WESTBROOK – While the initial vote on the combined city and school budget will take center stage at the Westbrook City Council meeting on May 7, another important vote will impact the final budget figures.

At the meeting, to be held at 7 p.m. in room 114 of Westbrook High School, the council will take action on a recommendation from the Finance Committee to use excess money from the city’s cumulative fund balance to establish a tax stabilization reserve of approximately $900,000. The money would mitigate future property tax increases, create a capital improvement fund and use approximately $762,000 to cover a deficit at the school department.

City Administrator Jerre Bryant said that money to create the capital improvement and tax stabilization funds, as well as the money for the school department deficit, comes from excess cash in the city’s cumulative fund balance, which is money that the city keeps in reserve for emergencies and unanticipated expenses.

According to Bryant, the city looks to keep a cumulative fund balance of about 14 to 20 percent of the city’s total tax commitment, which this fiscal year should be between $4.3 million and $6.1 million. Bryant said that the city has more than $9 million in the account, and he attributed the increase to “conservative budgeting, conservative spending and a modest rebound in revenues.”

Bryant said the vote on the three items needs to take place before the council votes on the budget, mainly because the approximately $23.1 municipal budget sent to the council contains approximately $186,000 from the yet-to-be created tax stabilization reserve that was included to offset an increase.

In addition to the tax stabilization fund, the administration has recommended that the council set aside $1.2 million to be used to pay for the city’s 2012-2013 capital improvement plan.

The advantage of doing this, Bryant said, is to allow the city to avoid taking out a bond and having to pay interest for the money necessary to complete the projects. Bryant added that any costs above the $1.2 million would be covered from other revenue sources such as grants and/or donations, as the city has no plans to borrow money for capital improvements in the coming fiscal year.

The final list of capital improvement projects is still being worked on, Bryant said last week. He has a list that contains such items as money for street paving and reconstruction, a replacement dump truck and a replacement for fire Engine 1. He said that he expects to present a final list of requests to the council at the May 7 meeting.

Bryant said this is the first time in his memory that the city has had the money to have a capital improvement budget. He said it is always the goal to have money set aside for larger projects, but tight budgets have presented this in the past.

“We simply haven’t had the luxury of being able to do it,” he said.

In addition to creating a pool of money to help offset tax increases and pay for capital improvements, Bryant said the administration also proposed to use approximately $762,000 to cover a deficit at the school department. Bryant said while the city and school department have separate finances, it makes sense for the city to use its excess money to cover the school debt.