Town Administrator Thatcher Kezer announced a $8.4 million budget deficit for fiscal 2027 due to soaring expenses and declining revenues. Without a Proposition 2 1/2 override, that gap could lead to 50 municipal layoffs in addition to program cuts, according to Kezer. That does not include cuts expected in the schools.
“We will need to limit the services that we do fund to only the most critical services — those critical to life, property and so forth,” Kezer said at his annual State of the Town Jan. 28. “All those quality-of-life services that make Marblehead Marblehead will be significantly reduced and probably shut down. It’s that drastic.”
Marblehead voters have not approved a general tax override in 20 years.
At Town Meeting in 2025, voters approved a $119 million budget for fiscal 2026. Kezer is projecting an increase in $2.1 million in property tax revenues for fiscal ‘27.
Beyond property taxes, town revenues are expected to drop by $2.2 million. According to Kezer, three of the most significant decreases include:
- Interest income, $784,677
- Motor vehicle excise taxes, $620,628 (Fewer people are buying new cars, Kezer speculated.)
- Permit fees, $359,881 (Fewer people are doing home improvement projects.)
The amount of free cash (money left over from the previous year’s budget) is also projected to drop.
“We are projecting having about $5 million in free cash available for operating and capital needs, down from $8 million last year,” Kezer said.
Expenses climbing
At the same time, expenses are expected to climb by more than $5.9 million. Leading cost drivers include:
- A new trash contract that will add $844,575.
- Pension costs, which are expected to increase by $462,735.
- Health insurance costs projected to increase by $1.9 million.
Possible cuts
Kezer warned that without an override the following may be needed:
- Staff reductions in the town’s schools. (The Marblehead School Department is already in the process of cutting $2.7 million to level fund its budget.)
- Elimination of more than 50 town positions (15% of the municipal workforce)
- Limits on services to only the most critical public safety and operational functions
- Significant reductions or elimination of “quality of life” services relied upon by residents
- Deferred maintenance of town-owned and historic buildings
- Additional budget cuts to absorb unemployment benefit costs resulting from layoffs
Select Board member Jim Zisson seemed taken aback by the dismal projections.
“The magnitude of these numbers are staggering and somewhat unexpected,” Zisson said. “I do feel that as a board we need to up our game a little bit. This won’t be business as usual.”
Zisson suggested adding the budget to every Select Board meeting agenda moving forward.
One question facing the Select Board, which decides whether to ask voters to increase taxes, will be whether to push for a “super-size” override this spring to cover the full $8.4 million, or attempt to make a series of smaller investments to address portions of the deficit over each of the next several years.
Kezer said that if the Select Board decides to move forward with an override request, the town can debate:
- Which services and positions should be restored or protected?
- What level of service Marblehead wants to sustain — reduced, level of enhanced?
- How should the override be structured to provide meaningful choices and transparency?
- How should affordability be balanced with community priorities?
“Ultimately, it’s a community conversation about values,” Kezer said, wrapping up his presentation. “What does the Marblehead we want look like, and how are we willing to support it?”
