The Bedford Select Board agreed on Monday that if Town Meeting approves the $32 million bond for a fire station, then payment will be absorbed within the tax levy limits of the state law known as Proposition 2 ½.
The law allows voters to choose to exclude debt payments from those limits. But Select Board and most Finance Committee members oppose that approach.
“That is what we’ve been planning for, that’s the way we pitched it in the beginning,” said board member Emily Mitchell. “We can do this within the levy and continue our tradition of fiscal prudence.”
At a meeting last week, Ben Thomas, chair of the Finance Committee, said that historically, “If we could reasonably afford something within the tax levy, we’ve funded it through the tax levy because if you make it exempt, the town can spend even more.”
Special Town Meeting will vote on the project on June 11. Since financing is by bonding, a threshold of two-thirds is required for approval.
Town Manager Matt Hanson told the board on Monday that the proposed bond structure would require annual payments of $2.5 million for 10 years, after which the amount would decline.
The decision to avoid a debt exclusion doesn’t mitigate the financial impact, at least not initially. And one factor that made the decision easier is the town’s excess tax levy. What that means is that over several years, the town did not tax to the limit permitted under Proposition 2½ and that provides a cumulative cushion.
Hanson also pointed out that “we still are expecting a lot of new growth,” which under the law is added to taxation computations beyond the 2.5 percent budget increase.
The town manager contrasted Bedford’s circumstances with those of some towns outside of Route 495 that are not experiencing new growth and thus need an override “just to pay cost-of-living adjustments.”
“We set up our budget and spend our money to meet the expectations of our residents,” Mitchell observed. “In the past, we have been able to do a lot with a little. That’s really not sustainable anymore.”
For example, she said, the town had to increase its share of employees’ health insurance premiums to stay competitive. “Those pinch points are inevitable and not the result of fiscal mismanagement.”
The Finance Committee last week voted 4-1 to support financing without a debt exclusion; the nine-member committee requires a five-vote threshold. (Two members were absent and there are two vacancies.)
Karen Dunn, George Lee, and Philip Prince joined Thomas in supporting payment within the tax levy. Dunn said that provides a “guardrail.”
Their colleague Abbie Seibert called for debt exclusion, pointing out the sharp escalation of projected construction costs.
“Do we really want a general override eventually to accommodate other capital items that need to be done? This committee and the annual budgeting process can be the guardrails,” she said.
Addressing another Special Town Meeting warrant article, the Select Board on Monday also recommended approval to transfer $500,000 from free cash to the Finance Committee reserve fund in anticipation of closing a fiscal 2024 school budget deficit.
Hanson explained that since the exact amount needed to balance the budget won’t be known until after Town Meeting, the $500,000 would go to the reserve fund so when the request comes in, the committee can vote the exact amount. Any money left over would revert to free cash.
The size of the shortfall is “evolving,” Dunn told the Select Board. “This is a prudent move to have this reserve set aside.”
Select Board member Dan Brosgol asked if the $500,000 infusion will be enough. “I’m not cautiously optimistic about anything.”
Brosgol, who noted that he voted against next year’s budget amount last January as a member of the School Committee, added, “I’m terrified” about the prospects for fiscal 2025. “The hard work is not over.”
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