HOULTON, Maine — While the 2008 annual audit indicated that Houlton remains in strong financial condition, town officials nonetheless were urged to keep a hefty sum of money in the municipal surplus account.

They also again were advised to create a policy to govern the money that they keep in the account.

During the recent Town Council meeting, the group accepted the annual audit of municipal finances by RHR Smith and Co. of Buxton.

Ron Smith, a representative from the firm, told councilors the town remained in solid financial shape, but he cautioned councilors not to let the town’s surplus fund get much lower.

Officially called the undesignated fund account, surplus money has been used to offset taxation and lower or hold the mill rate. It also has helped the town deal with unexpected costs.

Right now, Smith told councilors, there is approximately $900,000 in the account.

“You really have to be careful about what you use for money from the fund balance,” he said, adding that he believed the town was at the “lower end” of the amount he would advise the town to stash away for a rainy day.

At this time last year, the town had $1.2 million in its surplus account.

Smith also urged the town to adopt an undesignated fund balance policy, advice he has given for the past few years.

The policy would give the councilors a guideline for coordinating how much money to keep in the surplus account. Councilors have at times disputed how high the figure should be.

Over the past few years, some councilors have argued that the figure is too lofty and have advocated for more money to be used to lower the mill rate. Others have maintained that the surplus money provides a needed financial cushion for the town.

Smith has told councilors that keeping approximately $1 million in surplus makes good fiscal sense.

Councilor Sue Tortello agreed with Smith’s advice about the policy, saying she believed one needed to be put in place.

The next council meeting is June 22.