An important part of the Town’s annual budget is for capital improvements. Generally, capital items are for expenditures of $10,000 or more and that last for at least five years. Our capital budget includes a range of items from road paving projects to replacement trucks for the DPW, from public safety vehicles to town building upgrades and from harbor improvements to new utility pipes.
Like so many communities, Manchester has fallen behind in the upkeep of important infrastructure. The large number of water line breaks and the amount of unwanted water entering the sewer system attests to this. And residents have weighed in about the Town’s infrastructure, ranking it the top concern in the survey conducted by the Master Plan Steering Committee.
A rolling five year capital plan is updated each year as part of the budget process and voters are asked to approve the projects for the upcoming year at the Annual Town Meeting. Funding for the various projects and purchases come from a combination of general taxes, state funds for roads, harbor fees, utility fees, and bonds. Most of our bond payments are excluded from the limits of Proposition 2 ½ per voter approval, meaning that the taxation necessary to raise the annual principal and interest payments are not included in the maximum taxation allowed under Prop 2 ½. Our strategy regarding indebtedness is to not incur more debt beyond what we already have. However, when old debt is retired the strategy is to seek approval for new debt to replace the old debt, keeping the amount of additional taxation outside the limits of Prop 2 ½ constant while providing needed funds to upgrade our aged infrastructure.
In addition to excluded debt, the Town also has the option of approving a direct capital exclusion. In other words, resident can vote to raise additional funds outside the limits of Prop. 2 ½ to pay “cash” for particular capital projects. These are one time exclusions that must be approved each year. As part of the FY18 capital budget, the Finance Committee and the Board of Selectmen are considering using a combination of new, excluded bonds and new direct capital exclusions to fund capital improvements all the while keeping the total amount of taxation for bond payments and capital exclusions level year to year. By adding in direct capital exclusions we can maintain the amount of funds outside the limits of Prop 2 1/2 we are dedicating to infrastructure improvements at a consistent level without always taking on new debt.
The list of proposed capital project for FY18 will be finalized over the course of the next few weeks. Highlights include new borrowing for the replacement of water and sewer pipes, a direct capital exclusion for vehicle replacements in the Fire Department, general fund use for vehicle replacements in the DPW, as well as for road, sidewalk and drainage work, and to advance design work for a new DPW facility and the replacement of the Central Street culvert/dam. Waterway funds are proposed to be used for a new motor for the Harbormaster boat and for permitting the floats at Tuck’s Point.
By early March the proposed FY18 Budget will be finalized. The Selectmen will be hosting a public forum on the FY18 budget at their meeting on February 21 before finalizing the proposal.