The Hudson Board of Selectmen spent part of its final meeting of the fiscal year reviewing and discussing a detailed list of proposed encumbrances for FY26, a routine but important step in closing out the town’s financial books.
Hudson Town Administrator Roy Sorenson explained that encumbrances are a standard part of the year end process, allowing the town to carry forward funds for projects or obligations that have been approved but not yet completed. Although Hudson regularly uses encumbrances, Sorenson noted that the town does not currently have a formal policy outlining when and how they should be applied.
“Typically, we don’t, but it’s not a bad idea,” Sorenson said, adding that establishing a policy could help clarify expectations and ensure consistency. He said he plans to bring the idea to the Policy Subcommittee for future consideration.
Sorenson pointed out that the total encumbrance amount for FY26 is “large,” noticeably higher than in previous years. The primary reason, he said, is Warrant Article 10, approved by voters in March, which funds the Lowell Road and Birch Street Intersection Improvements, a major infrastructure project that spans multiple fiscal years.
“If you go into the breakout, you’ll see it’s because of the Lowell and Birch warrant,” Sorenson said. “That’s the major number in there.”
The total encumbrance amount presented to the Board was $3,619,704.92, with $2,553,000 tied directly to the intersection project. Sorenson emphasized that without that single warrant article, the remaining encumbrances fall well within the town’s typical range.
“So that brings you down to $1.1 million, and that’s kind of where we are generally every year carrying it over,” he said, noting that many departments routinely have multiyear projects requiring funds to be held over.
Sorenson highlighted Development Services as a prime example of a department that regularly needs encumbered funds. “Typically, Development Services is a great example. It’s major projects that will continue over fiscal years,” he said, explaining that planning, engineering, and development work often spans long timelines.
If the town moves forward with drafting an encumbrance policy, Sorenson said it would clearly define when funds may be carried over and ensure the town is not simply holding onto unused money. “I think our policy, if we do draft one, would speak to we’re not going to just carry over ancillary money just because we want to have it,” he said. He added that any policy would likely include a timeframe for when encumbrances must return to the Board for review and reaffirmation.
After discussion, the Board of Selectmen voted unanimously to approve the not-to-exceed amount of $3,619,704.92 in encumbrances for FY26, as recommended by the Finance Director.