Presented with a draft fiscal 2020 budget that is in deficit by several hundred thousand dollars, the Select Board voted Tuesday night to send the unbalanced package to the Finance Committee, leaving it to FinCom’s seven appointed members to recommend next steps, including a possible Proposition 2½ general tax override.
Town Administrator Tim Bragan told the three Select Board members present for Tuesday’s meeting that proposed fiscal 2020 spending exceeds projected revenue by $400,500. State law requires that a town budget be balanced, so in coming weeks, the Select Board and FinCom must find ways to trim that deficit to zero.
This is the second year that the Select Board has presented FinCom with an unbalanced budget, contrary to the requirements of the town’s recently enacted charter. Bragan had prepared a list of potential cuts to department budgets and extra spending requests that would, if accepted, narrow the deficit to $235,000. He also reported that he had suggested to School Superintendent Linda Dwight that she and the School Committee look for ways to wring $175,000 from the school’s proposed $14 million budget, which would further reduce the deficit to roughly $60,000. In addition, several line items, including next year’s insurance bill, have yet to be determined and have the potential to raise or lower the deficit. “Any combination of these changes may get us to a balanced budget,” Bragan wrote in a memo to the Select Board.
But with the upper Town Hall clock approaching 9:30 p.m. and with members Alice von Loesecke and Kara Minar absent, the board seemed to have little appetite for deliberation. On a motion by Rich Maiore, the board voted 3-0 to forward the projected budget and Bragan’s recommendations to FinCom without articulating its own priorities or preferences.
“You could say that we punted,” admitted Select Board Chair Lucy Wallace after the meeting. But there will be dialogue between the Select Board and FinCom in coming weeks, and FinCom is more experienced than the board in closely scrutinizing annual budgets, she added. In the end, she said, it was the job of the Select Board to prepare the final fiscal 2020 budget and present it to Annual Town Meeting in May.
Of budget cuts …
As FinCom gets down to work, it has several tools at its disposal, from budget cuts and the elimination of small warrant articles to a tax override.
In his memo to the Select Board, which members saw for the first time Tuesday night, Bragan suggested cutting $90,000 from department requests, including a one-year delay in purchase of a new cruiser and Tasers for the Police Department, a smaller first purchase of trash bags for the first year of the town’s new pay-as-you-throw trash program, and using a portion of free cash—$1.2 million, as recently certified by the state—to replace town computers with new Windows 10 machines.
Bragan’s suggested cuts to small warrant articles are likely to be more controversial, especially his recommendation that a COA request for $25,552 to operate a new van be deferred until the vehicle has been purchased. He has also questioned a $28,000 Parks and Recreation Commission request that the town pay beach safety personnel directly, freeing up money in the commission’s revolving fund for other uses. And he further suggested that the $8,500 needed to pay for an engineering study for the Housing at Hildreth project could come out of the town’s Rantoul Trust Fund, which recently received a contribution from Columbia Pictures as part of its agreement with the town. In total, accepting Bragan’s small article recommendations would eliminate an estimated $75,500 from the deficit.
Yet to be heard from are the schools, whose $14 million budget accounts for nearly half of next year’s $29 million total. While the town can set a spending limit for the schools, it has no say over how they choose to spend it. Bragan noted that a $175,000 cut to the school budget is a much smaller percentage of its total than the percentage his recommendations would cut from town departments.
… and overrides …
As for the looming specter of an override, there seemed to be universal agreement among the Select Board and FinCom members present Tuesday night that even if a Proposition 2½ tax override can be avoided this year, one will very likely be needed a year from now, when taxes are already set to increase to pay for construction of a new elementary school. The financial worksheet distributed by Bragan forecasts a structural deficit of $1.1 million by fiscal 2024, and although Harvard has avoided a general override for more than a decade, upcoming labor negotiations are likely to raise personnel costs beyond the town’s allowed annual 2½ percent increases.
Bragan said Tuesday that he does not recommend an override this year. While it might seem the easiest way to eliminate the deficit, it could fail, he said, which would mean the Select Board would “be right back where we are today.” He reported that Superintendent Dwight agreed.
… and known unknowns
Several components of the budget are unknown and could potentially raise or lower the deficit. These include the annual assessments of the Nashoba Valley Regional Dispatch District and the Montachusett Regional Vocational Technical School, as well as the cost of insurance for town employees, estimated to rise 7 percent next year. Bragan suggested that the town’s contribution to its other post-employment benefits fund (OPEB) and the cost of issuing debt for the new elementary school could be lower than planned, while it was possible that local receipts had been underestimated by $30,000.
Now the hard work begins. FinCom is scheduled to hold its first budget meeting at 7 p.m. Wednesday, Feb. 15, in upper Town Hall.
