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Williamstown Panel Looking at How the Town Uses Debt
By Stephen Dravis, iBerkshires Staff
05:39AM / Monday, August 28, 2023
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WILLIAMSTOWN, Mass. — The panel charged with looking at the town's future capital needs and finding "opportunities to be thoughtful and creative about future borrowings" met recently to review its work plan and talk about its objectives.
The Finance Committee created the Debt Study Ad Hoc Committee tp to get a better picture of current and coming capital needs both for the town and three other "capital entities," supported by Williamstown residents: the Mount Greylock Regional School District, Hoosic Water Quality District and Williamstown Fire District.
The town and fire district are funded entirely by town residents. Through separate agreements, Williamstown pays about two thirds of the cost of capital needs at Mount Greylock Regional High School and a little more than a third of infrastructure for the water quality district.
Starting next month, the committee, which began meeting in June, will sit down with representatives from all four cost centers, beginning with a presentation from Town Manager Robert Menicocci, who serves on the panel.
On Sept. 21, the Debt Study committee hopes to sit down with a representative from Unibank to talk about financing options that the town might want to consider.
"We have a profile of the existing debt," Suzanne Stinson said. "We are getting a consolidated estimate of capital needs. The debt options are something we will hopefully learn a little more about with Unibank."
Finance Committee members Stinson, Melissa Cragg and Fred Puddester serve on the Debt Study group along with Menicocci, Hugh Daley (the town's representative on the Hoosic Water Quality District Board), Carolyn Greene (Mount Greylock School Committee) and Donald Dubendorf (Williamstown Fire District Building Committee).
At its Aug. 17 meeting, the panel talked about the need to get "buy in" from all four of the independent municipal entities for any policy recommendations that may come out of the committee's deliberations.
"Part of what has to happen here is an intentional transparency, an intentional process to make sure Bob [Menicocci] knows what the Prudential Committee has on its mind on a constant basis, when it comes to capital, what the Hoosic Water Quality District does and the high school, so we're all in sync on these things, with the ultimate goal to be impacts on things like rates for water and sewer, etc.," Dubendorf said. "So we're, if you will, having a consistent, no surprise policy type thing."
The group agreed that its end result won't direct where the capital entities make their investments but rather suggest ways those needs can be addressed long term.
"We can formalize how we're going to collect and report [a capital plan] and then let it change because they'll come to us this year and say, 'We don't think we'll need a truck,' but then something changes and they say, 'It's better for us to do this,' " Daley said. "This is where the balancing has to occur, where the school says, 'It would be great if we could spend $3 million,' and the town says, 'Not right now. In two years … ' or whatever."
Stinson put it another way.
"[The committee's report] would show the pattern of expenditure for the past couple of years," she said. "It would show the budget and then some extrapolation. Not at the level of, 'This is what we're going to fund, this is what we're not going to fund.' It is more the idea of having a consistent cash flow. I do think the emphasis would be on debt policy."
Menicocci indicated that he hopes the group, which is scheduled to wrap up in March, will give him some guidance.
"For me, I get help to get a good, solid, in-depth capital plan for the town but also incorporating the other pieces so we all know all the moving parts," he said. "The main thing is we can have the good, healthy conversation about policy."
The committee members talked about making sure that policy includes a strategic approach to incurring public debt.
"If you save for an expenditure, by the time you get there, it has outrun your ability to save, given its cost," Dubendorf said. "So there's a potentially self-defeating element to that. I think the policy we come up with should force the question, just ask the question: Do we do it … over a four- or five-year period or do it all at once. Those questions should at least be part of the discipline of the decision-making."
Stinson said that the idea of saving up for a capital expenditure as Dubendorf expressed it, "speaks to the hidden costs of deferred maintenance."
"If you don't use debt as a tool, that's where you're automatically forced," Stinson said. "And because we have the ability to use debt as a tool, we can manage that better and get some economies of scale for the effort."
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