© The Stoneham Independent

STONEHAM, MA - Insisting Stoneham needs to purge one-time revenues from its operating budget, new Town Accountant David Catellarin last week urged town leaders to resist the temptation to raid the town's $3.4 million in free cash.

During a Board of Selectmen's meeting in Town Hall last Tuesday night, Catellarin explained he has already had to adjust downward Stoneham's proposed $66.67 million FY'19 spending plan to account for "structural" dependence on one-time revenues and lower than anticipated state aid allocations for next year.

"We had to reduce the revenue from the state aid, which then threw the budget into a deficit. I then went into the revenue section and eliminated all one-time funds from the budget. It seems like the budget was structurally out-of-balance," said Catellarin.

"We had a deficit of about $700,000 to $800,000, so we went back in and started cutting [departmental budgets and other line-items] until we had a balanced [proposal]. We're not using any one-time revenues to balance the budget," added the new town accountant.

It is likely Stoneham will see a greater influx in local aid by the time the state budget is finalized in the coming months, as the state Legislature has in recent years increased that funding source over and above the governor's budget. The town accountant plans on plugging any extra state funding back into the school budget for next year.

Last fall and again earlier this winter, Town Administrator Thomas Younger cautioned town officials about the practice of slating one-time funding sources like free cash and town receipts towards reoccurring budget expenditures.

Younger, who has a history of working alongside Catellarin in Swampscott, has insisted Stoneham's $3.4 million in certified free cash should remain untouched and left as part of the town's undesignated fund balance.

The town accountant this week voiced his support of that policy, as moving free cash into the budget will slash surplus revenue figures in the years ahead. By leaving the money untouched, he explained, the town will continue building up its reserve cash, which also includes monies in Stoneham's two stabilization accounts.

"The undesignated fund balance is the net of receipts you take in, minus the expenses taken out. The free cash would have been higher if some deficits were taken care of [earlier]," he explained.

However, veteran Selectmen Caroline Colarusso and Thomas Boussy disagree with that recommendation and have argued the $3.4 million in free cash should be at least partially used to discount local residents' annual $145 trash fee.

Though the proposed trash fee offset was not mentioned during the most recent Board of Selectmen meeting, the conversation over Stoneham's budgetary guidelines appeared to be a continuation of that debate.

Selectman Anthony Wilson, who agreees Stoneham needs to build its reserves, reiterated his belief that the town should begin adhering to its own fiscal guidelines, before it starts draining reserve accounts to reduce annual service fees.

The town's standing policy includes a recommendation that stabilization fund balance represent 10 percent of annual expenditures, while state budget managers suggest annual free cash certifications should equate to at least 3 percent of the annual operating budget.

Wilson also worries this year's free cash figure, the most surplus revenue certified by the state since the 1980's, has been artificially ballooned through one-time development payments and building permit fees for the Langwood Commons project and the Fallon Road apartment complex.

"I go by metrics and guidelines. The [state's] Department or Revenue recommends 3 to 5 percent of your operating budget [be represented in your annual free cash certification]. For us, that would be $1.98 million to $3.3 million. We should be doing that every year," said Wilson.

According to Younger, if the town managed to adhere to its own guidelines, taxpayers would eventually see a financial return in the form of lower borrowing rates for bonds.

Selectman Shelly MacNeill later pointed out that some surrounding communities, like Woburn, have such healthy reserves, city officials have historically refrained from increasing the tax levy by the full 2.5 percent allowed under Proposition 2 and 1/2.

When the tax levy is hiked by the maximum 2.5 percent, the cost is passed onto local residents and businesses in the form of higher taxes.

"If you look at some communities that have a higher bond rating than us, they need to see the same amount of free cash for a number of years. We're not at that level yet," said Younger. "We've had one good year, but you want to watch for the next three of four years to see if we can maintain that."

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