CAPITAL PROJECTS

what is capital spending?

Unlike annual recurring expenses which are typically included in operating budgets, capital budgets generally fund one-time expenses or recurring costs that come less frequently than annually. In Winchester, small capital expenses (less than $25,000) are generally included in departmental operating budgets. Larger expenses are considered and funded primarily from one of four sources:

Capital Stabilization Fund - upon review by Capital Planning Committee (CPC) and recommendation to Town Manager
Building Stabilization Fund - upon review by CPC and recommendation to Town Manager
Free Cash - typically as a stand-alone warrant article for Town Meeting review and action
Long-Term Bonding - similar to Free Cash, Town Meeting may consider 20- or 25-year bonding for specific projects/requests
State Aid - Some state aid is available for limited types of work and already assumed in budgeting (example: Ch.90 for roadways)

As a way to pay for building maintenance (e.g., replacement of roofs or heating equipment) and other high cost, long-lasting capital items (e.g., fire trucks), Winchester’s 2002 override established two town accounts, called the Building Stabilization Fund and the Capital Stabilization Fund. A portion of annual revenue is appropriated each year into these stabilization accounts. At this time most of the allocations going into the funds are being used to pay debt service on projects for which the town borrowed funds (or “bonded”).

Click HERE for the Capital Planning Committee's FY20 Report to Fall 2018 Town Meeting.

"The state of the Stabilization Funds is poor – literally. These funds are the Town’s primary way of paying for essential capital projects such as building repairs like new roofs and asbestos removal from schools, road and bridge repairs, replacement of vehicles such as Fire Trucks and Ambulances and snow plows and salters, repair of traffic signals, flood mitigation projects, repair and modernization of our parks and athletic fields. If you are a resident of Winchester, your life is impacted by these funds."

-- Capital Planning Committee's FY20 Report to Town Meeting

Capital stabilization fund

ESTABLISHED 2002

$500,000 committed to long-term debt service in FY20

Only $725,000 currently available for FY20 expenses

building stabilization fund

ESTABLISHED 2002

$2.3 million committed to long-term debt service in FY20

Only $306,000 currently available for FY20 projects

Main Street Bridge before Capital funded repair

By sheer number of projects, the primary sources of capital funding have been the Capital and Building Stabilization Funds. Originally established in 2002 by special act of the state legislature, the funds have not been supplemented with additional resources and have funded so many capital requests (paid outright or through long-term bonding) that they can no longer keep up with Winchester's many basic needs.

When created, the funds were envisioned to allow some money to accumulate year to year so that there would be resources available for planned large capital items such as fire trucks or anticipated major building repairs as the needs arose. With our present-day limited funding, the stabilization funds are usually spent down each year covering only the highest priority town needs. Some years, given unanticipated urgent capital repairs, only a few planned capital requests have been fulfilled.

The amount of known and anticipated Town capital needs are very large. This year there were approximately $20 million in capital requests and the 5-year outlook totals more than $66 million of capital requirements. The schools alone have nearly $11 million in level 1 (critical) repairs projected over the next 5 years. Since the amount of Funds Available for Use in each fund is very limited, the Capital Planning Committee has voted against long-term bonding additional projects. Because of the small amount of money available for Building and Capital projects relative to the annual and anticipated capital needs of the Town, coupled with the potential loss of Retiring Debt and/or the Town Manager’s annual Free Cash contribution, the Capital Planning Committee has largely been constrained to a triage approach to capital projects funding mostly emergency, public safety and mandated projects. Even some of these projects have had to be staged over several years or cautiously delayed to accommodate budget restraints. This has the effect of both increased risks and costs to the Town as projects are postponed.

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