State of the Town: Where we go from here
Less than 10 weeks from now, Town Moderator Jack Attridge will gavel Town Meeting to order, and this year it is anticipated that funding for fiscal year 2027 will be hotly debated.
On Jan. 28, Town Administrator Thatcher Kezer presented his annual State of the Town report to the Select Board in which he detailed anticipated revenues and expenses for the coming year. Town leaders have been predicting for the past few years that a general override of Proposition 2 1/2 would someday be required in order to maintain the current level of services we have come to expect, and it appears that we have now reached that point.
Kezer highlighted anticipated sources and amounts of revenue along with the costs to maintain a level-funded budget for next year. Level-funded is not equally funded; rather, it calls for staffing and services to remain the same as the previous year, adjusted for personnel-related contractual obligations and costs over which the town has no control.
Kezer, the Finance Committee and the town’s finance director have worked for many months with our elected officials and department heads to arrive at their collective determination of revenues and expenses needed to maintain existing services, and the numbers are stark. Anticipated revenues for FY27 are expected to decline by over $2 million while expenses are expected to increase by over $6 million, leaving a shortfall of just under $8.5 million.
On the revenue side, major factors for the decline are the reduction of funds for new growth, less free cash, lack of stabilization funds and lower local receipts, including interest income, motor vehicle excise taxes and permit fees.
As for expenses, other than contractual obligations for our town employees, the major increases relate to skyrocketing health insurance premium costs (estimated to increase by 15% or just under $2 million), a new waste contract (estimated to be just under $855,000) and pension costs of just over $462,000.
In order to maintain the existing level of services, Kezer reports that a general override of Proposition 2 1/2 will be required. While the Finance Committee will present a proposed balanced budget at town meeting, it is anticipated that a second, level-services budget will also be presented in a supplemental budget article, which if passed will then require a town-wide override vote in June, failing which there would need to be substantial cuts to existing budgets for FY27. We anticipate that town leaders will explain in detail the consequences of not passing a general override not only at town meeting but in the weeks leading up to it.
This challenge is not unique to Marblehead. The Massachusetts Municipal Association has recently published two reports that interested citizens might want to read, “A Perfect Storm: Cities and Towns Face Historic Fiscal Pressures,” prepared in partnership with the Center for State Policy Analysis at Tufts University and released in October, and “Navigating the Storm: Charting a Course Toward Fiscal Stability,” released two months later. The upshot of those reports is that reductions in state revenues, coupled with inflation and rising costs of uncontrolled expenses have been impacting communities throughout Massachusetts, not just Marblehead.
In recent years, surrounding communities — including Stoneham, Georgetown, Lynnfield, Melrose and Milton — have passed general overrides to maintain levels of service, and there is every reason to believe this trend will continue. Some of these recent overrides have provided menus of choices such as schools, public safety and general government, enabling voters to vote increases for all or some such categories as opposed to having a single up-or-down vote on one number. We encourage our town leaders to discuss and determine what approach to recommend to town voters.
To inform our readers of different aspects of the town’s finances, we will be publishing in coming weeks a series of articles under the heading “Overriding Considerations,” the first of which ran in last week’s edition. And as we approach Town Meeting, it is likely we will opine further on the State of the Town.
Stay tuned. In the end, it will be up to the town’s voters to decide what comes next.
