Increasing expenses coupled with limited tax revenue and a structural deficit have forced Marblehead officials to cut the budget, Finance Director Aleesha Nunley Benjamin said Tuesday.
Nunley Benjamin delivered the news during a “finance forum,” a sort of primer on the town’s fiscal health leading up to this May’s Town Meeting. The town projects revenue at $107 million, but the fiscal 2025 budget sits around $111 million, leaving a $4.2 million gap to fill. Half of that deficit will be assigned to the schools.
The town has announced that it will not seek a Proposition 2 ½ tax override this year. The schools have not made a decision on a tax increase request.
Nunley Benjamin reported the following cost increases:
— Health insurance costs jumped by $224,000 last year, a 7% hike,
— Retirement expenses continue rising about 8-9% yearly, excluding a single $1.4 million pension increase.
— Trash fees spiked 20.66%, by $420,679 to $2.45 million.
— Contractual obligations have increased roughly 5% per year.
Proposition 21⁄2 restrictions passed in 1980 cap property tax hikes at 2.5%, with exceptions for new growth or debt exclusions.
To balance fiscal 2025, Marblehead cut $73,000 by eliminating a full-time police officer position and reducing the library and Council on Aging budgets. The town also shifted some expenses temporarily to department revolving funds to limit vital service reductions.
Along with $22,000 in local fee hikes, a proposed 0.75% meals and a room tax up to 6% could raise $400,000. Adopting local meals and hotel levies would make Marblehead comparable to most other Massachusetts towns.
“If the meals and rooms tax does not pass, we’ll have to put something else in the warrant to reduce the budget on both the school and the town side.”
Along with exploring new revenues, the town aims to rebuild depleted budget reserves by adhering to recommended best practices, Nunley Benjamin noted. “We are working to reserve free cash at 5% of the budget,” she explained.
Nunley Benjamin and Town Administrator Thatcher Kezer say the town wants to stimulate new growth and enhance revenue streams.
“New growth is when somebody makes significant improvements to their property that increases the property’s value,” Kezer said. “Certain things count towards new growth and others do not — if it’s maintenance, like putting in new siding on your house, that’s not new growth. That’s just maintenance. But if you put an addition on your house, a swimming pool, a deck— those increase the value of your home.”
He explained that cities and towns can then calculate that additional property value and tax it accordingly.
“More importantly, for everyone else, it adds revenue on top of the existing tax levy,” Kezer noted. “So it’s more tax revenue without raising taxes.”
