FINANCE COMMITTEE BASIC ROLES AND RESPONSIBILITIES:
The Finance Committee is the official fiscal watchdog for a town. Because it is difficult for all taxpayers to be completely informed about every aspect of a town’s finances, Finance Committees were established so a representative group of taxpayers could conduct a thorough review of municipal finance questions on behalf of all citizens.
The primary duties of a Finance Committee are to advise and make recommendations to town meeting on the budget and other areas of finance. It has statutory authority to make transfers from the town’s reserve fund (a contingency fund usually created as part of the annual budget appropriations) to departmental budgets for extraordinary or unforeseen occurrences. It may approve, with the Select Board, some budget transfers during the last two months of the fiscal year and the first 15 days of the next year in order to close out the town’s financial records.
In addition to its research and advisory role at town meeting, the committee can play a vital role in the financial planning of the town. In some communities, the Finance Committee develops long-range revenue and expenditure forecasts, which are very useful in scheduling large capital acquisitions and identifying major changes in the operating budget of the town.
FINANCE COMMITTEE’S ROLE IN THE BUDGET PROCESS:
The Finance Committee is primarily responsible for submitting its recommendations on the annual budget to the town meeting. In assuming this responsibility, the committee influences the entire budgetary process.
The committee is also commonly involved in the budget preparation, which involves the development of budget forms and, in many communities, the establishment of budgetary guidelines for department heads.
Once departmental budget requests are submitted, the committee reviews them and makes recommendations on the requests to town meeting. Prior to town meeting, the Finance Committee often conducts budget hearings to allow more extensive review of the budget.