As of mid-February, Harvard’s projected fiscal 2010 budget shortfall is $451,988, assuming level-funded budgets for all town departments. The projections released last week by Finance Director Lorraine Leonard include a 13 percent reduction in state aid; a 10 percent drop in local receipts, primarily in excise tax collections; and a 62.8 percent drop in new-growth tax revenue as a result of moribund construction activity.
On Saturday, Feb. 28, the Finance Committee, School Committee, and Board of Selectmen will begin deliberating on ways to erase the projected deficit. By then, all departmental budgets should be in, along with impact statements describing the likely effects of further budget cuts. With few exceptions, town departments have already made significant reductions to offset recent state aid cuts for fiscal 2009 and produce level-funded budgets for fiscal 2010, which begins July 1.
In the past, town officials have typically allocated required budget cuts by assigning 70 percent to the schools and 30 percent to other departments. But this year officials have signaled a willingness to consider alternative solutions. Finance Committee Chairman George McKenna told the School Committee last Saturday that the decision will be based in large part on the impact statements submitted by various department heads—the more serious the impact, the less likely the cut. In theory, then, it’s possible that some budgets will see minimal cuts or no cut at all, while others will take a sizable hit.
There is still a possibility that the town could save a significant amount by switching employee health-care coverage to a “saver plan” that offers lower premiums in exchange for higher co-pays. The town’s projected fiscal 2010 budget for employee benefits is $2,984,600, a 5.1 percent increase over fiscal 2009; the bulk of that amount is for health-care coverage. Switching to a saver plan could save $150,000 to $200,000, McKenna said, but with only five weeks to go before the budget has to be finished, he doubts the switch could be done in time.
Another possible source of relief is at least $120,000 in unexpended funds expected to be certified as free cash after the June 30 end of the fiscal year. The surplus is the result of officials’ decision last month to reduce fiscal 2009 spending by $350,000 to compensate for expected cuts in state aid and reductions in local receipts. As it turned out, the aid cuts weren’t as high as was feared, so unless state aid is reduced again before the end of the fiscal year, there will be roughly $120,000 left in unspent appropriations. But that money can’t be applied to the fiscal 2010 budget until all fiscal 2009 bills are paid and the state certifies it as free cash, which usually happens in early fall. After that, it could be appropriated for any purpose at a fall Special Town Meeting.
