Town officials will decide over the next few months how to best use about $700,000 to $5 million in surplus funds.

The windfall came from additional revenue from permitting fees and underspending in several town departments, including public safety and public works, officials said.

It's a drastic change from the town's position earlier this year when the Morrisville Town Council talked about having to dip into its reserves or raise taxes in order to balance the 2011-12 budget.

Town Manager John Whitson said he anticipated a surplus this past summer but advised the council to wait until the official audit before it decided where to spend any additional revenue.

"There isn't one thing that I can point to," said Director of Community Services Tony Chiotakis, who oversees public works and public safety. "It's more of an accumulated effort of trying to be good stewards of the public's money."

Several town departments also came under budget. Public safety saved $420,000, and public works saved $650,000. Another $270,000 of emergency contingency funds were not used from general administration funds, according to officials.

Chiotakis said his departments have been aggressive in negotiating bids, some projects have come in cheaper than expected, and invoices have been scrutinized.

Park West Village, a mixed-use development that includes the newly opened Target, also has added to the surplus by contributing fees, according to the town's recent audit.

Morrisville received about $300,000 more in permitting fees. Morrisville also received another $100,000 in other taxes and licenses.

In total, Morrisville has $10.1 million in its savings account, called "unassigned fund balance."

This is a $1.8 million increase over 2010, according to the town's audit released Oct. 25.

Per town policy, Morrisville must keep 25 percent to 45 percent of its total expenses in reserve.

The Morrisville Town Council will need to decide how much of the surplus to keep in the fund balance.

There are more than $1.5 million in road improvements needed, about $300,000 is needed to revise the town's unified development ordinance, three firefighter positions have been put on hold for several years, and the town needs to buy another multi-purpose fire apparatus known as a quint.

At the 25-percent policy limit, the council could free up about $5 million for projects; at 35 percent, the council would have about $2.7 million to spend; and at 45 percent, the town could fund an additional $700,000 in projects.

Whitson recommended the council consider using the money for capital expenses, major infrastructure projects, meeting unfunded needs or replenishing pension and other retirement accounts.

The Town Council is likely to take up the matter at its January retreat, said Mayor Jackie Holcombe.

"This is a position that everyone wants to be in, where the staff has executed the budget in such a way that we have more in savings that we expected," she said.

Holcombe also she didn't know if the surplus would have an impact on the need for more revenue in the upcoming fiscal year.

"In terms of where the property tax rate needs to be next July 1, it's a little to early to know," she said.

"We don't know what the tax base will be or what the service needs are. The council still needs to have discussions on matching up revenue with recurring expenses."