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<br />Meeting with BoS, 2/6/06, SMR, 8:30pm <br /> <br />TE, SS, CWL <br /> <br />Comments to BoS by CWL <br /> <br />Madame Chair, members of the Board, <br /> <br />Thank you for the opportunity for the Capital Expenditures Committee <br />to meet with you this evening. <br /> <br />Over the past several months, our committee has spent extensive time <br />reviewing FY07 department requests, touring related facilities, <br />speaking with the town manager, and most recently deliberating over <br />the projects' impact, suitability, and priority. <br /> <br />I would like to make some overall comments on the Cash Capital picture <br />as it relates to the standing cash capital policy. These comments are <br />restricted discussion to the non-excluded tax levy and do not include <br />enterprise fund requests. The Town Manager has presented you with a <br />requested capital budget of 5.6 million dollars for both municipal and <br />schools. This is broken down into 1.04 million dollars in cash and <br />4.6 million dollars of debt. <br /> <br />The 5% cash capital policy indicates that 5.2 million dollars should <br />be used for capital projects. Subtracting out the FY07 interest and <br />BAN payments yields 3.674 million dollars available for new capital <br />projects. To determine the appropriate split between cash and debt, <br />we subtract out 2.195 million dollars of principal paydown and arrive <br />at a target of 1.479 million funded in cash. The proposed budget <br />funds 540 thousand dollars of projects with cash, excluding 500 <br />thousand dollars of roads set-aside money from the 2000 override. <br /> <br />We can look at these numbers in a couple of different ways. The first <br />is to consider the level of new debt relative to the principal being <br />paid down. With proposed debt at 4.6 million and the principal <br />paydown being 2.195 million we're borrowing 2.4 million dollars more <br />than we're paying down, thereby moving us away from a cash-based <br />capital policy. In other words, we're increasing debt, rather than <br />decreasing it. <br /> <br />I have spoken with the Town Manager about this and I understand and <br />respect his motivations for using this level of debt. One of his <br />motivations is that he places a strong emphasis on taxpayer equity. <br />For example, the taxpayers of today shouldn't be asked to make a lump <br />sum payment today for a fire truck that we buy that has a useful life <br /> <br />