There’s nothing unusual about the projected revenue and expense numbers in next year’s budget, which members of the Finance Committee saw for the first time at their weekly meeting last Wednesday. But there’s pain buried within the budgets of town departments and committees in the form of salary freezes, reduced services, and, in the case of the schools, staff reductions and fewer offerings. It will be up to the Finance Committee and Select Board to do what they can to relieve it.
The town’s tax bill, apportioned among residential and commercial property owners, will increase by a modest $600,000, or 2.5%, while spending for town services will increase by $1.1 million, or 3.7%, leaving for the moment an unallocated surplus of $75,000 once other sources of revenue are added to the total. (See table below)
To understand the work that lies ahead requires an understanding of the town’s sources of revenue, which limit what can be spent without a voter-approved increase in taxes, and next year’s largely flat spending requests of town departments and committees. (See donut graph breakdowns of fiscal 2022 revenue and expenses below)
On the income side of the equation, three-quarters of the town’s revenue comes from taxes on property, and 90% of that amount is collected from homeowners. The town also receives money from the state—an estimated $4 million in fiscal 2022—as well as money from excise taxes on cars and other fees. Other revenue is available from funds such as the schools’ Devens fund. Money sources such as those are projected to contribute close to $3 million to the fiscal 2022 budget, with a whopping $2.3 million coming from school sources alone.
In total, the town expects to raise $33.8 million to pay for its fiscal 2022 expenses, an increase of 3.5% over the current fiscal year. But planners have little control over much of that amount. Construction of new homes and improvements are up to developers and residents; the budget projects a mere $100,000 in taxes from that source. And the principal and interest payments due on excluded debt were determined when previous town meetings approved a temporary increase in taxes to pay for large projects such as the new elementary school. Payments on the money borrowed to finance the school peaked last year and are now declining, offset by additional contributions of $200,000 apiece from the Capital Stabilization and Investment Fund and money paid to the schools by MassDevelopment for the education of Devens students.
Also beyond the town’s control is state aid. The final amount will be determined by the state budget, which is a matter of negotiation between the Legislature and Gov. Baker and may not be settled until later this summer. And the amount of excise tax the town collects depends significantly on how many new cars are purchased by residents.
Much greater control is possible when it comes to the spending side of the budget equation, though even here there is much that is beyond the reach of town officials. Although departments and committees were asked to submit budgets that show no increase in spending in fiscal 2022, the town’s total spending is projected to increase 3.7% percent, to $33.7 million.
The schools, which account for 51.8% of the budget, are responsible for the largest increase (7.4%), but they have kept their net projected spending flat with infusions of state aid, money from the Devens fund, and other sources.
The second largest category, at 17.1% of the total budget, fringe benefits and insurance, will also experience the second largest rate of growth: 4% due to a $77,000 increase in the cost of providing health coverage to town employees and retirees, including teachers, and the addition of the new elementary school to the town’s fixed assets.
The biggest uncertainty in the current expense estimate is employee compensation. By the decree of FinCom and the Select Board, department budgets are to contain no money for cost of living (COLA) increases for town employees—with the exception of the police, whose contract includes a negotiated COLA. Assistant Town Administrator Marie Sobalvarro told the Press that awarding a 1.4% COLA for all nonschool employees would add approximately $27,000 to town expenditures. Additional money will likely be needed to cover the fiscal 2022 salaries of teachers, whose one-year contract will expire in June and is in negotiation. Likewise, the unionized members of the DPW are without a contract, as are Fire Chief Rick Sicard and Town Administrator Tim Bragan.
In spite of these uncertainties, with projected revenue exceeding projected expenses, there’s room to consider some additional departmental and board requests that would, if approved, add $175,000 to the total (See “Small article spending requests” in the table on page 6.) These will be discussed in a future Press analysis.
Now it’s time for FinCom to get to work. Since mid-December, when it was presented with the fiscal 2022 budget requests of 18 departments and boards, FinCom has been in “listening mode,” as recently appointed associate member Mike Derst described it.
FinCom members, as well as the members of the Select Board, were tasked to read every narrative and spreadsheet and to prepare written questions for department heads and committee chairs. Their answers were returned in January, and members have by and large accepted them without further questioning. Few departments and boards have been asked to appear before the committee for further scrutiny, the schools being a major exception (See our Feb. 19 story, “School budget is caught between rising costs, falling offsets.”)
Beginning at their next meeting, scheduled for Wednesday this week, Finance Committee members must prepare a budget to recommend to the Select Board next month for its review. For some, it will be their first experience in grappling with Harvard’s omnibus budget and its more than 200 line items.
“Right now, revenues are on the good side of things for us, but it seems completely likely that that’s not going to be true in the end,” said Erik Ward, who is completing his first year on the committee. “When we’re going through this and trying to think about where we should be ending up, what is the [spending] estimate that we should be targeting?” he asked.
A budget must balance, replied Chair Don Ludwig, but added, “You can’t really come up with a firm bottom number right now, because that’s a wild card.”
Town Administrator Tim Bragan, who led the night’s budget presentation, had this advice: “Come with your ideas of what you think could be reduced, what should be increased … At the end of that meeting, there’ll be a different [expense] number at the bottom of that [budget] sheet.”