A new state budget is on the desk of Governor Deval Patrick, and if he decides to sign it, it will mean a $100K reduction in local aid for Southborough in fiscal year 2010 which starts in July.
Town Finance Director Brian Ballantine said Southborough expected to receive about $3.1M in local aid in the upcoming fiscal year, but the number in the latest budget is closer to $3M. That means the town will have to figure out how to make up for the shortfall.
In April, Town Meeting voters approved a budget that essentially kept the tax rate flat. Ballantine said that means there is room in the levy to increase property taxes enough to cover the shortfall without needing further approval from voters. Increasing the tax rate to cover the lost local aid would amount to an additional $22.25 in taxes next year for the average household.
An alternative to raising taxes would be to cut the budget that was approved by voters in April.
But there’s also a third option. The proposed state budget includes a 0.75% increase in the meal tax and a 2% increase in the room tax. It’s up to local municipalities to decide whether they want to adopt the increases. According to state estimates, increasing meal and room taxes in Southborough would bring in an additional $155K in revenue to the town. Raising the taxes would require a vote at town meeting and would no doubt be controversial.
Ballantine said Southborough doesn’t get much in local aid relative to other towns because we’re considered affluent. He said that can be both good and bad. In a bad year like this, it means we don’t take as much of a hit. “We’re in better shape than other towns,” he said.
