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The Massachusetts Department of Revenue officially certified Sudbury’s free cash today, at a robust $9,985,147. The certification was made available on the Division of Local Services (DLS) website.
According to DLS “free cash” is “the remaining, unrestricted funds from operations of the previous fiscal year, including unexpended free cash from the previous year.” Basically, it’s a pool of unrestricted funds generated from the previous year’s surplus that allows Sudbury to fund capital improvements, replenish reserves, and manage unforeseen expenses without leaning on additional taxation. When revenue exceeds estimates in the budget, or anticipated expenses aren’t fully incurred (such as when a staff position is vacant for a portion of the year) the funds end up as free cash.
The nearly $10 million certification lands right where Assistant Town Manager and Finance Director Victor Garofalo expected, as outlined in his year-end memo in August and in comments to the Finance Committee in multiple recent meetings.
“The Town concluded FY2026 in a strong financial position. Revenues exceeded budget expectations in several categories, driven by continued strength in local receipts, conservative budgeting practices, proactive collection efforts, and favorable economic conditions. As a result, the Town is expected to generate a positive Certified Free Cash balance that is anticipated to exceed the prior fiscal year.”
(Page 88 below).
The healthy free cash figure was driven by a combination of disciplined departmental spending that resulted in $1,384,147 of unspent appropriations, paired with $4.53 million in revenues that exceeded budget estimates. The Town spent over 99% of what it budgeted in FY26, so that $1.3M in unspent appropriations represents precise budget management, not “overbudgeting.”
Where exactly did the influx of cash come from? A sizable portion of the excess revenue can be traced to historically strong interest rates that boosted investment earnings, alongside higher-than-expected motor vehicle excise tax collections fueled by strong vehicle sales and elevated market prices. In light of the strong local receipts, the Town made less conservative estimates on local receipts for FY27, something the Finance Committee advocated for in recent years, which brings the estimates a little bit closer to the prior year’s actuals.
The free cash came in substantially above the Town’s policy target of 3%-5% of the prior year’s budget, which happened last year as well. Again, that’s not news, as Garofalo and Town Manager Andy Sheehan have been telling boards and committees to expect it for months. The Town Manager’s Budget Working Group is currently discussing ways to avoid an override in FY28, and free cash is a key component of the strategy they have discussed thus far. A strong number could help bridge the Town to FY29 without an override, and do so without directing free cash away from necessary capital projects, which are frequently funded by free cash in Sudbury. Nonetheless, the strong free cash has ruffled some feathers in recent years, and is currently the subject of a financial policies discussion with the Select Board.
Garofalo has cautioned that some of the largest drivers of this year’s free cash are strictly “one-and-done” windfalls. Specifically, the Town collected over $700K in tax title and deferred tax payments during the fiscal year. This included the successful resolution of several long-standing delinquent tax accounts. Some dated back decades. Because these accounts are now resolved, the Town cannot rely on similar windfalls in the future.
Garofalo’s August memo noted “Although FY2026 produced exceptional revenue performance, some of the increase resulted from onetime or temporary factors, including Tax Title settlements, elevated investment earnings due to higher interest rates, significant development-related building activity, and other non recurring economic conditions. These revenue sources should not be relied upon as recurring funding for future operating budgets.”
[UPDATE 9/25 – 5:03p.m.: Garofalo provided a copy of the below memo on Sudbury’s latest certified free cash number. It explains all the factors contributing to it in detail.]
In addition to the general fund, the Town’s enterprise funds also saw retained earnings certified today, including $535,608 for the Atkinson Pool, $270,746 for the Transfer Station, and $41,753 for Field Maintenance.
For more information on municipal reserves, including free cash, check out this Q&A interview with Assistant Town Manager and Finance Director Victor Garofalo.
