchase land, fund capital outlay, further fund the Capital Stabilization Fund, and to address liabilities such as OPEB (Other Post-Employment Benefits) and retirement.”
The town’s free cash amount has steadily climbed over the past nine years, most recently from increasing $15.3 million (2015) to $18.3 million (2016) to $21.6 million (2017).
This year’s certification took place on November 6, 2017. The amount, however, is as of July 1, 2017. (The number is just in to the town and not represented on the chart above.)
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