Town Meeting Update: Officials grappling with budget demands, may table some expenses to a Fall Special

This winter, the Town’s Finance team and the Board of Selectmen have been hashing out the Fiscal Year 2021 budget to bring to Annual Town Meeting voters. One option recently floated was tabling some capital spending to a Special Town Meeting in the fall. In the meantime, a committee would better research the Town’s anticipated capital expenses* and how to handle them.

As of this week, selectmen and Finance were still unable to come to an agreement on a budget framework for FY21. Unhappy with long term forecasts, selectmen did approve a policy for the FY22 budget. The board voted not to add any new employee positions or hours in FY22 unless new revenue sources are found to offset the cost.

But that budget is more than a year out. For the FY21 budget, the board is still uncertain about how many positions, hours and benefits to add at department head requests. There were also questions about how to handle capital expenses in the pipeline. Selectmen (and likely the Advisory Committee) plan to tackle big budget decisions at a dedicated meeting on February 4th.

I know, it’s pretty standard to see the Town Finance team and selectmen worrying about the budget this time of year. In fact, the projected increase at this time last year was much higher (an alarming 6%). But by the time the budget got to Town Meeting, the projected tax rate increase** was cut down to 2.67%, a figure that the Advisory Chair referred to as cost of living.

Still, selectmen are now faced with a situation the Finance team warned them about last year – that tough times were ahead, especially starting in FY22. Recent debates have focused less on the impact to this year’s projected tax rate and more on the long term impacts.

Earlier this month, selectmen were dismayed by 5 year budget projections that showed the Town would begin to exceed its “levy capacity” in FY22.***

Vice Chair Marty Healey asked Finance to come back with a version that shows what they would need to do to avoid going into the red around the corner. This week, Treasurer Brian Ballantine presented a new version that did that. The new vision lowered the tax rate increase from 4.46% to about 3.61%. (Some uncertainty still remains about this year’s state aid, state charges, the Southborough assessed share of the school budget, etc.) But it required making cuts that selectmen aren’t entirely on board with yet. 

One uncontested change was the Fire Chief’s decision to drop adding a Deputy Chief. Other recommendations by Ballantine and Town Administrator Mark Purple included rejecting the Police Chief’s request to add two full time officers and reducing Youth & Family Services full time assistant request to part time. Finance also cut out some placeholders for “uncertain” capital expenses down the line and slashed the estimate for revamping the Transfer Station to just replace the hopper.

The forecast assumes that Town Meeting voters will approve adding a local meals tax and makes educated guesses on future revenues and charges. To stay under the levy cap, tax rates for FY22 and beyond tax rate would have to be capped at 3.5%. 

At the request of Chair Brian Shea, Ballantine had also prepared a budget forecast that added a 2nd part time position for Youth & Family Services and one of the full time police officer positions. Those additions pushed the budgets to likely exceed levy capacity in FY24 and FY26. The two 5-year forecasts prompted a range of overlapping reactions from selectmen.

Selectman Sam Stivers expressed hope that other revenues and savings would be discovered in time. (One mentioned was potential increased PILOT payments.) He was inclined to add back in more of the cut spending requests made by department heads. Healey and Purple argued against counting on hope. (Later in the meeting, Healey updated that Fay and St. Mark’s boards of trustees were unlikely to commit to a plan for regular PILOT payments. They were more likely to respond to requests to help fund specific expenses related to their mission.)

Selectwoman Lisa Braccio restated concerns most selectmen expressed at a prior meeting – putting off capital expenses could cost the town more in the long run.

Most selectmen voiced desire to fully or partially fund the new police officer positions, though Healey was hesitant. Braccio asked for Ballantine to find out what the FY21 overtime budget would look like if new hires weren’t approved.

After some debate about the long term picture, Healey pointed out a $4M jump in expenses from FY21 to FY22. He noted that he understood that debt expenses played a role. But he was concerned about baking in too many costs this year that would rollover into future years.

Advisory Chair Kathy Cook told selectmen that her committee hadn’t voted on their recommendations. But she thought she knew where they were headed. She said that the Capital Expenses in the pipeline were a big part of the future tax burden. She believed that they should reboot the Capital Budget Committee to research anticipated projects. She indicated that Jason Malinowski (Chair of the Public Safety Committee) was interested in digging into the task.

Cook opined that some shorter term spending might be a waste of money in the long term if the Town made subsequent decisions. One example was maintenance projects for a school when the Town might look at consolidating the four K-8 schools to 3 buildings. She also thought the CBC could come up with some creative solutions.

Another reason for putting off to a meeting in the fall would be to push out the Economic Development Committee’s proposed zoning bylaw. She opined that the committee wouldn’t be ready in time for the March meeting. Given their status, she didn’t think they were prepared to convince 2/3 of voter to approve the Article.

Selectman Dan Kolenda was absent this week. But at the January 7th meeting, he asked Finance to find out if some of the items in the budget that were constant over the years (like small stipends) were really needed or could be eliminated. This week, Ballantine shared that no one was interested in cutting any. Kolenda also argued passionately again to reduce the Open Space Preservation Commission budget by $500, back to it’s FY19 funding level. This week, Ballantine said that the OSPC planned to reach out to the board to make its case directly.

Finance had hoped to come to an agreement on the budget “framework” or some of the staffing requests. Selectmen remained uncertain how to proceed. They opted to postpone big decisions to a dedicated budget meeting on February 4th, with an invitation to Advisory. Cook was optimistic that her committee would be ready with their recommendations by then and able to chime in if asked.

As for the FY22 budget policy, Purple asked selectmen to make the commitment so department heads would be forewarned and plan accordingly.

*Unlike the year to year operating budget, capital expenses are to buy, maintain, or improve the Town’s fixed assets (buildings, vehicles, equipment, or land).

**The actual rate set in the fall turned out to be a decrease by 0.48% but taxes for the average single family home did increase – by 2.86%. (When Finance forecasts tax rates for the next fiscal year, they use the previous year’s assessed property values. But the actual rate set in the fall is based on updated assessed values , which went up this year.)

***The Levy capacity is the amount the Town can raise taxes, to avoid a deficit, without voters overriding proposition 2 1/2 at the ballots.