What is the Stabilization Fund?
Massachusetts communities are permitted by M.G.L. Chapter 40, Section 5B, to set aside money each year to be held in a Stabilization Fund in order to provide for emergencies and unforeseen expenses. The funds can be used for any lawful municipal purpose, but a 2/3 vote of Town Meeting is required to make an appropriaton from the fund. Rating agencies such as Standard & Poors look at the Town’s reserves, and especially the Stabilization Fund, in setting the Town’s bond rating, which in turn determines the rate at which Rockport can borrow money. The Rockport Finance Committee has set a goal for the Stabilization Fund of 5% of the annual operating budget, or over $1 million. The fund was successfully increased to $728,834 by June 30, 2002 but was tapped by $350,000 to balance the FY ’03 budget.
