Budgeting for Lease Purchases

Litchfield voters determine in warrant article 17, how they wish their budget to be created by the Budget Committee. Warrant article 17 is a non-binding article that advises the Budget Committee to use lease-purchases for items placed into the Town’s operating budget.  It is the opinion of the Litchfield Selectmen that allowing this flexibility in constructing the budget is in the best interests of the voters.

There have been numerous discussions concerning the legality of placing leases into the operating budget. Four times, the Board of Selectmen or the Budget Committee have obtained an opinion from legal counsel. Two separate attorneys serving as counsel for the Town along with multiple opinions of attorneys for the NH Municipal Association have all provided the same opinion; that placing a lease-purchase appropriation into the Town’s operating budget is legal. Nevertheless, there remain individuals who do not agree and refuse to consider this alternative.

The Selectmen had previously utilized lease-purchase for several items in the operating budget. Examples include the purchase of police cars, photocopy machines and other items. The use of a lease-purchase is typically done over the period of three years which applies the cost of these items over that period. While there will be interest payments required to do this, with today’s interest rates at all time lows, the additional cost of a lease-purchase is not high.

Performing an outright purchase as is currently used by the Budget Committee means that the citizens must appropriate that amount all at once, within one annual budget, thus raising the years budget appropriation and raising taxes. It is the suggestion of the Selectmen to advise the Budget Committee to use leases where appropriate in the operating budget by voting to support article 17.