These funds generally fall into two buckets: 1) rainy day funds and 2) capital funds. Rainy day funds are needed to protect the Town against economic downturns or unanticipated emergency expenditures. These funds help the Town maintain a strong bond rating which in turn results in a better interest rate when it goes out to borrow funds. Town officials do not advise using any of the rainy day funds.
Town officials are building up capital funds to pay for a new fire station. By using capital funds for the fire station, the Town will not need to borrow money and will save millions in interest costs. If these funds were used for the new elementary school, the new fire station would be delayed unless the funding was handled differently.
UPDATE: On April 3, 2023; the Town Council voted to appropriate $5 million from its Capital Stabilization Fund to reduce the impact of the debt exclusion on tax payers. The Town will seek to replenish this appropriation from the Capital Stabilization Fund by pursuing new federal tax credit payments for energy efficiency improvements at the proposed new elementary school.