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At a workshop last week, city councilors reviewed proposed changes to Keene’s fiscal policy, including making the capital improvement program a biennial process.

Councilors Randy L. Filiault, Carl B. Jacobs, Philip M. Jones and David C. Richards were absent from the workshop Tuesday evening.

City Manager Elizabeth A. Dragon presented to the council, along with Finance Director Merri Howe. Dragon explained that some of the proposed changes are meant to shift the way the city looks at spending.

“Our current [fiscal policy] language, I believe, unintentionally encourages the use of debt and restricts the use of cash for capital projects,” she said, adding that debt is an important tool that must be used wisely.

The alterations include upping the minimum “useful life” of projects that are eligible for debt funding from five years to seven. That also increases the maximum length of the debt’s term.

Dragon and Howe also proposed tweaking the policy language regarding the general fund debt service, which includes “revenue capital outlay appropriations” in calculating the cap on borrowing.

“The way that it is right now doesn’t allow us to do more with cash for capital projects,” Dragon said.

She suggested cutting that part and reducing the debt ceiling from 15 percent of the operating budget to 12 percent. Dragon and Howe both noted that, under the proposed new calculation of debt service, the city has historically been below 12 percent and is in this fiscal year.

As for the capital improvement program, Dragon pointed out that city staff and councilors devote several meetings and countless hours drafting what is essentially a six-year road map for future projects in Keene. When that’s completed, however, the council begins reviewing the operating budget.

Dragon argued that there’s not enough time between the two processes. The proposal calls for a seven-year capital improvement program every two years, and the councilors would review it during the budget process on their off-years.

With another change, Dragon hopes to pave the way for more revolving funds, which she explained are accounts untethered to fiscal-year timelines, so any leftover money stays in the fund. Keene has a revolving fund for recreation, Dragon said.

During the next budget cycle, she plans to propose that the council establish two more such funds: one for “outside detail,” which would be self-funded through reimbursements for police services, and another for “outside legal,” a fluctuating expense that Dragon said would benefit from using any remaining money.

Under the proposal, tax credits and exemptions would be reviewed every five years in conjunction with the city’s revaluation, rather than the current system of reviewing them every three years.

“When you increase or adjust one credit or exemption, you are shifting that tax burden to the remaining taxpayers, including others getting a different kind of credit or exemption,” Dragon said.

By timing the review of credits and exemptions — such as those for veterans or people with disabilities — with Keene’s property revaluation, Dragon said it levels the playing field for taxpayers and makes the changes more predictable for them.

The changes to the fiscal policy are articulated in a resolution, which the City Council referred to its finance, organization and personnel committee at its regular meeting Thursday night. The finance committee meets Aug. 29 at 6:30 p.m., after the councilors’ summer break.

Sierra Hubbard can be reached at 355-8546 or at shubbard@keenesentinel.com. Follow her on Twitter @SierraHubbardKS.