HOULTON, Maine — Town officials once again received good marks from the town’s auditor for the status of municipal finances, but the fiscal agent also cautioned them to put more money away for a rainy day.
Ron Smith, managing partner with the accounting firm RHR Smith and Co., presented the 2009 annual audit to the town during a Town Council meeting earlier this week. Smith said the town was in good shape financially, adding that Houlton is “a virtually debt-free town.”
At the same time, Smith offered town officials the same advice he gave them last year — keep a hefty sum of money in the town’s surplus account.
The town maintains a surplus account to pay for unexpected expenses and to fund other necessities. At this point, according to Smith, the town has a little less than $700,000 in the account, which is enough money to keep the town running for about 30 days.
Smith has told councilors in the past that maintaining approximately $1 million in surplus makes good fiscal sense.
Councilors have disagreed regularly on how much money should be in the surplus account. Councilors often have used surplus money to offset the need for tax rate changes. Some councilors have argued they need to keep at least $1 million in surplus to deal with unexpected expenses. Others have said that figure is too lofty and have advocated for more money to be used to lower the mill rate.
Smith lauded councilors for using surplus money to lower the mill rate and for taking on debt to invest in infrastructure. Over the past few years, Houlton has taken out loans to fix up its roads, invest in more energy-efficient heating systems for its municipal buildings and upgrade its technology.
Still, Smith said he brought “a message of caution” to the community.
He told councilors that if they were planning any long-term projects, they should avoid using surplus and instead use financing options. Interest rates are low, Smith said, making financing more attractive.