BERLIN – Town officials will discuss a reserve policy and the possibility of forgiving some of the sewer fund’s longstanding debt at their next meeting.
Though the items were on the agenda this week, Monday’s Berlin Town Council meeting was cut short due to problems with the livestream video. Mayor Gee Williams says they’ll now be added to the agenda for the July 27 meeting.
According to Williams, both issues came up during the spring’s budget development process. The draft reserve policy the council is set to discuss will put into writing the town’s practice of keeping funding on hand.
“During the months-long discussion about the new budget everyone on the council, myself included, agreed we needed to establish a more formal policy for our general fund reserves,” Williams said.
He said the town would be setting a policy regarding maintaining a reserve fund balance.
“We’re just codifying what the practice has been,” he said.
He said that while the term “reserve fund” was commonly used, the town had various categories of reserves. The draft policy to be discussed calls for a budget stabilization reserve with enough for three months of town operations, a capital reserve of $100,000, a debt reduction reserve containing enough to pay the town’s debt service for one year, and a disaster recovery reserve of $250,000.
Williams said the policy approved this year could be adjusted in the future if the town’s needs changed.
“It’s good to have a public discussion to know what these policies are,” Williams said.
Along with the reserve policy, town leaders are expected to talk about a staff recommendation to reduce the sewer fund balance owed to the general fund. The sewer fund balance owed to the general fund as of June 30, 2019 is $3.4 million.
“Reduction of the sewer fund amount due to the general fund will reduce the nonspendable amount of the general fund,” wrote Finance Director Natalie Saleh in a memorandum to town officials. “It will provide a structured repayment plan with the date of the loan retirement.”
Williams said officials would be discussing how much of the debt owed to the general fund should be forgiven.
“We owe the money to ourselves,” he said. “The discussion will be how much to forgive, how much to pay back over time.”
He added that the debt was no longer growing thanks to the property tax and rate increases implemented last year.
“The combination of those two has set everything on track,” he said.