Milton finance leaders are weighing a significant shift in how the town manages its enterprise funds, potentially paving the way for resident fee reductions when fund surpluses exceed target levels. During a Friday afternoon discussion on the town’s draft Financial Reserves Policy, committee members debated whether excess money in water, stormwater, and PEG access accounts should be reflexively used to lower costs for subscribers rather than simply sitting in reserve for future capital needs.

The proposal, championed by committee member Brian, suggests that when enterprise funds grow beyond their established reserve targets, the town should prioritize lowering rates. Brian argued that the current trajectory often results in automatic annual increases that may not be necessary. At some point, if you collect all the money and you have a decent reserve, just reduce the fees instead of increasing 2.5% a year, Brian said. While Town Administrator Nick noted that the current practice involves drawing down reserves for capital projects and rate stabilization, he cautioned that making fee reductions a requirement could limit the town’s discretionary tools. Lori, the committee chair, suggested a compromise by adjusting the policy language to specifically include rate reduction alongside stabilization and capital funding. Nick, rate stabilization is not rate reduction. So Brian's talking also about potential reduction, Lori noted during the exchange.

The committee also moved to exclude PEG (Public, Educational, and Governmental) access funds from the general reserve policy. Nick explained that because the town negotiates these payments with cable companies rather than assessing a fee directly on residents, the town has no mechanism to utilize reserves to offset subscriber costs. For PEG, it's not a fee that we assess. We negotiate with cable companies to secure payments, Nick said, adding, There's no way for us to utilize the reserves to offset fees. Lori agreed that the fund did not fit the criteria for the broader policy, suggesting a separate descriptive policy might be more appropriate for those specific cable-related funds.

A more philosophical debate emerged regarding the balance of power between town boards and the role of the Warrant Committee in budget preparation. Lori moved to clarify that policy-making authority rests with the Select Board and the School Committee, citing the town’s Home Rule petition that established a strong Town Administrator model. The authority for policymaking rests with the Select Board and the School Committee, not the Warrant Committee, Lori stated. I want to be clear about who has final decision-making authority. This sparked a rebuttal from Jay, who argued that the Warrant Committee remains the primary body presenting the final budget to Town Meeting. The town budget is approved by Town Meeting and the budget presented to Town Meeting is the Warrant Committee’s budget, Jay countered, emphasizing that the committee should focus on big-picture items like reserves rather than departmental line items.

Addressing the town’s broader financial health, the committee discussed adjusting goals for certified free cash. In light of the recent budget increase following the local tax override, Nick suggested lowering the target range for free cash from the previous 2-4% down to 1-3% of the prior year’s operating budget. Members also grappled with the terminology used to describe these funds. Winston questioned the use of the word generate, noting that free cash often results from conservative budgeting rather than active creation. Is there a better word to use than generate? Winston asked. Following the discussion, the group agreed to rephrase the goal to focus on the amount certified as free cash rather than generated.

The committee also scrutinized the newly established Operating Budget Stabilization Fund, which is currently subject to a 2% limit. Nick explained that this would cap support at roughly $3 million based on a $150 million budget. Lori expressed concern that reliance on such funds could mask underlying growth issues, particularly within the schools. If you have a school budget growing at a rate of 9%, and we simply fund that each year out of the stabilization fund, I think that's a mistake, Lori said. We've got to do something about controlling the rate of growth. To ensure ongoing oversight, the committee discussed a requirement for the Select Board to take a formal vote each spring to continue the recurring $700,000 tax levy appropriation into the stabilization fund. The $700,000 is recurring. Each year the Select Board is required to say whether they're going to do it. If they don't take action, it goes away forever, Nick explained.

The meeting concluded without formal votes after both Winston and Brian departed, resulting in a loss of quorum. Before the session ended, Lori announced plans for two upcoming budget summits: a smaller session in late November or early December to establish parameters, followed by a larger multi-board summit in January to finalize revenue and expense forecasts for the upcoming fiscal year.