The Selectmen on Tuesday approved a new policy that will help the town plan for emergencies despite its cash-strapped budget.

Town Administrator Derek Sullivan asked the Selectmen last month to approve a policy that would fund the town's "stabilization fund," which is earmarked for unexpected expenses, with "free cash."

"Free cash" is comprised of the money not spent during a previous year's budget, or unexpected revenue from another source.

Towns typically put money into the stabilization fund though their yearly operating budgets, but Wareham's expenses are outpacing its revenue, leaving the town unable to plan for emergencies through the usual avenues.

"With the way our revenue and expenses are, we can no longer afford to fund [the stabilization fund] through our operating budget," said Sullivan.

He noted that rather than going back into the town's general coffers, under the new policy, the money may be used for specific purchases.

Under the new policy, if the town has $200,000 or more in free cash at the end of the year, the town will transfer at least $100,000 to the stabilization fund.

If the town has less than $200,000 at the end of a year, 50% of the total will be transferred to the stabilization fund.

Any transfer would have to be approved by Town Meeting voters.

Selectman Steve Holmes said he was impressed with Sullivan's idea.

"I just want to give Mr. Sullivan high marks for his recommendations and his forward thinking," he said.