Creating and managing Harvard’s budget is enormously difficult today compared to past years. Last year, the difficulty escalated as three overlapping storms clobbered the town: a financial maelstrom due to the nation’s economic collapse and the reduction in state aid to cities and towns; the peaking of Harvard’s “structural deficit,” with insufficient revenue to cover services; and the December ice storm.
Long-term work is under way to expand the commercial tax base (the mandate of the Economic Development Analysis Team), but there will be no short-term relief. Harvard reacted to the financial crisis last year by cutting jobs and reducing services; the resultant spending cuts were deeper than the cuts in local aid, and if ice storm cleanup costs didn’t use all of the savings, the town may have built a cushion that will soften cuts that might be needed this year.
The process for building next year’s budget is about to begin. Traditionally, budget development for Harvard has been done quietly until a few weeks before Annual Town Meeting. Boards and departments submit “wish list” budgets in December, and the Finance Committee reviews submissions and negotiates with each board and department to construct a budget that fits the available funding. If that isn’t possible, the Finance Committee begins to plan for override(s).
After last year’s crises, all officials are gearing up for much more difficult negotiations this year, and the need to decide where to reduce programs or services—or how to pass a significant override.
“Harvard by the Number$” will track the evolution of the fiscal 2011 budget between now and Annual Town Meeting. The Press will collaborate with the League of Women Voters of Harvard to update and maintain the website www.lwvharvard.org as a resource that describes the processes and components of Harvard’s budget.
The whos, whats, and whens of hammering out a town budget
The development of Harvard’s budget may seem to be mysterious to many residents. Here’s a primer that should make it clear.
Who does the work?
Harvard’s Finance Committee is central to the budget negotiations; it reviews past budgets for trends, predicts capital needs, and, ultimately, makes recommendations to Annual Town Meeting for each expenditure proposed in the budget. The committee works closely with the Board of Selectmen, which has oversight for certain departments—for example, the police, ambulance, and fire departments. The committee also works with the School Committee, which develops a separate schools budget that is a line item in the overall town budget.
The town finance manager and the town administrator provide financial and budgeting data, coordination, and support to town departments as they form their budgets.
What is the budget cycle?
The fiscal 2011 budget cycle began in September as the Finance Committee reviewed current (fiscal 2010) budget status and state and local fiscal conditions. Once the Finance Committee, Board of Selectmen, the town finance manager, and the town administrator agree on a recommended approach (for example, level funding or level service), the town administrator, on behalf of the Finance Committee, will send a request for budget proposals to board and department heads. This request will include instructions that specify the form and content of data being requested—for example, historic spending, amount requested for the upcoming fiscal year, and projections of future needs.
In recent years, the budget process has included a meeting of the Board of Selectmen, the Finance Committee, and the School Committee (a so-called “tri-board” meeting), which is designed to get agreement on the budget strategy. (From time to time, other boards and departments participate in such meetings; these are then referred to as “all boards” meetings.) Departmental operating and capital budgets are due in January, after which the Finance Committee will schedule meetings with each board/department to ensure that requests align with town needs and fiscal conditions. The Finance Committee will then develop the final budget for the Annual Town Meeting (and town election, if an override is required).
Where does the money to run the town come from? Where does it go?
The town has three main sources of income: property taxes, local aid from the state, and local receipts. The property tax amount, referred to as the levy, is the total amount of money raised by taxation; this amount is limited by Proposition 2½. The levy limit may be increased annually by 2½ percent plus new growth and may be increased beyond that by a levy limit override vote. Local aid includes Chapter 70 aid for schools, lottery proceeds, reimbursements for state-owned lands, and minor grants reserved for various programs (for example, the library and school lunch). Local receipts come from motor vehicle excise tax, investment interest, fines received from the court system, transfer station fees, beach stickers, permits, licenses, certificates, filings, and gifts.
At Town Meeting, voters will decide the budget for next year after seeing the recommendations of the Finance Committee.
