Auburn’s Fiscal Fitness

by | Nov 1, 2013

By John Anderson

During Tuesday’s special town meeting, Town Manager Julie Jacobson presented “Your Tax Dollars at Work” the “Prudent allocation of resources to promote efficient operations and effective delivery of services.” Some of the financial highlights were:

  1. An increase in total infrastructure investment from $1,156,022 in FY11 to $1,425,569 in FY14. The improvements in roads alone are obvious.
  2. An increase in the stabilization fund from $1,265,598 in FY10 to $2,264,807 in FY14.
  3. An increase in free cash from $271,109 in FY10 to $3,991,250 in FY13.
  4. An increase in excess levy capacity from $833,388 in FY11 to $2,962,417 in FY14.

In addition, the town began funding an “Other Post-Employment Benefit” account in FY13, there is now $1 million set aside for things like retiree’s health care. OPEB’s are considered a major threat for the financial well being of municipalities nation-wide, and Auburn is one of the few Commonwealth towns being proactive. Auburn’s OPEB exposure is nearly $80 million, so this deserves annual attention.

Excess levy, as certified by the Department of Revenue, is the difference between the amount of money a community taxes and the amount that is allowable under proposition 2-1/2. As explained by Chief Financial Officer Edward Kazanovicz, Auburn has grown the excess levy capacity from $350,552 in FY10 to $2,962,417 in FY14. While taxes still go up nearly every year, in FY14 the increase was only 1.14% or 45.62% of the allowable 2.5%. Excess Levy Capacity is another indicator of a community’s fiscal health. Many area towns are using the full 2.5% increase every year and asking voters to approve overrides as well.

Some readers are probably asking what all these numbers mean and why it matters. In a layman’s analysis, Auburn’s leaders have worked very hard to be conservative with spending while investing as much cash as possible. Cities and towns need to borrow money from time to time, whether for periods of cash shortfalls or to fund major capital projects such as new school construction.

The interest rates municipalities pay is directly related to their creditworthiness (no different than for businesses and individuals), and Moody’s Investors Service is the primary analyst for municipal bonds. Auburn has seen a better rating in recent times, and this translates to lower interest rates. In the end, Auburn tax payers are saving money on interest so more can be spent locally.

Next week, the Auburn Mass Daily will look into some of the accomplishments our government leaders have made to make Auburn a better place to work and live.