With its review of departmental and committee spending requests complete, the Finance Committee learned last week that to balance next fiscal year’s budget, it must eliminate one of the largest deficits of recent years, sparking talk of an override for the first time since 2008.
The amount of that deficit, according to a five-year revenue and expense projection prepared by Finance Director Lori Bolasevich, totals $834,656. Driving the imbalance are a 60% increase in the principal and interest due on town debt and a 7% increase in the estimated cost of town services, including schools (see chart). State aid, which might have provided some relief, is projected to drop by 2%.
While it is not unusual for a budget to be out of balance at this point in the town’s annual planning cycle, this year’s estimated shortfall is a challenging 25% more than the amount that confronted FinCom in 2019. State law requires a town’s revenues and expenditures to balance, and at its Feb. 12 meeting, FinCom will begin that work, which must be completed and presented to the Select Board in two weeks.
To balance the budget, FinCom has few tools at its disposal: It can recommend cuts in expenses or it can propose an increase in revenues by asking for a tax increase beyond the limit set by Proposition 2½, which caps the annual levy increase at 2.5% plus an allowance for new growth.
Town Administrator Tim Bragan, Bolasevich, and FinCom Chair Don Ludwig were expected to present Finance Committee members with a menu of recommended cuts and other options when they met this Wednesday. The cuts were likely to be presented in two tiers: first, cuts to requests by departments for additional resources above and beyond their current operating budget; and second, the elimination of small warrant article requests. A third tier would likely require cuts to the town’s existing workforce and operations, while prospects for raising revenues have yet to be discussed.
When departments and committees gathered for an all-boards meeting in October, department heads were asked to limit increases in their budgets to 2.5%, but they were invited to make separate requests above and beyond that amount. These are included in the current forecast and add up to $370,000. Among them are requests for an additional full-time firefighter-EMT ($55,000), new school textbooks ($38,624), money to cover the increased cost of hauling paper from the Transfer Station ($23,000), and dollars to provide free trash disposal bags to seniors ($5,000).
An additional $135,000 can be found in eight small warrant article requests, whose total appears as a separate line item in the budget forecast. Among these requested expenditures are amounts to repair the electrical system that controls sprinklers at the Charlie Waite field ($7,200), the preservation of town documents ($25,000), a part-time worker to assist boards in recording and preparing minutes ($6,000), and Tasers for the Harvard police ($14,000).
However, if every departmental and small warrant request is dropped from next year’s budget, a $300,000 deficit would still remain. “It’s early days,” Bragan said last week, and not every item in the budget, such as fiscal 2021 state aid, will be known with certainty until later this spring. But should that shortfall persist, FinCom and the town have one more tool available: a Proposition 2½ override.
An override allows a town to increase the amount it taxes property owners beyond the 2.5% annual limit set by state law. Voters must approve the increase at Town Meeting and the ballot box, and once enacted it becomes permanent, embedded in the amount the town can levy on taxpayers each year. With a jump in excluded debt already planned for next year to cover the cost of financing the new elementary school, an override would further increase the taxes of Harvard homeowners. Harvard voted its last override in 2008 when it narrowly approved (674-612) an additional assessment of $200,000 in property and personal property taxes to fund that year’s budget. None has been proposed for fiscal 2021, but its time may have come, Bragan said.
