A Board of Finance Perspective – Why I Voted As I Did

by Mike Rettger, Board of Finance

Recently the Board of Finance considered a proposal from the Board of Selectmen to use a portion of the town’s funding from the American Recovery Plan Act (ARPA) to cover part of the cost for the “Route 7” phase of the wastewater plant modernization project.  I voted in favor of the resolution supporting the BOS proposal, as did my other Democratic colleagues on the BOF.

For me, it was an interesting journey in decision-making – and one that I think illustrates well the role and contributions of the Board of Finance in the town’s governance processes.

As background, several years ago Town voters approved a $48 million plan to renovate the town’s wastewater treatment system, to bring it into compliance with state and federal water quality standards.  The plan had two parts – 1) the renovation /expansion of the main treatment plant on South Street, and 2) the retirement of a secondary treatment facility near the intersection of Routes 35 and 7, with that sewage and treatment capacity being redirected to the upgraded main plant.  Work was started in 2019 and, though delayed somewhat by the Covid situation, Phase 1 is now about half completed. 

When bids for the second part of the project were received in May,  the bids were $3-$5 million above the original cost estimate of $5.8M developed in 2018.  This situation is what triggered the BOS to make its proposal, which recommended using $3.4M of the expected ARPA funds to offset the higher costs so that the project timeline could proceed as planned.  

The BOF received an initial briefing on the proposal in August – and frankly my first reaction was a “hard No.”  Where had the increase come from?  Hadn’t we just started a process for gathering ideas and input on potential uses for the ARPA funds?  

So what changed my thinking?

It was a combination of hearing the facts, understanding the alternatives, and seeing that the public approval processes of the Town Charter were being followed.

For me, the key facts were these:

  • The additional costs we face are not the result of poor planning, but rather the lingering effects of the “Covid economy.”  Businesses, governments, and individuals across the nation with building projects have seen rising costs in materials and labor, and from disrupted supply chains.  Importantly for me, the high bids were not the result of major errors or gaps in the original project design as it was eventually finalized.
  • It was clear that there would be good opportunity for resident input.  Everyone involved in the discussions – the BOS, the Water Pollution Control Authority board, and the BOF – recognized that given the amount involved, the requirements of the Town Charter for approval of the funding by town residents (public hearings, Town Meeting and voter referendum) would be triggered and followed.  (I would particularly encourage people to view the Sept 1 BOS meeting discussion, which starts around 2m30s into the meeting timeline.)
  • The alternatives of going back to re-bid, or doing nothing, are not good financial outcomes for the town.  The low bid was close to $2M less than the other two bids received.  Any significant delay in deciding would likely mean loss of that bid commitment and an even higher cost for this piece of the project when later re-bid.  Also, the state has recognized the “Covid economy” effect on municipal projects and has set aside a portion of its own ARPA funds for grants to help offset rising costs – but on a first come, first funded basis.  Again, a delayed decision would likely cost the town access to these grants – perhaps on the order of another $1M-$1.5M of net cost.  Not doing the Phase 2 at all was also not an option – there are new federal and state water quality standards that we need to meet, and not doing so can trigger significant fines for the town in the future.
  • The amount of ARPA money used may end up being substantially less than $3.4M, with any remainder being available for other ARPA uses.  In the BOF’s consideration of the proposal, we made two important changes.  First, the proposal was modified so rather than being a fixed appropriation, the amount was defined as a ceiling (“not to exceed”).  In addition, we required that grants, recoveries, and other savings realized from the project go to offset the amount of ARPA money allocated, thereby potentially reducing the extent of ARPA funds actually used for this purpose.  Based on the information provided in the discussions of these potential offsets, the amount of the ARPA draw may be closer to $2.2M and could ultimately be less than that.  

A second deciding factor for me involved the roles and interactions among the governing bodies making this decision.  The BOS – the policy-making body for the town – had made the request, implicitly communicating two important policy statements: that it was important to move ahead with the water treatment facilities project for the benefit of the town, and that this allocation of ARPA funds was a reasonable use of a portion of those funds.  The BOF’s role is not broad policy, but rather to oversee the budget and the long-term financial position of the town.  With those dual goals in mind, the proposal – as adjusted by the BOF – seemed like a reasonable financial judgment to me in light of the expressed policy position.

Lastly, but most important, the BOF’s action did not actually commit any funds.  Rather, the BOF action had the effect of triggering the Charter provisions regarding consideration and approval of the proposal by town residents – to me, the ultimate and definitive form of citizen input.  That motion now goes forward in a process that allows town residents to express their view through the democratic process of the Town Meeting (a date for which has not been set) and a voter referendum, to be voted up or down.  To have done otherwise would have been, in my mind, acting without gathering full citizen input.

I would encourage residents to support the BOS and BOF motion, for the reasons outlined above.  The proposal uses available funds to move an important town infrastructure investment forward at a critical juncture, and any funds not needed go back to the ARPA fund pool to be considered for other uses, through that citizen-input process that is now being formed.

One final note – the views expressed in this document represent my own thought process, and my statements are not intended and should not be construed to reflect the views of the other members of the Board of Finance.