To the editor:

Full disclosure: I ran for re-election last fall and was defeated. I do feel obliged, particularly because the current council has only one member with what I would call real council experience, to raise a particular point. 

At the end of each fiscal year, the town declares whether it has a surplus or a deficit. Every effort is made not to run a deficit and certainly during the last two or three months of the fiscal year I have watched administration pretty much freeze almost all spending. 

Immediately following the end of the fiscal year, that which was called the surplus is treated in one of two ways. It is carried over into the next fiscal year and represented as an income item when the next budget is being addressed. More often, however, it is placed into what is referred to as the reserve.

The reserve is required by law and by good practice for any entity. Specifically, in government operations, it is recommended that an entity have two to three months worth of reserve against any obligations that would arise. In the absence of a sufficient reserve, the entity is often forced to resort to “taxpayer anticipation notes” — that is, to borrow money in anticipation of taxes. 

A number of town councils have faced that dilemma when the fourth quarter taxes are due June 1 will cover the expenses of April and May. I would hope people would recognize that is an inefficient way to cover those expenses and the council has achieved a sufficient reserve to prevent it from happening. 

At Monday night’s council meeting, there was a discussion about invading the reserve in order to pay a current obligation. I consider that a very bad idea. At some point you’re going to want to replenish the reserve, which will require new revenues. In the next fiscal year you will have to make up the amount of the invasion in order to pay whatever the obligation was. 

You have two holes in your budget that will be required to be filled from the taxpayers in a particular year. That is an inordinate and unnecessary procedure. I believe the council will be tempted in this fiscal year coming to invade the reserve in order to balance the budget. Again, I consider that a very bad idea that creates two holes in the budget: the reserve that you’ve depleted and the ongoing expense that you have not met.

Charles Levesque

Portsmouth