The town’s fiscal 2027 revenue is projected to decline by $514,462 to $109,244,857, leading Finance Director Aleesha Benjamin to predict the need for the first general override since 2005 “to sustain high-quality services.”
Benjamin presented a gloomy financial forecast at a Select Board meeting Oct. 22.
In local receipts, the town’s interest income is expected to drop $800,000. Building permits and fees are projected to dip by $100,000, due to a slowdown in local building. Local automobile excise taxes are predicted to drop $200,000.
While state aid is expected to increase 1% to $9 million, it will not keep pace with inflation at 3%. The town is projecting $2.1 million in additional property taxes (the limit under Proposition 2 ½), bringing the total amount of property taxes to $77.8 million.
Meanwhile, costs are expected to soar. The town is about to sign a new trash and recycling contract that is predicted to increase costs by $800,000 to $1 million. Employee insurance costs are increasing 14%, and personnel costs (which make up 80% of the town’s budget) are set to climb about 3% due to contractual obligations. Pension costs are also expected to rise.
Other expenses are not yet known. Town department heads are being asked to prepare level-funded spending plans, which will be undercut by climbing costs.
Benjamin also warned that the town shouldn’t be tempted to tap into free cash (money left over from previous years), as it has for many years. Finance Committee Chair Alec Goolsby said the new free cash amount should be certified by the state soon and “could be $2-3 million less” than last year.
Select Board member Erin Noonan agreed that relying on free cash to balance the budget is dangerous.
“The cost drivers far outpace living within the Prop 2 1/2 cap,” Noonan said. “We need to get off this free cash carousel we’ve been on.”
Other pieces of the town’s financial picture include:
- The town’s new restaurant and lodging taxes generated about $700,000, according to Goolsby.
- Federal COVID relief funds (ARPA) will be fully spent by the end of 2026.
- The town has maintained its AAA bond rating, but “operations and maintenance funding need attention,” said Benjamin.
Marblehead is not alone. A new report by the Massachusetts Municipal Association describes a “perfect storm” facing cities and towns across the country. With skyrocketing costs, shrinking state and federal aid and Prop 2 ½ limits, many communities are struggling to balance their budgets.
The revenue forecast is the beginning of Marblehead’s budget process. More financial information will be coming at the State of the Town address in January or February.
Editor Leigh Blander is an experienced TV, radio and print journalist.
