The Town Boards and administration have begun to look ahead to the next fiscal year, running from July 1, 2023, thru June 30, 2024 (FY24).
This fall, the Board of Finance received the audit report of last fiscal year (FY22) which ended on June 30. As a result, Finance has been looking at closing out or redirecting funds that are no longer needed in capital and similar side funds. The intent is to put money to better use now and in the future – for both current and future capital needs, or to have it fall back to the General Fund fund balance for use in upcoming budgets.
The audit showed Granby in a continued solid fiscal condition—with reserves of some 18 percent of the budget—putting us in a strong financial position as we contend with the inflation-related pressures just as we all face at home. Those reserves will be critical as we budget for next fiscal year (FY24). Additionally, we will soon tackle replacement of the town-wide communications system that impacts fire, police, ambulance, and public works operations.
Finance recently reviewed a number of the current smaller side funds as reflected in the audit. Particularly the board focused on:
1) ones that have served their original purpose but are no longer needed as stand alones or at all,
2) others that can be closed out with the residuals returned to the General Fund or moved into the Capital Non- Recurring Fund in anticipation of the upcoming communications project, and
3) any that carry more of a balance than may be felt necessary.
Further action will occur over the next few months.
The Board of Finance concurred with the Board of Selectmen in sending to Town Meeting a motion to authorize an increase of $1,460,000 to the High School and related school projects due to cost increases incurred since the initial capital votes three-and-a-half years ago. The increase would be paid by transferring the same amount from existing bonded money within the bridge replacement projects.
The bridges do not appear to need as much as was initially projected due to a recent change in the federal program under which certain ones (Simsbury and Donahue roads) are now being done with the local share reduced from 20 percent to 0 percent of qualifying costs. The first bridges—Griffin Road and Hungary Road—are completed and came in less than projected. Moosehorn Road is now in progress.
Even with the transfer of the $1.46M to the schools project, there is still an estimated $1M as contingency within the bridges project. If not needed, once they are all completed a couple years out, this money may be redirected via the same public approval process for a different capital need, or some portion could just fall back to the General Fund once the bridge project is finally closed out.
A lot has changed in the three-and-a-half years since the Town put forth the school and bridge projects for public review, discussion, and decision. Hard costs have moved upward driven by significant inflation and supply chain disruption.
While the high school roof replacement portion of the schools project had to wait per the state rules to secure the state reimbursement, at the same time a change in the federal bridge program reimbursement rate to the towns put us in a better position overall than initially projected. We are fortunate to have borrowed a year ago at net interest rates – coupon rates offset by premiums earned—of roughly 1.7 percent, all accomplished before the recent run up in interest rates.
In a nut shell, we will follow the same procedure as we did in 2019 of public review, discussion and decision. Given the pluses and minuses, the combined projects—including the transfer of existing bond money from the bridges to the school project—are on track to come in with a lower gross and net hard cost, with lower interest expense than had initially been projected in 2019.