MARBLEHEAD — Reducing the town’s reliance on free cash will be a key focal point for Marblehead in fiscal year 2021, Town Administrator Jason Silva said Friday.
During a presentation on the state of town finances, Silva said that despite the fact Marblehead managed to maintain its AAA bond rating last year, officials will need to continue to closely monitor the town’s free cash balance to ensure fiscal stability.
“Our free cash reliance is still an issue that we’re really focusing on and really monitoring closely,” Silva said, noting that in order to guarantee the town’s financial health, officials will need to find alternative sources of revenue, as well as efficiencies in service delivery and operations, while reducing reliance on free cash.
“Our use of free cash has increased, and our free cash balance is going in the wrong direction,” he said. “We’ve been talking about this issue since I started. We have to right the trend so that we don’t see this dip too low.”
In FY16 and FY17, Silva said the town gave back more than it used in free cash, but in FY18 and FY19, the town used nearly $1.5 million more than what it was giving back in budget turnbacks, creating a current reduction.
Although the town is still waiting on its free cash certification number for FY21, Silva said Marblehead used $7.2 million in free cash last year to balance its budget.
“We budget our local receipts very conservatively, which helps with our generation of free cash and enterprise payments,” he said. “We know our capital needs, infrastructure needs, facility needs aren’t going away, and so we’re really trying to be thoughtful and build upon our past efforts to really plan those out. As years go on and on, we’re trying to be more comprehensive in how we’re doing that.”
As for the town’s FY22 budget, Silva said Marblehead is currently working with the Collins Center for Public Management at the University of Massachusetts-Boston to produce a more comprehensive operating budget compliant with the requirements of the Government Finance Officials Association Distinguished Budget Award.
He noted that department budget worksheets have been submitted to the Finance Department and initial meetings began this week among departments, boards and committees, Finance Committee liaisons, and the Collins Center.
“It was a fun round of meetings and I’m looking forward to some follow-up with that,” he said. “I think it encouraged a different way to look at budgets for a lot of people and got people to really think about not only the smaller picture of day-to-day goals, but also the larger picture of goals the department would like to accomplish.”
Elyse Carmosino can be reached at [email protected].