I am a long time Westfield resident working as a bond broker on Wall Street for 22 years. I am writing to voice some concerns and questions regarding our current Westfield budget surplus.
By asking questions about our town's budget plans, goals and transparency I am in no way implying that numbers are hidden or that the current fund balance should be spent down. To me as a Westfield resident who works in the debt markets for a living, there are specific questions to which our town's voters deserve explanations during the election season. Legitimate questions should be welcomed by the town council and I have a couple.
On Feb. 24, 2014, our town's S&P rating was upgraded to AAA in part due to "Adequate budgetary flexibility supported by increase in fund balance in 2012 audited, which is expected to climb based on unaudited 2013," as stated by S&P at the time in their report. The surplus balance in 2012 was $1.6 million, then roughly four percent of the budget, which increased to $4.7 million in 2013.
Fast forward to 2017. Our projected surplus balance remaining for 2017 is now $10.2 million, roughly twenty-five percent of municipal appropriations. Why was such a low percentage fund balance sufficient for our bonds to be upgraded in 2014, but now we must maintain a much higher percentage? Was this extreme increase, of our budget surplus, solely a reaction to sudden newer, higher standards by the rating agency?
I get that higher ratings help curtail interest rate repayments on our debt, but what are the savings on our debt service for bonds rated AA+, one rating notch below? How does this debt service savings amount compare with the amount used to dramatically increase our already large surplus which our members of town council claim is necessary to maintain the AAA rating?
Yes, having a healthy rainy day fund is prudent budgetary practice. It is equally prudent for Westfield voters to expect answers to questions regarding budgetary specifics to understand that the town council is indeed vigilant with managing our tax dollars.
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