Investment Committee - Regular Meeting

Well, good afternoon everyone. I welcome everyone to the investment committee. Wendy, thank you for joining us on Zoom. Present is uh Jamie Blaine, Phil Lichenstein, Derland, Mayweiler. Um it looks like uh Mike Bailey is will be finished with his dissertation and hopes to join us uh after at our next be meeting. And so what I've often done Wendy of all my committee members if they have instead of asking them to leave if they have ask for a leave of absence if we really feel that's really important instead of finding someone and asking them to come back is usually they'll never come back. We give them the admitter status and I don't want to defend a PhD. I don't think I'd be very good at it even though I do know how to argue. So, are you sure we screen? We'll get a little screen and we can get a we'll get a motion to do the minutes. Yep. So, move. Here are the minutes. If everyone didn't get a chance to review them prior, I just glanced at them quickly. It was just the Yeah, it was just the four of us here last year at last meeting and we had and we had our person from the bank. Yeah. And will he be joining us today? No. No, we didn't ask him. Right. That was that was a clear thing that we had. Correct. And I don't think he should come every quarter. I think it's really important that we've talked about, you know, and this was tax season anyhow. It's really important that we get him here after the

fiscal again because we're this is like our leadup meeting and we did really well not to only lose that little bit in that quarter compared to everyone else in the world. Okay. So, um, are we still reviewing the the minutes? Yeah. So, uh, yeah, let's go back. Any any corrections, Jamie or Derland or May? I don't have any. I So, so, uh, I move to post the the minutes to the next POS meeting in two weeks. Sounds good. We're not going to make Tuesday's meeting. Okay. Because the packages went out already today. Okay. So, now we can review. Can you pull it off and relax? Because I can't read nothing. I'm going to go walk out and get my glasses and come right back because I'm going to be fighting this like that. Oh, that's that was really good. Can you do that again? All right. So, we'll go on to sit closer. No, I I got it now. I got it now. So, so we're going to review the first national wealth management's performance material that which was the end of the first quarter. Wendy, were you able to get a copy of it or see it? Yes, I have a copy in front of me. Excellent. Um, okay. So we So this is the overall performance summary, but if you look at the actual uh quarterly statement on this on page two with the activity summary, this is our actual um realized activity. The 13294 um million would include either unreal unrealized activity. So down here in the ending market value for activity summary

that's our actual activity. So this ending balance of 13,257 uh,416 that is the actual ending market value. And as you can see we did um decrease slightly but yeah but very slight. It was in a very turbulent time and you know worldwide for markets we definitely fared well and these guys are are pros and I think we've done really well by them and also some of their choices and investments are really designed to weather these type of storms over the long term. We are the municipality. We can't bet the farm. What is the blended benchmark that they use? Do you know? Does it say we have uh Okay, so the blended was um minus.0. I mean, what does is that something where do they get that benchmark? It's because it's it's I believe that's um the it's an excellent question. I I think it's just standard market performance. I think that they have um some indicators that they're able to tell them what the right um rates are for I guess all the other institutions um and I guess compared to the Treasury. Um but that's a good question. I'm I'll ask him. I don't know off the top of my head and it's it's a great the next time we have him on the call, Jamie, let's ask him that because he he will give us a really good explanation. No, he's he's

he's good. And yeah, I just wonder about Yeah, I'll ask him how exactly he comes up with those benchmarks. That's a great question. That's kind of what I was assuming, but again, I don't know the the complete answer. All right. So, now we're on to the pie charts here. So, our fiscal year is January one. Uh 6:30 to uh it's July 1 to 6:30. July 1. All right. So, this this next quarter next quarter. Yeah. Exactly. Yeah. Got it. Okay. So, we're in the last quarter of this current fiscal year, right? As of April 1. Do you want to look at the details on on here? I think they done so well. I don't I I don't I think we were certainly not ever going to micromanage them and I don't think there's really it's a rough time if they could weather that well in the last 90 days. We got to give them we we first of all as a town we're very lucky to be this far ahead to begin with and how it's how well they've done for us. We haven't really, you know, it's not like we lost millions. No, no, it is. A lot of portfolios are down as much as 30%. So very very very good. I'm very pleased. Okay, good. Anybody else? Wendy? Nope. It looks good to me. Thank you. Okay. Because it pretty much coincides with the dates of this administration. Exactly. That's why I brought that up. Which has been volatile to say the least. Well, and ever since that, you know, I could apply some other adjectives. Well, yeah. Yeah, but we're being recorded. They'd be out of the Ethernet forever, JB. Yeah, our commerce secretary though, I'm not too pleased with them. Let's be

honest on that. And you know, I think the tariff thing, you know, is very difficult. And I think it could be it could this could we could be looking at something be a lot worse. Well, the uncertainty of it all. The tariffs are on one day, then they're off the next, and then they're back higher the next. I mean, so no one I don't know how you could predict anything in this in this environment other than to be careful how you bid your investment. Yeah. And ride it out. Don't panic. Yeah. Yeah. Well, the equities were only a certain part and then I see the interest rates are going back up again. Yeah. Because there never which is not the greatest thing. No. And that's what caused the panics, you know, last early last week. The goo the ghosts of Smoot and Holly have risen from the grave, right? But something to keep an eye on here is that so if we're going to the portfolio portfolio summary so over the activity summary when we have the um ending okay so we did the last actually no it's better than I thought okay scratch that it's better than I thought so the cash is is is that an investment or is that just money that we that you might need um between now and whenever. That's another good question. Um I believe that is um liquid. I think we can get access to that immediately. I believe you're correct from from past conversations. Yeah, I think we we do because we have that in our investment policy that we do have that requirement to have um at least 500,000 of cash and I believe um

that this is still uh the result of the large uh deposit that we made uh in September for investments to the CIP. I think they're probably still working with that number and um distributing it most appropriately. Um, and that some of that makes a little bit of money or doesn't make any money. Some of that cash. I I would agree. I would think it would. We did. We actually did well on our cash. Well, on our money, you know, that that's over at this. This is the first at Barber Banking Trust on our money market account, which that's what you're doing with all your sweeps. We're making Yeah, we're doing really well on that. I think we're like just under 5%. Wow. Which is Oh, we've decreased. We've decreased, but we were we were Yeah, but we've done well. Yes, we are. We are uh on track to meet budgeted expectations for interest income in fiscal year 25 despite the cuts. Um yeah, we'll we we have more things on the agenda regarding this portfolio that we can circle back and talk about the um the activity um in um more detail. Um but that's a good overview. If you guys have any questions, I'm going to make sure I ask uh Matt how exactly the blended benchmark is calculated. Um and then how much if the cash and equivalence actually has any return, right? Because that's a lot of money. That is a lot. Yeah, I I would think I mean it would kind wouldn't make any sense to have an investment portfolio not making anything. They always have some form for you know from its past experience. There's got to be I'm I can say I'm certain that that we are making something up. I don't believe this is a savings account situation with our cash and equivalence. But I will I will circle back follow up on that. I don't want to say anything wrong but I I would be shocked. Yeah. Yeah. We don't have

anything that's not earning anything. I believe it's not a parking lot. No, it's not. It's not. We don't have anything that's just hanging out in a savings account. So, but we can get the actual what what it's pay if you'd like to find that out. That's easy. That's an easy Oh, yeah. straight up easy question to get from him. We can get that right. We'll get that right. Easy peasy. All righty. Okay. So, now we can move to our internal reporting. So, so that we hand off to you. This is me. Okay. So, this first report here and let me know if you want me I'm gonna be back in 90 seconds. I cannot read that. What about What if What about Guys, keep going. Okay. Yeah, that's not going to do it. Like to remove that toolbar, but it's not letting me. So, okay. So, right. So this is uh this is cash and cash equivalents right here. This is what the 6.4 million as of um 331. That was how much we had across all of our cash accounts. Um so that's our operating account, our operating ICS reserve. um our uh well, we have a a an account for wire um transfers that I keep empty to make sure that there's no um fraudulent activity. If people want to pay via wire um like pay taxes or pay their marina fees because they don't want to send a check, I do that. But I don't want them getting it sent to the operating account just because giving out that routing out there is not something that it's the best idea. That's good. um we we earn very a very minimal amount on our um elementary school bank account because we spend um their their balance is pretty is pretty minimal because we just transfer money when it's needed. Um so there isn't a lot of um gain from from that account.

Um so are the schools all on this in here too? Yes. Yes. Well the so the school we so we don't have access to their books. They're not in our accounting system, but we transfer money to fund their activities. So, okay. Um, and that comes from our we transfer from our operating account into their bank account um which which we're the signer on. And then in our um account at First National Bank um not wealth management, we have uh $1.4 $4 million that is liquid in cash. Um if we're if we need um any um if we have any cash flow issues, we can pull from there as well as the the reserve. Uh then um we have we have an account specifically for the ARPA funds that we received a few years ago. Um we are still in the process of doing um the a spectrum broadband project with those funds that we got. Um we went in with the with the with Hancock County. They gave us some funds um to add uh to to the pot and um we have had one expenditure which is this 135,000 um dollars and this is our remaining it's 158 but that'll finish out the project um probably in the next few months actually and I have to obligate those funds um by the end of this month so we don't lose that money. So look at that. You didn't miss. Um I was just I'm still on cash. This is just the balance that we have. ARPA. Yep. Uh then we have uh the balance of the uh our bond or capital projects. So, I've broken each of the um since 20 2023 the capital projects are broken out by um by the project and then we designate the cash amount that we've

taken out specifically for each project one by one. Um, so a lot of these, um, we we get the funds from most of the, well, over the last few years, all of the general obligation bonds we've taken out have been with Bar Harbor Bank and Trust. So, we have an a capital projects account where they deposit those funds into, and that has a um, that's in a separate bank account that has a much lower interest rate against it. um because we don't want to um be out of compliance with arbitrage which is not making more money or more interest income than we are paying on our loans. So we miss out on you know some interest by having that's part of our tax and death rules. You can't do that tax exempt. Yes. and MUN bonds. I don't know if you saw that if that the the feds have um identified another way that they can save money, which is getting rid of taxexempt municipal bonds, which is bad for which is bad. Also, very bad. That that would increase project cost by at least 25 to 50%. It's a big it's Yeah. I don't Yeah, we can we can sense. Yes. Yes, absolutely. So, this is the balance that we have in capital projects right now. Um, and I transfer those funds to our operating account as we do the expenditures out of the general fund. That makes um so that way we're not getting that interest. This is a really dumb question. No dumb question. Here's my I just am still confused about the way you use pluses and minuses. Oh yes. Okay. So the

minuses are you add the minuses and you subtract the pluses and Okay. So so it depends um and this is why accounting is such a great thing u because um pluses and minuses mean different when you have debits and credits or if it's a balance sheet account versus a revenue or expenditure account. um these are uh balance sheet accounts. So the positive numbers you see here are actually positive whereas this negative number you see at the general fund that's the the combination between our IC reserve which transfers back and forth. So sometimes the operating will have a negative balance because it has the fund swept over into the reserve account. So in this case what you see with these or lack thereof of minuses um is actual straight positive activity. But when we get to um the expenditure accounts and um income state accounts, sorry, income statement accounts, um those will have negatives because those um have a different normal balance in the general ledger. Um I'll just continue to do it backwards the way it um it is. It is confusing. Um, and I don't I haven't really found a good way to describe it um in in standard terms. Honestly, I'm working on it. I'll let you know when I can wrap my head around that. Right now, I just thinking of more importantly, the money comes in, the money has to go out, and there's always going to be a net balance. So that's what could be confusing for a lot of us that far. I guess I will I will when we go further down I'll point some things out and I'll think about um ways that I can describe

that better. The good news is is for these first few accounts um the ending balance is actually going to be positive. So it's Yeah, we can digest that easier. Okay. So, uh then this I love these reports. Um can you can you see on here? Okay. Um so this right here is the internal version of what we just looked at at the first national wealth management. These numbers right here are what match match those statements. Um, and also where we are tracking our reserves in an Excel spreadsheet that I will show you. That is a beast. Um, and the numbers are the same. Yes, that 13257. Exactly. That is that was on there. Yep. So, it balances. That's it's a good start. Um, so excuse me. So, this Let's see. So, we're going to we're in the 100 fund right here. This is the um un show you actually this I think I don't know if this actually will be easier to see because it might be there's a lot more numbers here but uh that 2.1 million that's our general fund investments. So those are the reserves that are um undesated. We don't have any particular usage for them right now. Um and then we have uh the general fund reserve investments. Those are the CIP um funds that we have for our department's respective projects and um equipment equipment. Uh and then the marina which has to be it's its own fund but this is also included in the reserves. So the total reserves um that are attributable to the CIP is about 84%. You asked about that last

time Jamie. Yeah. So the total amount of the reserves or the our investment portfolio that is specifically earmarked for uh firet trucks, station wagons. No, not those. We don't buy those. Um cruisers, all those uh cruisers. Yes. Thank you. Um that's 84% of our entire reserve portfolio. So theoretically, all of that money will get replenished, but it will all get spent. Yes. And then added as assets. Yeah. It's it's kind of just a money in. Yeah. Um and then like I said there's well it's also it's been also itemized and pledged. That's what you know I think is the really important takehome of this that everything is has been is tagged and going to specific places due to the CIP both both CIPs. I think that's a great improvement. It is huge. You can follow things and know where it came from. So the marina do we have we just get that as the warrant committee for information or correct do you gets invested with our folks wherever yes and who does do we say that's a good job or a bad job or is that up to the harbor committee to say that oh okay um that's an interesting question that's a very interesting question but the answer is No, it's it's I don't believe the Harbor Committee has zero voice. They they get asked to spend the money, but they can't. They there's no they're they're similar to they're an advisor. They're like the sustainability committee. They're just an advisory group. The only one other than us as the investment committee or the board of selectment could make any you know changes to the investment of that. Exactly. Yeah. and any and I when the when the CIP was enacted, I mean it

had to go to town meeting and correct um any the initial allocations were approved at town meeting. Um and the the scope in which those funds could be applied were also agreed upon at town meeting. Um the select board is authorized to approve expenditures from those reserves based on the outline that was provided at the time. Marina goes through the same process as any department head. It's the exact they request the taking of so much money for this particular project and then they tell what the balance will be. So they do not get to operate on their own the board of selectments. Yes. Correct. So at the end of at the end of every board of selection meeting and Wendy could testify is they do what's called treasurer awards and that those are those transactions and how those take place. Correct. Yeah. Are you talking about the new business with the because we have the the new business is the actual agenda items that request the authorization to use those funds. The treasurer's warrant is just a summary of of what of of the accounts payable for the just the vendors. It's where it's who we paid and how much. Um, but that's included in the approval of the treasurer's warrant. Um, but it's something to note that the uh the new business where the agenda items are listing um, uh, requests for authorization that does not necessarily reflect the activity in the treasures report because they will make those are encumberments that they are requesting in advance. they'll show up later and so the accounts payable process they're lagged they won't necessar you're not there are some times where you will see a request to use those funds at the same meeting where we are going to be paying an invoice that's not exactly best practice but in a in a uh we can't we can't release the funds until we have

authorization so it is within our purchasing policy and with them the right it's just it's it's it's like I said not best practice they want to buy a John a brand new John Deere tractor out of the marina reserve funds. They would get the select and approval and then the it would show up in the treasures warrants either the following or the the next following meeting. There usually is some foresight and state. Yes. And it has that does occur if there's some emergency putting the pressure on when there is an emergency. Yeah. when they discovered that they need to spend something right now. Um, and then the vendor needs to check immediately and I'm like, okay, well, they're gonna have to wait till this meeting. Um, and you can ask for you can ask for authorization at this meeting, but we're not going to we cannot send the check out until the board authorizes it. But I just wanted to clarify that that what you see in the treasur's warrant does not necessarily match what you see under the agenda items that are listing reserve authorization activity. Thank you for that explanation. Ultimately, my pleasure. Okay. So, right. So, that's just uh that was just some detail there. We going too fast, Wendy? Oh, I'm with you. Okay. Any questions? No. No. I looked it all over really well, so it it pretty much makes sense. That is the goal. Um and then this is uh this is our um another form of showing the reserve balances for each of our um equipment reserves. So we've broken down um each of these. So we have you know uh public works building reserve, public works equipment. We all all each departments have their own reserves for specific use. Um, and so as you could see like about threequarters of the way down, Jamie, you could see the the

equipment engine reserve for the fire for the fire company and see that high, you know, that how high the amount is there. But what I also see, but we may has tried to explain it to me, but I can't all those minuses. Here we go. They get added to the Okay. They get added. Yes. So this um Okay. And this is interesting. Um the initial setup of the uh CIPs had them um added as liabilities. Got it. Okay. Um and so that's why you can see this negative end balance uh because it's it's a it's a different it's a different account. Um and I think the the the credit balance will it's the new math. It's exactly. Yes. Um so in this case and I mean there's so many different ways to set this sort of process up. You don't have to have them as liabilities, but that is what the town um did when when they um first started the CIP. Um so the reserves are are are displayed as liabilities and this is the the negative balance of their reserve because in assets it was positive and this liability it's it's negative. It's got it. Yeah. Um so this is I will continue to think of ways to explain that. There's got to be a way. I'm going to find one. I'm gonna find a really good one. You got it. Um and um so great. So this is just these are the balances. So when um for the for the most part um when department heads uh want to know the balances of their reserves, they can go into MUNS and find them. At the same time though, MUNS does not account for the incumbrance. Um so when they you know they request authorization to

purchase a vehicle 6 months in down the road um it will we can the fire equipment engine reserve if they have a encumberment for almost a million dollars um that they haven't purchased a new fire truck. So that that is money that's not just on paper that's actually real money. That is money that is in our investment portfolio that I would have to um reach out to Matt Weaver for him to liquidate. And so do they so if they buy something do they they just buy it or do they buy it on Great question. Okay. So all expenditures uh for the reserves and everything come out directly from our operating account. So our general fund everything is paid out of there. That's where accounts payable is. um at the end of the year um it's it's uh it's a for cash flow purposes best practice to to uh make a transfer from between funds. So it' be a due to the general fund entry um where we would take the audited balance of what has been due to the general fund as in everything that's been paid out of the general fund on behalf of the reserves. That's a balance by the end of the fiscal year. Just you know that list of everything that we paid. That's what's owed. Um that's what I would request Matt to release. Um and I would give him enough time so we can move things around. And um I didn't do it last year because I thought I just kind of wanted to see what would what could be done if we um kept um kept that in our uh in the reserves to build them more. Um but this year, not because of a cash flow, but just because I think it's also um a good idea to do a a transfer to um the general fund specifically because of the market that we're in. like to take some of those funds out. Um, but the

encumberment that we have on this fire equipment reserve um is like I said, I think it's 963,000. That brings our balance down to, you know, 1 million something, 1.6 million, 1.9 around there. So, it's not every not everything is what you see this you have to track through the spreadsheet um in order to determine what the actual available balance is. And yes, that is available funds that we have to pay out of our operating account, but does not does not belong. It is not it does not come from the operating, you know, I have to transfer. It has to there's there's Yeah, there's a there's a way they get they get in there. Anything see? Okay, those are total reserves. Uh then we have uh couple trust funds Stanley Reynolds scholarships that we um we give to u MDI high school students um graduating seniors. Um it's the which is coming right up. Correct. Yeah. It's the uh they each of the trusts has a covenant about what exactly can be done with the income um in addition to the principal. So the princ the covenants say the principal must remain the same but any income earned in that year can be used for the purposes that they line out in um in in the initial endowment. Um so I mean we're it's it's it's small small amounts. Um these these endowments are from the 50s60s. Um, and this is at Bar Harbor Wealth Management. And we actually, this last quarter was actually good. As you can see, we had a increase of $620. Um, but so there's no incentive to grow that because

because of the restrictions on the initial restrictions. Yeah. And it was these are gifts were given back in the 60s when you know completely different. Yes, exactly. A completely different um circumstance and the requirements you know they $100 can go towards the scholarship. You know that back in the 60s that was a lot of money good amount of money for a scholarship. It's very interesting. But um because of the restrictions that we have on them, yeah, we we actually, like I said, had a good quarter and we had um earnings of $620 in our trust funds this year or this quarter. Last quarter we had a loss. So it's always good. And then this is uh another example of different um financial statement accounts having different balances. These are revenue accounts right here. So they'll show a credit balance um which is this negative amount of course of course naturally as in negative. Um so as you can see so the total of uh what was budgeted for um investment and interest income in 25 was this 410. Uh and we are almost there at 92 uh% as of the third quarter of fiscal year 25. So, we should be able to be on track to to get that 410. Uh, it won't be as good as last year. Last year, we we were over by over 180,000 of our budgeted um budgeted revenue. So, interest rates increased substantially. Now, did these guys try and forecast interest rates or not? I think I mean they he talks a lot about potential upcoming cuts. So yeah, I think they I think they do. They try to be in in front of market trends. Yes. He says proactive a lot.

Um and then you can see here u we have our our uh the account that houses all of our bond funds. you know, it has $6 million, but this is how much interest that we have gotten um in the last uh three quarters because of our um restrictions on interest income on tax exempt bonds. And this actually that just gives you a total right there. We're super close. Super close. 97. Okay. You know, one of the things that I'll remind Jamie that comes up in the water committee, people don't understand county practices. Why? Why do we bond things? And we explained that we should never be on the hook for money. We shouldn't put out money in advance that we don't need. Yes. Yes. And also another thing about um right for for for the potential to decrease taxes doing that way because taking it on the brunt of it would be a huge increase to to um residents. Uh and then the other thing is that I think when it comes to either you know using reserves or pulling from something that isn't a bond like easily or not is but but readily accessible funds like a bond. um the people that are paying for the bond won't see the benefit of or okay people that are if you do not bond and you go ahead and do those projects like out of a reserve or out of an undesated fund balance um you know the reserves that are going on those are in the future so a lot of the times that the expenditures and the tax increase that are affecting the residents they're not going to see the benefit of those projects in their lifetime I mean potentially so when you take out a bond the be it's the most immediate way for residents to be able to see the effect the positive effect of their tax dollars. That's why I mean that's another reason why bonding is it's about

you get the money as soon as possible. You don't have to wait and you get the pro and you pay and you pay as you go. Pay as you go. So versus take, you know, crushing all your reserves. Crushing your reserves. So having the money invested versus, you know, I think you understand that how that works, but to people that don't understand, you know, accounting practices and how municipalities did their accounting practices. Well, why we have the money, why are we just spending, you know, why do we, you know? Yes. And we've I've heard that in our meetings and I said, well, it just doesn't work that way. Yeah. And I think your explanation is really good. I'm working on it on over time. No, but over time and the immediate SP what you're spending today, right, over 20 years, those you know those those little bit of interest that you're paying each year versus zeroing out your reserve account. It's it's much and you never know what you're you know what you might need in those reserve accounts waiting to rebuild what's going to happen in 10 12 years. Yeah, it could be a lot different. Well, that's why it's a concern that people who think that way and would see that we had all this money would say, "Well, why don't you give it to us?" Well, I I think I think the Robin Hood effect comes in, you know, because I mean, the the other way to do it is if you know, we don't have these these growing investments, then we're we're going to have to raise taxes. Yeah. That's the otherwise we can't just go out and purchase a million dollar fire truck because we'd have to raise taxes that year just to do that. So is what you know you know significantly as well the whole idea the CIP as you know as we're nearing your end of your tenure Darling and one of the you're you

know one of the things that you really helped the town with is our chance to say that was creating the CIP which takes all the spikes away and then we don't have all these individual reserve accounts that we were picking money away from as we went we now we have a forecast and a plan and now that our CIP is fully funded. Yeah, you're there. And it took what three to five years to to complete it roughly. Yeah, it did. So, I think the town thanks you for that. That is our chance to, you know, say some nice things to you along the way. And I think that, you know, in the next 20 years, I think this will really be a great benefit to the town so we can predict and have some way to navigate the future. And things are unfortunately things just continue to cost more. Yeah. And it's just inevitable. And when we have things like schools and buildings to take care of and I don't think the price of fire trucks are going to go down any day soon. No. No. Does not bode well. Um so this next item number five um this is very much a discussion in advance because we can't do anything about it yet. Um, but we I looked in prior years and the investment committee was involved in the decision to pull from the capital gains reserve. Um, so I wanted to bring it up at this meeting because our next one wouldn't be until July and we would already have done the assessment by then. Um, and then this wouldn't even matter. So, um, I brought it's going to be it's on the warrant for the town meeting in a couple weeks. Um, it's a discretionary spending article. We had one two years ago. um where if the market conditions are conducive with this uh to potentially take funds from the capital gains reserve um which is included in our reserves, but it's it's

outside of the equipment reserves um and potentially taking an amount based on the market to lower the uh the assessment for the 26 uh commitment. So, so that that wouldn't be a cash transaction. That would just be lowering taxes. You wouldn't be paying me no. You'd be paying us less. That's You'd be paying us less. No tax cut to Jamie. No. Yeah. It'd be it would potentially lower the amount that we are. So, basically, it lowers your tax liability as a cit as a significant. So I the discretionary spending article I have up to 200,000. So we can do anywhere between zero and 200,000 which is more of a nickel. The town has to approve this. Um but I the it's pretty standard to to 250 200 based on the market. I said probably up to 200 because you don't want to do more than that specifically in this market. um because the capital gains reserve and I can show you um takes the brunt of market volatility um and that was set up and allocated that way to protect the equipment reserves from losing any of their principle. So if the market crashes all of the activity or all of the all of the um all of the loss would hit the capital gains reserve. You just answered one of my questions. Good. That's great. Efficient. Um, so as you can see right here, so in the quarter, this is the loss that we had um in in the um investments, the change in market value was was almost $200,000 negative. Um, so obviously the sales and purchases that

net out, but um, the $200,000 difference here, like I said, comes directly out of the capital gains. And I'll show you the capital gains down here. So, it is included in our uh our reserve uh when it comes to uh the list of assets and equipments and stuff like that. just this is specifically um earmarked for changes in the market. So if we have a really good uh really good quarter then the capital gain reserve is going to be fantastic. Um and then if it's if we have a really bad one then then it's going to you know wipe it pretty much. Um so basically if there's so this difference right here this is going to be the uh purchases that we need this K 100 I have to it's an Excel formula so this right here um this plus this right so it's the loss and market value right and then the net Cash sales believe those were that yeah not cash sales purchases. So you know the decrease in our because we purchased it's the activity basically it's what they they made purchases of of of stocks bonds all of that. So that loss in the overall market value um is this 246,000. Um so that means this sense that because it's that loss is coming directly from the capital gains reserve um the impact that it has is going to be much greater on the reserve balance than the rest of. So if

we have like if if we have a decrease of of 1% in the entire portfolio the capital gains reserve would be 12 like down 12%. Um just the it's because we're the smaller it's smaller allocation bigger allocation to this smaller amount um it just it it it's more effective. So that's something to consider that if the market falls and we want to pull from the reserve, that's not it's not a good idea and that's why I didn't do it last year because it was so volatile last year as well. Um so it's an available tool that she doesn't have to use. Yes. So that's why it's discretionally invested I assume. Yes. Um good. I I well actually um this is the Okay, so the I'm so sorry the the the first doesn't um they're not they don't know exactly how we do our internal allocations and breakdowns. So that reserve um isn't invested or the capital gains reserve isn't invested any differently than all of the other assets in our portfolio. It's just the way that we internally allocate it. Oh, okay. So for us it's it's we're we are internally allocating it to more a higher percentage of higher percentage of the market activity. Um and that's you can see right here um the that's just how you know we here's our negative activity right here and the general fund investments and then the general reserve the the capital gains reserve like I said is included in this uh the general fund reserves including all of those assets. So it's included but it's its own reserve and that is assigned the highest allocation when it comes to

market volatility and the effects of that. Um so it's like I said invested the same amount or same way that everyone else is all the other ones are. Um but last so two years ago um the town pulled $100,000 from the capital gains reserve. there's a discretionary spending article that had up to 250 and then in June right around the time it was going to be for the commitment um the investment committee um recommended 100,000 um and that was what was done. So if your tax rate is based on your value of your property, correct? The the big houses are the ones that get the benefit from that 100,000, right? Well, it would just affect the mill rate. So the if the mill so it' be all it would be everyone would have effect. I mean it we're out of the same lot. Yeah. Of course, like the more money you pay, the more it's gonna decrease back. Yeah. But at the same time, if you're paying less, then you still pay less. But it's all per, you know, the bill rate's all based still on per thousand. I I just I don't know. This is just a hypo theoretical question, which is is it worth is is this is is the reason for doing this to kind of say we're doing a nice thing for you even though it's really pennies that could be better saved and invested by the town. I It is an excellent excellent question and um I cannot answer that. Um, no, that's sort of the Exactly. Exactly. Um, that's exactly I think it's it's

I my way that that I think of it is is is I say similar in that um we have all this money, we have, you know, potentially an opportunity to lower taxes. So, it's sort of a it's a goodwill intent. Um, but $100,000 is not going to do a lot, but it costs, you know, the the households that we have, it's not a lot of money. And yeah, like you said, that's I mean, that would be 100,000 be like two and a half cents. Yeah. Yeah. But I'm glad to get it, but I wonder if it's not better investing. I'm sorry. And that's why we're That's my two and a half cents. But you could you could I have some ideas. So yeah, that I mean that's really up to it's up to but but it's an available tool if we needed it. Sure. Or if we had spikes some year up. No, I'm not opposed to it. I just I'm just It's confusing. Listen, it's very esoteric and confusing, but at the same time there's it's a lot of clarity in it because there's only you can it's only one thing you can do with it. Yeah. And the idea of capital gains to a regular investor, you have to pay tax on it. We don't. Correct. Not a sense for now. For now today. Let's hope that doesn't happen. It would be really I think it put a lot of small towns in Maine in trouble. Yeah. We would be fine. I can't even I mean we could from what we have in front of us, Wendy, we can weather things that a lot of small towns in Maine can probably not nod if if if they start taking that the that away 100%. And I think, you know, it's I think some people, you know, when they see that figure, you know, that reducing

the tax rate, even though it is minuscule, I think that it makes I don't know. I think it makes some people feel like they're getting a teeny bit of something. Yeah. Yeah. And that's the whole point. Yeah. The whole the the theory behind it is to address that you fact that you have overt taxed the people the year before. Exactly. So you give it back the next year. You took too much from you last year. That's the That's the undesated fund balance. That's a difference. But I mean it's the same. I wouldn't put it that way. What's that? I wouldn't put it absolutely not. that would have been overt tax. Well, you know, but the problem the problem is that when the budgets are done 18 months in advance, you don't know how it's going to be. It's a gamble. Yeah. And but you have to gamble because you want to take a little bit too much more than too much less. Right. Right. I think it's a fine idea because we don't want to be in a situation where like you we have one of a department head has to come to the board of select and say well listen you know we budgeted this and we're o and you know we're over budget and now we need to ask which we have had we've had to do several times especially like on the the recycling program that was like a perfect example when we got hit with the 8% CPI increase I mean our budget was totally out of whack because we had we had anticipated you know, two to 3% which had been, you know, the standard and that's usually 2 to 3%'s the standard over a decade, but all of a sudden in that decade, you get one that hits eight and oh my god, in the year before it was one, you know. So, I I would like to note though that when it comes to pulling from the undesated fund balance, there is that the concept that, you know, it's because we overt taxed you the year before with the capital gains reserve. It's not that same situation because it's it's it's it's an extra benefit that we can use to benefit our constituent. So, it I think

it has a more positive message that we have this opportunity to lower taxes as opposed to going backwards and say just kidding. We we we got too much from you. This is a different Yeah. Yeah. Exactly. Yeah. It's a it's it's it's it's good, but at the same time, it's very very very hard to tell. Many times don't have that opportunity to pull from a UDF. No, because they utilize every single dollar. They're in the red all the time. We're not, you know, we're very we're still very blessed and the five of us should pinch ourselves and I want to thank, you know, our two both our town manager and our finance director for doing the good job. With that said, before we get to other business and while we're and have we had our audit and when does the audit take place? No one's got it yet. None of our towns have got them. No one's got They're still in the school. Um we last year was like a day or two before town meeting. We had the meeting May 1st when they presented it. Our meeting was May 7th. It will probably be September again this year, I'm guessing. I reached out to them today. I'm waiting to hear back about availability to present in the next couple weeks. Um, but as of today, I do not have it. And um, but they have the books, they have the numbers, they have everything they need, right? I specified I said, "Is there anything I can get for you?" We just have to kind of So, we're just It's the waiting game. Like, everyone's in the waiting game. Mhm. I specified that uh I didn't want to have to reschedu our town meeting. So I think they know the urgency. Um but u she said there's other towns and schools waiting on theirs as well. So I mean I think that is the reality of the situation going forward especially since

uh the amount of auditors in Maine are decreasing rapidly. So we're May our time it's May 6. Yeah. Yeah, that's gonna be a busy have a busy week. Yeah, it's gonna be great. And Jesse graduates on that Saturday. So, yeah, I get to travel again. Okay, keep go. So, we're close. So, I said well no, I took the calendar out, too, because that's what that's our next agenda item. Are there more? Do we have more do more to follow here? I mean, are we all before we move on? Are we all comfortable with item five and understand how the capital reserve article is which would there was no push back if the warrant committee or questions it's just a standard thing that happens very standard yeah no but does anyone have sorry Wendy go ahead no that makes sense to me all right did is there an amount that you recommend that you want to recommend to go forward or do you want to have an emergency meeting in June to discuss a poll um before it's done an exact amount or Oh, for five. So, I ra I like how you had it list not to if you do like as you said not to exceed 200,000. Yeah. Right. Because that number does not go to town meeting just the article that we're taking the money. We could take $5. We could take $5. What as the finance director, this is where you get to put that hat on. Um, do you think 200,000's enough or too little? I love the words not to exceed because that gives a lot of that gives us a lot of wiggle room. I think that's a smart those are smart words to use which we do on you know most of our requests any our lawyers are well we're all lawyer trade unfortunately I ask the

planning board uh Amazing. It is amazing. Um, yeah. I I mean, I can't I can't dictate this. We do. We do Does it do we need do we should put a dollar figure today while it's the five of us or do we can just leave it open? We don't want to have an emergency meeting. I'm with you. I think so. We should come up with something today and just because we pick a number, we don't have to use it. Correct. Sure. So, I propose that we use 200,000. not to exceed 200,000 in our discretionary spending article. I would Oh, I can't vote. Never mind. I can't vote. Right. Jamie can see you can vote. You can vote. You can vote. No, I think it's me that can. Yeah, I think you can vote. I think she You can vote. Yes, we have a because of her. Yeah. I would like to know. Um, two years ago it was 100,000. Ah. Um, and that's what we did. Then we'll do a 100,000. We don't need to. Do you think there's no reason to double that, right? I don't think so. You said 200,000 then. If it if some some miracle occurred in the next few months. I said perhaps 200, but let's just do a 100,000 then. Okay. So, can you do the mo I'll take back Wendy? I I'll read I'll do re redo that from the discussion. I make a motion to for the discretionary spending article approved at the 2025 that meeting that the capital to reduce cap uh to reduce tax commitment should not exceed $100,000 right I just I feel like that's even less pennies at least if we set up to 200,000

and it became a h 100,000 And it would at least I don't know. I just feel like it it gives a good face look that it's four pennies instead of two or something like that. Yeah. Yeah. Yeah. The last time we did that, wasn't it left? I mean, when the the warrant article says up to 200,000, didn't uh Jake finally, wasn't he the one that made the final call on that basis? I can I can answer the question. Okay. So, uh, two years ago, the discretionary article that was presented was for up to not to exceed $250,000, right? Then at the investment committee meeting before, actually it was after it was in June, so after the article had actually been approved up to then Wendy suggested according to the minutes, $100,000 um to be utilized at that time. that was based on recommendations that you know for real numbers that we kind of had. Yes. Because this was actually in June and it was an appropriate time to actually make that decision. So you were totally right about about that amount um because it was closer to the actual time where you'd be doing that. I like I mean I like that. Um you know if we were to say up to 200,000 and then in that June meeting it can be changed obviously because we're saying up if you don't have 200,000 you can't do it. No I mean so then you then you actually have real dollars to think I think it's all sufficiently big. I will I will second whatever the numbers I mean 200,000. We just stick to the 200. Let's stick to 200. 200 safe, right, Wendy? Yep. I I agree. I think that it just gives us a smidgy of wiggle room. Sounds good. I'll just put it in the minutes that we had 200,000 boo to not exceeded. Yeah. Right. Just just to to to um replicate the Warren article essentially. Cool. It's a good

good plan. Um anyhow, I think it's good. It's really healthy to discuss stuff like that. Yeah, that is good. I think it's awesome to hear. That was a I I agree, Wendy, with with the um with that take about how it's even though it's a couple pennies, I do think it it has a better um better look. And you you it'd be hard to calculate from your own tax bill exactly what the number was that the select board. feel like it feels good when when I think my my tax bill was reduced because we had a little extra money and and it you know absolutely and the most amount and doing the most amount possible like it's the I think there's a there's a good optic and um goodwill basically I think it it yeah I agree that's a great way to put it just a a goodwill commitment yeah yeah yeah the next meeting I have to run it get a dog at daycare. So, yay. Um, July. Yep. July. Okay. So, I am not available. I'm only available between the 2nd and the in the 18th this year in during July. So, I propose how about the Does Friday the 11th of July work for people? No. We won't have our reports for the quarter by then. So what's diver? Could we go to September then? So okay I we so there I think there's a couple options here. We could meet in June prior to the commitment and decide on a number then. So it would be two months instead of three. It would be even better than quarterly. So um and then not meet until

September or I guess October in that sense. But so I mean that's that's an option or we could go to August. All right. So, I'm booked from the 21st of of June through the the 1st of July, and we can't I can't schedule anything in that time. Okay. Could you do like the the 12th or 13th of June, Bill, or is that too early? May, we don't have our quarter reports by that time. usually the it's the end of the or 6:30 and then it takes them 10 12 days to generate I get them until Monday this week and I was out of town at a seminar this week so I pulled everything together last night I don't I don't I mean we could now yeah we want to have the reports for the quarter but if we met it well if we met in June we wouldn't have them anyway because that's in the middle of the quarter right so the quarter ends So we could meet whenever whenever in June uh because the second quarter wouldn't even be complete yet and we wouldn't have So what would we talk about? We would talk about the discretionary spending article and how much we should pull from capital gains. That would pretty much be the only thing and then our own um internal activity. But I have to have my reports to reconcile. So it could have unreconciled activity. Yeah. So, I'm super flexible and after graduation at the high school until school starts. So, I'm sorry if this dog or my daughter will disown me. Sounds good. We'll let you go. We'll mail you when we have a date. Yeah, we'll ponder it right now. Thank you so much for your time and your input today. Thank you. Have a good holiday weekend, please. Thank you. Bye. Bye. Happy Easter. Bye. Bye. Oh, she's got the week off. while the kids are gone all next week. So, Patriots Day is a holiday and then the

the school vacation week is the rest of the week. So, I think the st support staff still goes in. Yeah. Yeah. Is so July 25th is off the table. July July or or July 25th. If you want them I have people coming in the 21st. So, it have to be the the I could do the 18th and I could do the 15th of August or we can push it all the way to September 12th, which is a Tuesday. I guess we could have September 12th. Oh, I'm on August. Sorry. Sorry. So, yeah. So, let's see. My get that round of guests leave the 11th. So available the 15th or the 22nd or the 29th. We all really want to get together in the middle of August. The 29th is a Saturday. 29th of the August is a Friday. When does the quarter end? Let's see. Let's go. All right. So June 30th. June 30 is the end of the quarter. and the end of the fiscal year. It might be better to meet in August honestly because wrapping up the fiscal year is very involved. I agree. August then I could do the 15th, the 22nd, 29th or or the 12th of September. What about the 29th of August? Nice hot day. We'll all be in charts. Exactly. sundresses and whatever. Exactly. How about you? You are you is that do you prefer to wait after Labor Day because I um I don't plan that for

ahead. So it's wide open now, but who knows? I've got what's the what's the grandchildren? Arriving sometime. I don't know when. Like the 5th of September because it gets us through the summer. I don't think a week's going to make a difference. I might be out of town that weekend about the 12th of September. What about the 29th? I know I'm going to be here because I What? You don't like the 12 either? You're looking at me funny. Too far. That is too far. And Wendy will be back in school. She'll be back at school. Yep. Yep. School starts that week and I think the kids So, or does it start the last week of August? Let's go back to you here the 15th or the week you're away. Uh August back in August. Um I will be here on the 15th. Let's propose the 15th because the the 22nd is not a good day for me. Okay. And we'll be discussing quarter four of of fiscal year 25. Correct. Correct. Yep. And if we do need to have a quick meeting on item five after town meeting, let us know and we'll work. What do you think? Are you good with that? Yeah, I know it's far away. That's why you could pick any day to be worse. Well, I I had to do I did all my scheduling for all my committees and I have perfect and with great push back from some committee members that refuse to meet in July and August because people don't turn up but we're a very small tight group. When do you will you still be with us? The last day. That'll be your last day. What? Oh, the 29th. Yes. Sorry. He'll still be with

us. Yeah. Oh, theoretically we'll have a cake. Hopefully by that time should be probably will be me at that time because by that time the new person better be in place like the 29th do the 29th over the 15th. Um probably still I have to did you say 20 29th is probably better for me. Yeah, just do the 29th because it's close to Labor Day. We start. All right. So, that's the start of Labor Day weekend, everybody. Just so you know, that's not going to work. That's why I kept on pushing for the following week. Well, then what about the 15th? That's the 15th. That's what we're having. That's why we're here the 15th. Right here on my calendar. The 15th. Well, it's in Jamie's phone, so therefore we can't move it. I don't know how to change it. So, we'll do the 15th. Now, other business. I want to do some quick other business before we leave. What time? 3:30. Always 3:30. Okay. Last time I was 2. Yeah, I got to leave two minutes. Okay. Better get going. I don't have to I like 3:30 is good because it just it allow it's late enough in the day you can finish what you're doing. Or if I'm on the water and if I have a changes in household guests and things like that, you know, I'm booked as a captain that week, we'll have to defer. Okay. But we'll start with the 15th at 3:30. Sounds good. We can move if needed. Other business the guests leave the 11th. Other business. I'd like to discuss that whatever new town manager that we do hire that we'd like to have again included in this committee. That's all. Oh, great. And for some reason they're here like in a training, you know, if they're here and you're still here, I'd like to invite them also to would everyone be comfortable with that and would you be comfortable with that asking? Yeah, that that day I may or may not be here anyway because of that managers

thing that might that's usually that week. So, okay. You still going to workshops? Well, I'm trying I want to get my certification, keep my manager certification because I might want to do interim work. Oh, I gota do and so that's important to have that bar counselor and town manager. No, I'm not going over there. that not even on an interim basis. How about Jesse Dumbar? They got rid of him. I don't think they'll get rid of Jesse. No, they'll hang on to him. He's a good guy. He is a good guy. I like him. Very capable. Questions, comments? I want to say a couple things. Thank you for all your hard work that you do every day for us and thank you for your explanations. Jamie, thank you for coming. Wendy, you're not here, but thank you. And thank you. Do you have any other qu You had great questions as we went. Any other comments? Thank you. Thank you. Thank you for being my grimmer. This is not easy stuff. This is not looking at a regular investment portfolio. It's not. No, this is not easy. Not easy at all. And it's like look, you know, looking at market sweeps and things like that and even the standard portfolio is complicated enough. I mean, I can get it with it about 20 cents, you know, I'm pretty it's silly interest rate things. It's like it's really hard to It's like, "Oh, right. The IRA got a flint there. Get you every time." Yeah. It's not like dollars. Holiday weekend. That's right. Oh, yeah. And the market was shut today. I commented, you know, I thought that was great to pick a day. That's why Weaver did he had a day off. That's why he did. We So, do we want Weaver to come on the 15th of August? That would be the other It's a great question. I' I'd say yes. Y Okay. How about you? I like Hey, we pay you guys. He's happy to come. If he

Yeah, if he can come. Absolutely. I would. But my only question that I have do have to run would be uh since it is so vague as to when we're actually going to be meeting because of schedule changes and stuff. I'd hate to sign him up for the 15th and have us change it. Sure. So, as long as he knows that this is he has a summer home not too far from in in the Mid Coast that he tends to like to go to on a Friday. So, he's come in person and and you know and then gone back to the summer home before. We haven't had him in person since co when it gets closer to the meeting date, I'll reach out to him. Okay. Um get probably give him at least a month um in advance, maybe two weeks. How long in advance of that will you have the your entertainments? You think? Um, we'll probably see those sometime in the first 10 days of July. Yeah, that should have. Yeah, I'm just thinking about my reconciliations that go in addition to um the statements. I should I should definitely have them by then. Okay. They'll be unodudited, but they will be I trust you. We got We got this this quarter. They had it la You got them last Friday, right? Uh I got them on Monday. Monday this week, right? So the 14th. So So this will probably happen this the 14th of July roughly. And then that gives me a month to It should be okay. Great. Okay. I need to adjourn this one. You're good. We're all go. Second. Second. Okay.