It’s pothole season. On March 11, Amy McHugh, director of public works, informed the Select Board that there are more than 120 potholes in Marblehead on her list that need fixin’. D’ah y’ah think there is a relationship between pothole season and Marblehead budget season? I don’t know if there are more budget holes than potholes, but the budget holes are both deeper and wider monetarily. Back breakers.
Here are my latest Marblehead Municipal Musings covering the latest budget discussions — balanced operating budget, operating budget overrides and capital budgets.
D’ah y’ah think (DYT) anyone should be surprised by the need for an override? A year ago in the 2025 State of Town address, operating budget deficits were forecasted to be $3.7M in FY27, $7.2M in FY28, $10.5M in FY29 and $14M in FY30. That’s a cumulative deficit of $35.4. Those numbers included free cash consumption of $23.5M. Why would we expect any budget surpluses at all? We are a year ahead of those forecasts with a FY27 projected deficit of $7.7 million,
DYT any real planning has occurred in the last 12 months on how to mitigate these deficits to create a legally required balanced operating budget subject to the limits of Prop 2 1/2? The Select Board has not been relentless in pursuing ALL new and incremental revenue opportunities, including new growth, additional rooms and meals taxes and liquor licenses regardless of their magnitude. As far as we can tell, they have not spent concerted efforts brainstorming new revenue ideas. They have not investigated possibilities for reorganization that might save money. They have not instituted hiring freezes including replacement hires like a real business would. They are scrambling at the last minute to define a residential trash collection fee that is considered trash by some.
Balanced operating budget scenarios lack overarching strategy
DYT lame duck Town Administrator Thatcher Kezer could get the correct date — March 4, not March 3 — on his first slide of his recent budget update presentation? Or that the FY 26 columns of numbers could be labeled consistently? In some cases, they were labeled as “budgeted” and in others as “projected.” Instead, DYT we could have “FY26 ACTUAL results”? After all, it’s been a whopping eight months since the close of FY26.
DYT Kezer’s balanced operating budget slides would tie to the $7M deficit forecasted on March 4? Not in this presentation. Projected FY27 revenues were $101 million. The “requested” budget total was $104.5M, yielding a difference of only $3.5 million. Confusing, DYT?
DYT Kezer actually thought his proposed Scenario A that defunded six departments and 56 positions was a legitimate scenario and not a charade?
DYT his Scenario B, which relies on a new residential trash collection fee raising $2M and defunding 20.5 full-time employees, is a better option? The Select Board thinks so since they have no other option. I think the Select Board is making a mistake in relying on Scenario B and its trash fees to develop a balanced budget. What if that scenario is not approved by town voters because of the trash fee?
DYT the Select Board gave Kezer any guidance on developing “scenarios” for balancing the budget? DYT any Select Boarder reviewed Kezer’s slides before his presentation?
DYT the Select Board or some individual Select Boarders were embarrassed or maybe even pissed off by Kezer’s Scenario A proposal?
DYT what’s needed is an overall strategy that encompasses both a balanced-budget scenario and override options? The better balanced budget scenario, a Scenario C, would be a 7.4% reduction across all departments — $7.7M divided by $104.1M equals 7.4%. This scenario would affect all departments equally. The Select Board would not have to pick and choose which departments to favor. A separate warrant article would propose the new trash fees that the voters decide, not the Select Board. And then a menu of override proposals could restore services or even invest for enhanced services as the Town Meeting voters decide.
Operating budget override proposals — none yet as of March 20
DYT the Select Board has the ingredients — investment descriptions and costs, remaining time available and ability able to cook up a “Chinese menu” of override proposals that “restore, stabilize or invest” in services in as few as seven different groups of departments — schools, public safety, general government, etc. — or as many as 20 individual departments that the voters will understand?
In the case of group overrides, how would money be allocated to departments in the group? For example, in public safety — police vs. fire. Or will the Select Board have to orchestrate “Let’s Make a Deal” and present Door No. 1, Door No. 2 and Door No. 3 options that bundle more money for specific departments that are decided by the Select Board, not the voters?
DYT voters will understand how multiyear overrides work and trust future revenue and expense forecasts? I don’t. If more money is needed a year from now for FY28, another override should be proposed then.
Capital budget – where is it?
DYT we should be worried about proposed capital projects funded by debt exclusions? I have heard no discussions nor seen any lists of proposed investments.
Marblehead Meritorious Service Medal – recognizing budget process contributions
DYT Marblehead Meritorious Service Medals should be awarded to the following for their contributions to the FY27 budgeting process to date:
— Marblehead’s dedicated and incredibly knowledgeable department heads who are professionally dealing with the FY27 budget crisis and resulting employee and expense reductions.
— Alec Goolsby and FinCom for discontinuing two bad accounting practices: 1. budgeting and expensing all School employee benefits on the Municipal Service Organization side of the ledger. 2. using a purely historical and arbitrary 50-50 split of revenues between Schools and MSO as basis of budget allocation.
— The School District’s new administrative leaders, John Robidoux and Michael Pfifferling, for quickly developing a level-funded budget entailing a reduction of 14.75 FTE employees without drama over two months ago.
— Matt Hooks for researching tax burdens in 16 other comparable towns and making the case that town operations are underfunded. Marblehead has the 16th lowest tax burden based upon income and 17th lowest based upon property value. Taxes as a percentage of residential income only ranged from 3.3% to 4.3% — a very narrow range. If Marblehead increased its percentage from 3.3% to 4.3%, an additional $10M would be available for the operating budget, covering the $7.7M deficit this year.
What d’ah y’ah think? Can the Select Board get everything done by April 4, 30 days before Town Meeting starts on May 4?
James (Seamus) Hourihan was born in Marblehead and is a MHS graduate. For 35 years, he worked in finance, marketing and executive management roles at high-tech companies. He currently sits on the Town Charter Committee.
