Date Posted:Friday, April 15, 07:35:20am Author: Joe Gareis Subject: Degrees of conservatism in budgeting In reply to:
's message, "Can't Agree This Time" on Thursday, April 14, 03:17:34pm
I agree that as a matter of honest budgeting (at least) the collection rate assumption should reflect what the BOF expects it to be. But I would give the BOF some slack on this issue. I know in early 2009, the BOF discussed that the rate had increased from mid-90s in earlier decades to the high 90s in recent years. They also knew that historically the collection rate decreased during recessions. Given the economy two years ago it's understandable that they decided to allow for the possibility that the rate would head back down. I don't think this has been something the BOF has been milking for decades.
I'm also less critical about the general policy of maintaining a moderate amount of surplus in excess of the levels needed to maintain the town's favorable bond ratings. Because of the state budget mess we're always left guessing whether the state would come through on the second ECS payment and/or dramatically cut it in the next fiscall year, after our budgets have already been set. It's rational budgeting to be more conservative in that kind of environment.