By Chris Maza|
EAST LONGMEADOW – The town recently received word that its long-term bond rating was increased by Standard & Poor, signaling the community’s improved financial stability.
The company. which specializes in municipal credit rating, bumped East Longmeadow’s rating from an AA to AA+, which is just one step below the highest attainable level for municipalities of AAA.
“[Standard & Poor] talked about the fact that the town has fine financial practices based upon its good financial planning and I think that’s something all town residents should be aware of,” Appropriations Committee Chair Russell Denver said during his committee’s recent budget presentation. “Standard & Poor has given the town a vote of confidence on its financial management practices.”
Standard & Poor cited in its report that the town has utilized good money management practices, maintaining budget flexibility while also supporting contingent liabilities such as unfunded other post employment benefits, also known as OPEB.
“We believe East Longmeadow will likely maintain, what we consider, its very strong economy, liquidity, and debt and contingent liabilities profile,” Standard & Poor’s credit analyst Jim Tchou said within the report.
According to information provided by Town Treasurer Thomas Florence, under current market conditions, the ratings upgrade is estimated to lower interest costs on a $10 million, 20-year bond issue by approximately $105,000 over the life of the bond.
The Appropriations Committee recommended a budget of slightly less than $55 million for fiscal year 2015, an increase of $1.5 million over the FY14 budget.
Denver noted that this year the Appropriations Committee gave a recommendation that all departments should limit increases to their budgets by only 1 percent, including expected salary increases, and said that to their credit, all departments came within that directive.
The budget as recommended would put the town within the Massachusetts Department of Revenue’s guidelines that state that the town should have between 5 and 8 percent of its operating expenses in reserve at 5.24 percent, or $2.8 million.
He said the town anticipated receiving $37.5 million in real estate taxes, an increase of approximately $1.3 million.
Local aid from the state, including educational aid, was anticipated to be $11.3 million, representing an increase of $66,676, which Denver said was “the smallest increase I can remember in the eight years that I’ve been on the committee.”
The Appropriations Committee recommended a $500,000 allocation for capital expenditures, plus $50,000 appropriations to the OPEB and Stabilization Fund accounts.
Denver made special mention of the fact that for the first time in five years, the committee’s recommended budget utilized no free cash to balance the operating budget.
“That’s a dramatic change for this town. Five years ago, the town was using $1 million a year to balance its operating budget,” he said, explaining that the Appropriations Committee had been reducing use of free cash by $250,000 each year. “We will, however, use it to purchase equipment.”
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