Where Does All the Money Go?

Last night at the first night of Town Meeting, we heard from the Town Manager and Finance Committee about the financial state of our town. Both presentations emphasized an upcoming funding gap - i.e. We won't have enough money next year? We all write pretty big tax checks every quarter, where is all the money going?  In a big picture view, money comes in, money goes out, and anything leftover goes into savings.  

Here in Sudbury the community really comes through big when it comes to paying taxes.  Even through the pandemic, we maintained our ~99%+ collection rate.  Knock on wood, local taxes are a very stable and predictable income for our town.

A majority of the operating budget (~85%) goes towards salaries and benefits for our town staff.  These salaries are determined mostly by union contracts, so these are also pretty predictable.  Approximately 10% of the operating budget goes towards general expenses and materials - including gasoline for police cars, books for the library, and such.  And there is a 4-5% "buffer" built in, which, if not spent, goes into savings.

Let's talk more about all of the "savings" that we have.  Note: The amounts are best approximations based on Town Meeting Warrants and committee meeting minutes.  Some funds balances are not reported in the warrants, so they may be inaccurate.

Free Cash - $4-6 million every year - Every year this buffer is built into the budget.

Stabilization Fund - $5-6 million - This is our rainy day fund.  We keep it at 5% of operating budget. 

Capital Stabilization Fund - $1.5 million  - In recent years we have contributed $250,000 per year.  

Community Preservation Fund (CPA) - $6.4 million - Every year the town contributes approximately $2.9 million to this fund.  

Solar Revolving Fund - $1 million - Revenue from solar power generation. 

Americans with Disabilities Act Plan Fund - $400,000

Trust Funds - $2.2 million - Typically we only spend the interest earned on these funds. The interest earned every year is somewhere in the ballpark of $100,000 per year.

Turf Stabilization Fund - Couldn't find the current balance. - Approximately $10,000 is contributed every year (from field fees paid by sport teams).

Overlay - $1.5 million - The town collects extra money to cover potential abatements (refunds) that taxpayers might receive. Sudbury collects on the order of $400,000 for this purpose every year. The excess that ends up not being used goes into the Overlay Fund. The current fund has grown by about $100-200,000 per year in the last couple years. It's interesting to note that the increase in FY22 was approximately $700,000.

These "savings" are pretty significant buckets of money. The big question is, would we rather keep building these funds (for purposes not yet known) or would we rather put some of it towards the operating budget in order to close these funding gaps that are being talked about?