Marblehead voters will not be asked to approve a general (permanent) property tax override this spring, Town Administrator Thatcher Kezer told a standing-room-only crowd at Abbot Hall during his annual State of the Town Address Wednesday evening. However, the town and School Committee will likely ask residents to temporarily raise their taxes for two major capital projects. They are:
— Mary Alley Municipal Building renovations, including a new HVAC system. The total cost is not yet known.
— A new roof at the high school, estimated at about $14 million. Town Meeting approved $5.3 million for the replacement in 2022, but it was never started. The project now includes new HVAC units. The School Committee is expected to ask for another $8.6 million debt exclusion override that would raise taxes for 15 years. The first year, it would add about $86 to the tax bill for the median-priced home.
Assistant Superintendent of Finance & Operations Mike Pfiffering, who answered questions about the roof project at Wednesday’s meeting, told the Current that the School Committee will not need to ask for an override to fund teacher contracts or operations in fiscal 2026. Debt exclusion overrides require both a two-thirds vote at Town Meeting and a majority in the June election.
Meanwhile, Kezer outlined a fiscal 2026 budget of $102.3 million, supported by approximately $12 million in free cash reserves (money left over from last year). Of that free cash, officials plan to move $2 million to stabilization funds, keep $1 million in reserve, use $2 million for capital projects and put $7 million toward balancing the budget. He credited an unexpected windfall in interest payments, as well as other revenue sources, for the reason no general override is needed.
“We’ve had a strong position in the amount of free cash that we’re generating this year, in part due to the work of the professional staff, both schools and town, really controlling our spending and being wise in that,” Kezer said. “Additionally, our interest income, which had been normally about $60,000 in a year from our accounts, brought in more than $2 million.”
The town’s new meals and rooms tax brought in new revenues, too, with Finance Director Aleesha Benjamin reporting improved second-quarter results that prompted revised estimates from $400,000 to $600,000 in annual revenue.
FY 2026 budget overview
The total fiscal 2026 budget of $102.3 million represents a $6.23 million (6.49%) increase from fiscal 2025. Revenue sources include:
— Property taxes: $77.85 million (76.11%)
— State aid: $9 million (8.08%)
— Local receipts: $7.87 million (7.07%)
— Free cash and other sources: $7.58 million (8.74%)
The town’s operating budget increases assume the following:
— Town departments: $46.9 million, up $2.11 million (4.72%)
— School department: $49.1 million, up $2.36 million (5.05%)
— Essex Tech assessments: $539,076, up $71,019 (15.17%)
Fiscal challenges and long term pressures
The town faces significant fiscal pressures, including a projected 10% increase in Group Insurance Commission health insurance rates and aging municipal facilities requiring urgent maintenance. The Mary Alley building, constructed in the 1950s, exemplifies these infrastructure challenges with failing HVAC.
— Recycling and disposal costs increasing by approximately $1 million
— Property tax revenue growth limited to $2.16 million (2.94%) due to Proposition 2½ constraints
Officials acknowledged potential fiscal challenges in fiscal 2027 and beyond, including an expiring waste disposal contract and continuing infrastructure needs. Multi-year projections suggest growing budget gaps that will require careful management and potential revenue adjustments.
— Fiscal 2027: Projected $7.16 million budget gap
— Fiscal 2028: Projected $10.5 million budget gap
— Fiscal 2029: Projected $14.04 million budget gap
Concerns over contract negotiations
President of the Marblehead Municipal Employees Association Terri Tauro voiced concerns over ongoing contract negotiations, stating that municipal contracts — those covering the police union and municipal employees — expired in July and remain unresolved. Speaking on behalf of town employees, Tauro presented an informal petition urging the Select Board to prioritize union negotiations and to ensure that town representatives engage in good-faith bargaining.
“We respectfully request that the Select Board step in to make union negotiations and municipal employees a priority,” Tauro said. “We are concerned that the town representatives are not bargaining in good faith to provide municipal workers with a successful contract that meets public needs.”
She also criticized what she described as “tactical delays” in negotiations, arguing that they demonstrate a lack of respect for Marblehead’s workforce.
“We’ve been in negotiations for 11 months, and nothing is getting anywhere. We’ve requested state mediators, but even they don’t know what to do at this point,” she said.
Marblehead seventh-grade science teacher Tawny Callaghan expressed frustration with the State of the Town presentation, arguing that it failed to address the systemic issues affecting municipal services and long-term financial planning.
Callaghan called for a clear, actionable strategy to tackle these challenges, warning that without one, the town risks severe consequences in the future.
“The question now is, what is the plan to fix these systemic issues? When will the town hear that plan? Without a clear, actionable strategy in place, there will be severe consequences for the future of Marblehead. We cannot afford to delay or ignore this any longer,” she said.
Resident Albert Jones expressed concerns about the town’s financial management, particularly regarding its borrowing practices and the impact on seniors living on fixed incomes.
“I just don’t understand how we’re spending money we don’t have,” Jones said. “I know a lot of older people in town who are struggling. Many of them have been retired for decades, living on Social Security and small pensions. If all these raises and spending proposals go through, the town will be asking for money it simply doesn’t have, and it’s the taxpayers — especially our seniors — who will bear the brunt of it.”
Highlighting success
Kezer and Benjamin highlighted the town’s success in maintaining its AAA bond rating, keeping interest rates low when the town borrows money. The rating agencies have responded positively to Marblehead’s strategic reserve building and financial management practices, she noted. Kezer noted the hiring of Marblehead’s first Community Development and Planning Department director.
To protect vulnerable residents amid these financial changes, the town is increasing veterans’ tax exemptions through the HERO Act, allowing for cost-of-living adjustments and expanded eligibility for full exemptions.
“Our goal is to maintain excellent services while being mindful of taxpayer impact,” Kezer said. “We’re building a sustainable financial framework that balances immediate needs with long-term stability.”
The Finance Committee will weigh in on financial Town Meeting articles at its warrant hearing in early April.
