Two weeks ago, the town’s projected fiscal 2010 budget deficit stood at $452,000; a month ago, it was $550,000. Last week, however, Town Administrator Tim Bragan gave the Finance Committee a recap sheet showing a $301,988 deficit, but not because any new revenue is expected. The difference, Bragan explained, is that the new figures assume an infusion from the town’s stabilization fund to cover any capital requests at Annual Town Meeting.
The deficit could see another downward adjustment Saturday when the Finance Committee, School Committee, and selectmen meet to review all departmental budget requests. Some departments have submitted budgets based on revised figures after the mid-fiscal 2009 cuts, whereas others are level-funded from the original fiscal 2009 number. Some of the mid-2009 cuts are sustainable into 2010; others—notably in school spending—are not, according to officials. For the sake of consistency, the recap sheet released last week shows all departmental spending as level-funded from the amounts appropriated at Town Meeting last year, but the actual 2010 proposed budgets for the Council on Aging, library, Finance Department, and others reflect significant spending cuts, which should further reduce the deficit figure.
If all town departments had incorporated their fiscal 2009 spending reductions into their requests for 2010, there would be no deficit, Finance Director Lorraine Leonard confirmed this week; there would, in fact, be a small surplus. But many didn’t, or couldn’t, so in effect the cuts will have to be made again.
If the deficit as it stands now were allocated in the traditional way—70 percent to the schools and 30 percent to other town budgets—balancing the budget would require a $211,392 reduction in school spending next year and a $90,596 reduction in other town spending. The Finance Committee had planned to meet last Saturday with the School Committee and selectmen to begin deliberations on how to close the deficit and to consider alternatives to the traditional split. But that meeting was rescheduled to Saturday, March 7, primarily because a revised school budget had not yet been submitted. The school budget submitted earlier did not cover the $100,000 increased cost of health insurance for school employees, as requested, so the Finance Committee asked for a revision.
At their meeting last Wednesday, Feb. 25, finance board members struggled with the question of whether to use free cash and/or the reserve fund to help with the deficit and alleviate the need for more cuts. The town has on hand roughly $86,000 in fiscal 2008 free cash and another $60,000 that could be obtained by closing out old warrant articles. That money could be appropriated at Town Meeting to ease the deficit, but board Chairman George McKenna argued strongly for putting it in the fiscal 2010 reserve fund to be used in case of an unexpected revenue shortfall. McKenna is convinced that another round of state aid cuts will come in fiscal 2010, and he wants to be able to respond quickly if that happens. The Finance Committee has control over the reserve fund and can use it without Town Meeting approval.
Bragan agreed with McKenna, saying that it is “not at all unrealistic” to think there will be further state aid cuts in fiscal 2010. Bragan urged that any savings, from any source, be held in reserve to address problems he expects to materialize next year. Longtime board member Steve Colwell agreed with the need to beef up town reserves, but he urged that any free cash be put in the stabilization fund as it has been in the past. If all the capital requests are funded by the stabilization fund, and no free cash is put in, it’s “really going to whack stabilization,” Colwell said. But when it came to a vote, everyone else on the committee agreed with McKenna that getting the money out of the stabilization fund, if needed, would be too cumbersome and costly, given the need for a Special Town Meeting to do it. The stabilization fund has a balance of roughly $1.7 million.
