The Finance Committee Thursday implicitly endorsed the School Committee’s proposal for up to $1,445,000 in supplemental spending to cover “recovery” from the effects of the pandemic, including sustaining personnel and equipment to allow safe in-school learning beginning in September.
The committee by a vote of 8-1 approved a budget scenario that also supported continuing this year’s $450,000 reserve to cover out-of-district costs for students with serious learning needs. The Finance Committee separately approved the base school budget for fiscal 2022.
Discussion will continue at a Finance Committee meeting on March 4 on how to apportion three sources of funding to best cover fiscal 2022 expenditures.
Those sources are the stabilization fund, with a balance of around $6 million; free cash, which was certified at about $1 million; or higher property taxes. (Since the town does not use all of the allowable levy under the limits of state law, known as Proposition 2 ½, taxes can be raised without an override.)
Committee Chair Ben Thomas emphasized the need for a balanced approach, as he and other members pointed out that relying too much on reserves for operational needs will inevitably result in higher taxes when those accounts are depleted.
“If it’s all coming out of free cash, I cannot support that. It guarantees tax increases in ’23 and ’24,” he said. Other members expressed concern that reducing reserves could be a red flag to the town’s bond rating agencies.
“We already took money and set it aside for years like this,” said committee member Tom Busa. He was referring particularly to the stabilization fund. “Why let it sit there and never be used?”
Thomas made a case for a separate town meeting article on the supplemental school funding, because that “gives voters a direct say.” If voted, the money is spent after everything is checked by the finance director and town accountant.
One alternative is an enhanced reserve fund. Transfers have to be requested from and approved by the Finance Committee as an “unanticipated, unforeseen” need. School Committee Chair Dan Brosgol pointed out that the situation is not “unforeseen,” but Town Manager Sarah Stanton said the financial details are “unknown” because there could be an infusion of federal aid.
If the schools come in and need to transfer funds, “there’s no possibility Finance is going to vote no,” Busa said. Thomas concurred: “We always figure out a way to get the schools what they need.”
Member Steve Carluccio said that annually the town ends up with more free cash than anticipated, and “some years there has been a lot more.” Rather than raise taxes this year, “I would rather wait and roll the dice.” He added that even the $3 million still exceeds the committee’s financial planning guideline.
Busa added that “we always underestimate new growth by large amounts. If we just repeat the past year, we will increase our revenue projection by a half-million dollars.” Stanton counseled caution because of the coronavirus; “I don’t think this is a year to hedge bets.”
One scenario included a property tax increase of 4.77 percent. Member Elizabeth McClung felt this would be “a huge increase,” particularly for people of modest or fixed incomes. “Our job is spending money responsibly,” she said. “We don’t want our town to be so expensive as to not attract a diverse population.”
Thomas encouraged her to propose specific spending reductions. Member Erica Liu also called for efforts to reduce the tax increase.
McClung, who ultimately voted against the scenario, said the December local unemployment rate was 6.1 percent, and “there are people in town who are struggling. I am not understanding why you want to increase taxes this year.”
Her colleague Paul Mortenson later commented that he was without work for nine months in 2012 “and let me tell you, it’s just miserable.” However, he added, during that experience “I didn’t expect any tax breaks.”
One way to avert funding the operating budget with reserves is to instead earmark them for capital expenses. But whatever the destination of stabilization fund reserves, they will require a two-thirds town meeting vote for approval.
Member David Powell said he considers a free-cash balance a result of “overtaxation from last year. As long as there is not a structural deficit, use the free cash for items that qualify for it. Use as much as you can other than what we defined as we need to keep.”
Mortenson countered that if there was no free-cash balance it could be considered “undertaxation, because free cash is part of good municipal finance.”
The committee voted to recommend approval of several other budgets, including the Select Board departments. McClung was the lone negative vote, expressing concern about the impact of a tax increase. She also voted against the favorable recommendation for a $2.3 million capital article. Stanton said maintenance and replacement of roads and equipment are not options. The 2022 total is also compensating for some cuts in the current year, she added.
Mike Rosenberg can be reached at [email protected], or 781-983-1763