Understanding Highway Budget Reserve Funds
Posted by the Elmore Selectboard | June 2025
It’s rain, storm and, potentially, flood season in Vermont. Learn how the Town of Elmore uses reserve funds to manage storm recovery and emergency repairs—without debt, without delay.
Why This Matters Now
Every spring and summer, Elmore faces unpredictable weather — from washouts and culvert failures to equipment breakdowns. The Town’s ability to respond quickly and avoid borrowing hinges on one thing: financial planning. That’s where our reserve funds come in.
At recent Selectboard meetings, we discussed large infrastructure payments that occurred outside the regular budgeting cycle. These moments are important opportunities to explain how our reserve system works, why it’s in place, and how it protects taxpayers from unexpected costs and disruptions.
This FAQ is part of our effort to make Elmore’s finances more transparent and accessible, especially as weather challenges continue.
FAQs: Town Highway Budget and Reserve Fund Management
Q1: What was the $500,000 in last fiscal year’s highway spending?
This figure reflects necessary expenses for deferred plow equipment and storm-related bridge repairs, with invoices arriving in early 2025 — after the regular budget was approved.
Q2: Does this mean the Town overspent its annual budget?
No. These payments were made from the Town’s Highway Reserve Fund, which exists for exactly these types of situations—unbudgeted but essential expenditures. The operational (annual) budget remains intact and within scope.
Q3: Why might this look like a budget overrun?
Expenses paid from reserve funds can sometimes appear in reports as if they are “overages” in the main budget. However, the reserve fund and operating budget are two separate tools. The reserve fund is tracked independently, and these transactions are not budget overruns.
Q4: Why does Elmore keep money in reserve funds?
Storms happen. Elmore experienced major storm damage in 2023 and 2024, requiring rapid response. Without reserve funds, the Town would need to borrow money or delay repairs until federal/state funds arrived. By maintaining a healthy reserve, Elmore avoids debt and keeps roads safe without delay.
Q5: Will FEMA or the State reimburse the Town?
Yes. FEMA and the State of Vermont typically reimburse eligible emergency expenses once a disaster is declared and their representatives assess damages. That money is then used to restore the reserve fund that covered the initial work. Reimbursement may take up to 18 months so the Town leverages reserve funds to close the gap between incurred repair expenses and reimbursement.
Q6: Who decides when to spend from the highway reserve for storm damage?
The Highway Commissioner can access reserve funds for urgent, unbudgeted needs. All transactions are reported to the Selectboard and reviewed during quarterly and annual audits. The Highway Commissioner also updates the selectboard, clerk and treasurer weekly and at the monthly public selectboard meetings.
Q7: Is this process transparent?
Yes. All reserve fund expenditures are tracked, reviewed during the budget process, and included in the Town’s annual audit. These records are public. The Selectboard works to ensure that all financial activity—whether operational or reserve-related—is communicated clearly and appropriately. Every reserve expenditure is public, audited, and recorded. Meeting minutes and full recordings are posted at elmorevt.org.
Q8: What would happen if we didn’t have a reserve fund?
If Elmore lacked reserve funds, the Town would likely have to call special votes to approve short-term loans to cover unexpected expenses. That would delay repairs, increase administrative burden, and cost the Town interest. Fortunately, Elmore has not had to do this because of forward-thinking financial management.
Q9: Why not include these expenses in the annual highway budget?
Elmore’s annual operating budget is focused on known and recurring expenses—like payroll, maintenance, and fuel. Emergency repairs and storm response costs are unpredictable and can vary widely year to year. If we budgeted for every potential emergency, the annual tax burden would be significantly higher. Reserve funds allow us to plan responsibly without overburdening taxpayers.
The Elmore Selectboard meets monthly on the 2nd Wednesday evening at 6:00pm at the Town Offices. Attend in person or join via Zoom. Visit elmorevt.org for the agenda and access links.