(Host) State Auditor Tom Salmon is advising town officials to be prudent’ with the money that they’re about to get from Montpelier this week.
Municipalities will be receiving their portion of the $135 million the state is paying out for homeowners who are eligible for the Property Tax Income Sensitivity Program .
In the past, checks were sent directly to taxpayers who were eligible for income sensitivity. But now, the state is wiring payments directly to cities and towns, which, in turn, will apply the payments to an individual’s tax bill and adjust it accordingly.
Meanwhile, many communities will be experiencing a large inflow of cash right now, and they won’t need to spend that money until their school payment is due. And that can vary from a few weeks, to 6 months or longer. Tom Salmon says towns can benefit from managing the money carefully over that period of time.
(Salmon) “You should call 3 to 4 banks. You should figure out what CD and Money market rates are. Of course, you’re going to be safe. But, there are cases where towns have taken $2 million and gotten 5.25% over 6 months and nearly paid for their finance operation by doing that. Using cash management has actually paid for part of their operation by doing it wisely.”
(Host) Salmon says it’s very important for schools and town’s to have their books in order’ – to know what their anticipated receipts and expenditures will be so that they know how much to invest.
(Salmon) “I think what happens is, sometimes they don’t really know where they stand, so they’re afraid to put a block of money away for 60 days, 90 days, 180 days because they don’t know exactly how much they have to work with. And that’s something we’ll work on in the months and years ahead.”
(Host) Auditor Tom Salmon says the income sensitivity payments were sent out to municipalities on July 1st.
Note: More information on Short Term Investing Guidelines is available through State Treasurer Jeb Spaulding’s website.