After three years of witheringly tight budgets, town leaders say they hope to open Harvard’s spending spigot just enough next fiscal year to invigorate the departments and committees that struggled to provide the services residents expect as a pandemic raged and costs rose.
But with many of the conditions that constrained spending in fiscal 2020, ’21, and ’22 unchanged and the most recent financial forecast predicting a deficit of $537,135 in fiscal 2023, town officials say a Proposition 2 ½ override—an increase in taxes to make up for insufficient revenue—needs to be an option.
“We’re looking at trying to return to normal after a couple of hard years,” Finance Committee Chair Jennifer Finch told the more than 50 committee chairs, department heads, and volunteers who gathered virtually Tuesday, Sept. 21, for this year’s all-boards meeting. “But that doesn’t mean we’ll be [writing] a blank check,” she said.
The all-boards meeting is an annual fall event that traditionally marks the start of budgeting for the coming fiscal year. In the past, the Finance Committee has chaired the gathering and used the occasion to unveil guidelines for departments and committees to follow as they prepare their requests for spending. This year’s meeting, however, was chaired by Select Board Chair Stu Sklar, and budget guidelines will not be distributed until Oct. 22.
The half-million dollar shortfall forecast for fiscal 2023 is a familiar sight to the town’s financial planners. It’s structural, says Select Board and former FinCom member Alice von Loesecke, a situation in which revenues are unable to keep pace with expenses.
Von Loesecke was the first to speak at last Tuesday night’s gathering, explaining that while town revenues tend to rise approximately 2.5% year after year, town and school expenses are rising at faster rates, sometimes dramatically. She said that the salaries of town employees account for 70% of those and have been growing an average of 3% to 4.1% per year. Harvard employees typically receive a cost-of-living increase each year and may be eligible for step increases based on years of service or additional training.
But other elements of the budget have surged in unexpected ways, including health insurance benefits (12%), state charges for students who opt for a charter school (8%), and building and liability insurance (17 to 90%).
Unique to fiscal 2021 and 2022 were the extraordinary measures taken to protect employees, residents, and students from infection by the COVID-19 virus, and these also added to the town’s costs, nowhere more so than in the schools (see story on page 1). While the town expects to recover much of this spending through federal and state relief programs, the pandemic created uncertainty that has restrained plans to expand town staff or town programs.
In the past two years, von Loesecke said, the only way FinCom and the Select Board have been able to balance the budget was by discontinuing positions and cutting expenses to the bone. The dynamic in which costs continue to rise faster than revenue won’t change, she said. “If there are a lot of services or positions that budget [stakeholders] feel are absolutely critical, then we’ll really have to look at the revenue assumptions, and possibly [recommend] an override to actually make it work.”
Harvard hasn’t had an override for 12 years, not since 2008 when voters approved a $200,000 override. More recently, in May 2020, the Select Board and FinCom recommended a budget that required a $320,000 override to cover budgeted expenses, but voters rejected the measure 674-467, requiring the Select Board to return that fall with a budget that eliminated the shortfall without raising taxes beyond the 2 ½% limit set by state law.
“We are always looking at the budget deficit and looking at possibly doing an operational override,” FinCom Chair Finch told attendees at last Tuesday’s meeting. What’s really important, she said, is for department heads and committee chairs to “tell us what the numbers don’t” and to prioritize their needs, whether for additional staff or a budget increase. “Identify your needs to us,” she said, and how the town would be negatively impacted “without things that your department meets.”
As leaders of the nearly two dozen organizations unmuted their mikes and spoke to the assembled Zoom-facilitated gathering, it was clear their priorities would include requests for more staff support, including, in the case of the town’s land use boards, a full-time director of conservation. The Board of Health and other committees say they need more paid administrative support to help their volunteer members do the work expected of them. Pending contracts with Harvard’s teachers and DPW workers will increase personnel costs. The schools, Fire Department, and Council on Aging will be submitting capital requests for a new field complex, a tower truck, and alternative senior center, respectively. These requests won’t immediately impact the fiscal 2023 budget but would add to future tax-funded debt payments.
While there were few smiles among the online faces of attendees, Capital Planning and Investment Committee Chair Nate Finch drew a chuckle when he noted that his committee had no budget. “We just spend money,” he said.
“And we love that,” said master of ceremonies Stu Sklar. Later Sklar praised Harvard’s all-volunteer Energy Advisory Committee for its efficiency. “They have no budget but have brought the town more than $800,000 in grants over the past few years,” he said.
The Finance Committee was scheduled to meet Wednesday night, Sept. 29, to follow up on Tuesday’s meeting and prepare the guidelines for the fiscal 2023 budget. These must be approved by the Select Board and distributed to departments and committees by Oct. 22. Budgets are due to FinCom by Dec. 1; members will begin their review the first week of January.
