Wiscasset needs an investment policy and should consider hiring a financial advisor, selectmen were told during a March 4 meeting with auditor Ron Smith.

"You are probably one of the few towns in the state that have reserve funds," Smith said.

"But you should be developing a policy for the use of that money," he added, referring to the $14 million in a number of different reserve accounts. "You should have plans for the next five, ten, and 15 years," he added.

"Have you ever had this conversation before?" asked budget committee Dick Hanson.

"We did, two or three years ago, when Andrew was here," Smith answered, referring to former town manager Andrew Gilmore.

Selectman Bill Curtis asked, "Would we benefit from having a financial officer?"

"Absolutely," Smith said. "You're a $20 million operation on any given day. You should have this service in-house. A position like this would clearly pay for itself. The days of selectmen running town government are coming to an end."

Smith suggested sharing a financial officer with another town. Hanson asked if Smith could suggest names of people who could handle this responsibility; Smith said he would.

Budget committee member Pam Dunning asked Smith if he could recommend a certain percentage of interest that should be used.

"It's time for the town to re-evaluate its needs," Smith said.

"Should we be looking at a new investment counselor?" selectman Phil DiVece asked.

"I'm not saying Edward Jones has done a bad job," Smith said, referring to the firm that now handles the investments of the reserve funds. He said the firm has been giving the town "an eight or nine percent return."

Town manager Arthur Faucher said a meeting with Edward Jones has been set up for May.

"But before you go out and solicit the services of an investment firm, you should give them a policy, and give them some benchmarks."

Smith also urged the town to simplify its budget process.

Smith said although town officials had expected $900,000 would be needed to balance the 2006-2007 budget, the actual need was about $170,000. This is because the revenues were more than the town predicted, including an extra $100,000 from excise taxes.

"Where did the rest of the money go?" Hanson asked.

"A lot of it went into the schools," Smith said.

Asked by Hanson if the town could have put $440,000, the carry-over amount, "back into the reserve accounts," Smith said yes.

"I asked awhile ago about putting money back into the reserve accounts," Hanson said. "I vote we put it back."

"Have you made all these recommendations to the town?" Hanson asked.

"Most of them," Smith answered.

Asked how many of them were in writing, Smith said, "probably most of them."

Paul Grover asked if money appropriated from the cemetery reserve fund, which is not spent during any budget year, should be put back into the fund. Smith said it should.

Ben Rines asked, several times, whether the selectmen had the authority to overspend accounts, as they apparently did in the last budget year.

Smith said, "No, you should have a separate warrant article that defines what you want to do."

"You said it was not necessary to appropriate the money in your report," Curtis said.

"I believe it should be a warrant article," Smith said.