To the Editor:
I read with great interest the recent Letter to the Editor from Chris Collings concerning the spending habits of the Town of Marion. In particular, Mr. Collings describes the spending habits of the Town as “uncontrolled.” He lays the blame squarely on the use of “Free Cash,” describing its use as “undisciplined behavior.”
Recognizing that the language of municipal government can be confusing, it would first be helpful to truly and accurately define this thing we call “free cash.” It is a revenue source that results from the calculation, as of July 1st in any given year, of a community’s remaining, unrestricted funds from its operations of the previous fiscal year based on the balance sheet as of June 30th. It typically includes actual receipts in excess of revenue estimates and unspent amounts in departmental budget line items for the fiscal year just ended, plus unexpended free cash from the previous year.
Like most cities and towns, Marion uses free cash to support current-year operations. In fact, it is well established and sound financial policy for a town to generate free cash in an amount equal to three to five percent of its annual budget. This goal helps deter free cash from being depleted in any particular year. To accomplish this, we generate conservative revenue projections and departmental appropriations.
As a nonrecurring revenue source, free cash should be primarily restricted to paying one-time expenditures, funding capital projects, or replenishing other reserves. In concert with prudent debt management and the establishment of reserves, free cash is an integral part of a plan to manage municipal finances in both the short-term and the long-term. The use of free cash as outlined is neither “undisciplined behavior” nor is it “unfettered spending.”
If, in fact, the Town’s spending habits were as described by Mr. Collings, it is hard to imagine that Marion would achieve and maintain a “AAA” bond rating. Such a rating is granted only to those operations demonstrating strong and prudent financial discipline with a high degree of credit worthiness. We are proud of that designation and work hard every day to maintain it.
Thank you for the opportunity to offer this clarification.
Jonathan “Jody” Dickerson, Chairman
Marion Board of Selectmen
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