The town committee responsible for vetting large expenditures has recommended that Harvard replace its ailing pumper truck and pay for a new one with money drawn from the town savings account created for just such a purpose.
Capital Planning and Investment Committee Chairwoman Debbie Ricci unveiled her panel’s plan at a joint meeting with the Finance Committee last Saturday morning, Jan. 24, an annual event at which CPIC presents its plan for the coming year for spending on projects whose cost exceeds $20,000 or with a lifetime greater than five years. The cost of a new truck is estimated at $500,000.
The new pumper is the most expensive of seven projects the committee recommends funding with money in its $1.9 million Capital Stabilization and Investment Fund in fiscal 2016 (which begins July 1). Other expenditures on the list include a heavy-duty dump truck and fuel dispenser for the highway department, new portable radios for the police department, renovation of Hildreth Elementary School bathrooms, a new voice-over-internet phone system for the schools, and replacement of a wooden dock at Bare Hill Pond. Each project requires the approval of town meeting.
Part of a much larger package
The seven items are part of a $3 million fiscal 2016 capital plan consisting of $1.7 million in capital requests plus $1.3 million in long-term debt to pay for the first phase of the renovation of Hildreth House.
Like any modern family, the town has several tools for financing large or unforeseen projects. A typical homeowner will have a 15- to 30-year mortgage to pay for the house, along with one or two shorter-term bank loans, perhaps, to pay for a car or a home renovation project. A savings account for unforeseen crises such as a failed water pump or fallen tree is also a good idea. Or maybe it’s time for a second job.
Harvard makes use of similar tools: long-term debt (typically a 20-year bond) for big building projects, such as the renovation of Town Hall; shorter-term bonds for smaller investments such as trucks; and a one-year tax increase known as a capital exclusion to pay for more immediate projects, such as the much-needed renovation of the ventilation system at Bromfield.
A savings account for large purchases
The Capital Stabilization and Investment Fund is a town savings account that has been used primarily to pay for capital projects that cost less than $100,000. The account is replenished each year with so-called “free cash”—cash left over from the prior year’s operating budget. The amount of free cash allocated to the fund this year at the October Special Town Meeting was $615,774.
The need for a new pumper truck emerged this winter. Attempts to repair the existing vehicle, which has a cracked frame and a leaky tank, were unsuccessful. The cost of rehabilitating the vehicle had been estimated at nearly $200,000, and the manufacturer would not provide a warranty for that work. As the only pumper in town, the truck’s unavailability was seen as a safety issue. Purchase of a new one seemed the wiser course.
At their joint meeting with FinCom, CPIC member Alan Frazer said the decision to use nearly a quarter of the stabilization fund’s $1.9 million balance to purchase the new truck was made after a discussion he described as “vibrant.”
Chairwoman Ricci said she would have called the conversation “more of an esoteric discussion on the purpose of the Capital Stabilization Fund and the fact that we had the ability to cover the fire engine without placing an additional and unplanned burden on the taxpayer. It was vigorous in that we all participated, but not in that we were argumentative.”
A ‘financial shock absorber’
In a later email to the Press, citizen member Keith Cheveralls said that given the need for a $315,000 capital exclusion to pay for new lab ventilation and a $1.3 million long-term bond to pay for Hildreth House renovations, “eliminating a possible bond of $500,000 for the pumper truck was the responsible thing to do.”
Added Cheveralls, “We also felt that using the fund for this purpose fulfilled an oft-unspoken function of the fund: to act as a financial shock absorber to help smooth our way through potential tax spikes.”
It’s always a balancing act, wrote Cheveralls. “Draw down too much and you compromise the ability of the fund to help pay for the future-year plans. Use too little and you risk asking the taxpayers to fund more debt and/or capital exclusions.”
The Press will take a closer look at the fiscal year 2016 capital plan in a future issue. For now, it’s up to the Finance Committee to accept or reject the capital committee’s recommendations for large expenditures in the coming year. FinCom members planned to meet on Wednesday, Jan. 28, weather and roads permitting, to decide next steps as they begin to assemble spending articles for the Annual Town Meeting warrant.
