NORTHBOROUGH – Northborough received approximately $750,000 more in excise taxes for fiscal year 2024 than what it had budgeted.
During the Oct. 21 Select Board meeting, Finance Director Jason Little made a presentation focusing on the fiscal 2024 budget and the closing of the fiscal year.
The final fiscal 2024 budget estimated that the town would receive $70.3 million in revenue, including $4 million in local receipts. However, the year-to-date actual budget indicated that the town saw $6.5 million in local receipts and a total revenue of $72.8 million.
Within the local receipts figure, Northborough received $3.6 million in excise taxes, which is an increase compared to the final budgeted figure of $2.9 million. Excise taxes include motor vehicle, meal and room taxes.
“Due to conservative budgeting, that was a very large increase over what we had projected in the budget,” said Little.
The town also saw an increase over what it had budgeted for interest and penalties on late taxes and investment income. Investment income in particular resulted in a 444.7% increase over what was budgeted; the final budget originally projected $235,000 and the year-to-date resulted in $1.3 million.
“As everybody knows, interest rates are high. When we set the budget for this, we’re trying to pick conservatively. We don’t know if every month we’re going to have consistently high interest rates,” Little said.
In general, he said municipalities have more money in liquid to pay their bills. Northborough typically has between $30 million to $40 million at the end of the month and generates about 4% in interest on that over the course of the year, Little said. Investment income was typically below 1% in previous years.
“Our treasurer does a great job of making sure money is maximized and we’re maximizing our investment income opportunities in these bank accounts and moving things to the higher generating accounts and so forth,” said Little.
The Department of Revenue has certified the town’s free cash for the general fund at $4,627,145 as of July 1, which Little said is a “relatively good year” for Northborough.
Free cash is a fiscal term for the “remaining, unrestricted funds from operations of the previous fiscal year, including unexpended free cash from the previous year, actual receipts in excess of revenue estimates shown on the tax recapitulation sheet and unspent amounts in budget line items,” according to the town’s definition.
In the memo, Little wrote that Northborough’s free cash was certified at $3,572,920 for July 1, 2023. Town Meeting then voted to appropriate $2.8 million from that amount.
“So, the town was left with an unappropriated balance of $770,000 from the previous year, which means the town ‘generated’ $3,857,145 during FY2024,” Little wrote.
Little said the certification came earlier this year due to pressure to close the books for the sewer article that was approved at Town Meeting in October.
The conversation was ahead of Northborough’s tax classification hearing in November.
