During a marathon meeting Monday evening, the Finance Committee voted to recommend a bevy of financial articles to Town Meeting, including a nearly $2.5 million override request to fund level service budgets in both town departments and in the school department.
The committee reviewed all 54 articles on the warrant for the May 1 Annual Town Meeting, but only took votes on those they deemed to have financial implications — a whopping 38 articles. Many of the articles are standard annual asks — including equipment purchases, capital improvements for public buildings, and leasing town properties. The FinCom ultimately opted to recommend nearly every article they deemed to have financial implications, notably doing so for the town’s reduced services budget and a request to allocate roughly $8 million in free cash to aid in balancing the budget.
The key financial articles on this year’s warrant are 29, 30, and 31, which concern the free cash allocation, the total budget allocation, and the override request. The committee voted unanimously to recommend each one to Town Meeting.
Town Administrator Thatcher Kezer said he aimed to deliver a balanced budget without a built-in override request, working with departments to find cuts to ensure he could meet that mandate. He emphasized that town officials sought to present a budget with minimal cuts to services, pointing to the town’s largest departments — police, fire, and department of public works, as those that bore the brunt of the reductions.
“We were not going to build a budget based on stoking people because we’re going to take away their favorite program or whatever it may be,” Kezer said. “It was a realistic, ‘if this is all the money we have, and we need to get the mission done, providing services.’ These are the choices that we’ve made to build this budget.”
Committee Chair Alec Goolsby said town officials, including members of his committee, had braced for the fact that the coming fiscal year’s budget would likely not be balanced without an override because of structural challenges stemming from expenses outgrowing revenue.
“Here we are tonight to report that last year’s expectation has held true, just like the State of the Town had foreseen,” Goolsby said, noting that the last time the town went to the voters with a general override request like the one put forward this year was more than a decade ago, in the mid-aughts. “From my perspective, whether the override to be presented in article 31 passes or not, the structural budget challenges Marblehead faces will continue to exist moving forward.”
“For towns like Marblehead that rely mostly on residential property tax revenue and have limited new growth, it can be difficult to fully fund recurring expenses,” he continued. “We’re excited to see our town leaders actively work to address this challenge in a number of ways while keeping taxpayers’ money in mind as well.”
Goolsby expressed confidence in Kezer and Finance Director Aleesha Nunley Benjamin’s ability to utilize newly implemented budgeting systems and tools to guide the town out of the perilous position it faces. He cited impending contract negotiations with a pair of unions representing town officials and insurance contract negotiations as another factor that could present financial challenges for Marblehead.
“From my perspective, being a member of the Finance Committee for the last six years I couldn’t say that we’re in a better position with the team that’s been built and the steps that have been taken to address these challenges that I foresee continuing to exist for years into the future,” Goolsby said.
Kezer said the override number represents the difference between a balanced, reduced budget and a level services budget, where no cuts are made. Of the $2.47 million, $1.33 million would go towards town departments, while the remaining $1.14 million would go to the school department, where 33 positions will be axed if the override doesn’t pass.
Article 32, which asked for an override specifically dedicated to the School Department, was indefinitely postponed, and a motion by the committee to recommend Town Meeting do so was carried unanimously.
Article 29, concerning free cash, is among the most consequential on the warrant because, as Nunley Benjamin explained, historical reliance on free cash via this article is one of the drivers of the current budget deficit. She said she and Kezer quickly agreed that the town needed to decrease its reliance on those funds to strengthen its financial position.
“What we’re proposing for this fiscal year 24 budget is to use an estimated $8 million in free cash to offset the budget and lower the tax rate,” she said.
Goolsby said it was his understanding that town officials were expecting free cash numbers to be certified at $8.5 million, and with $8 million directed towards the budget, the town would have an additional $500,000 in non-appropriated free cash. Those funds would likely go towards the existing stabilization fund, which was funded at allocations of $250,000 in the previous two years, leaving the town with $1 million for emergencies.
“I’m happy to see we have some cushion still after balancing this year’s budget. We’re not using all of our free cash, which I don’t think would be something that our committee would recommend,” Goolsby said.
Nunley Benjamin explained that the town is trying to ween itself off of free cash while continuing to generate the funds to maintain a AAA bond rating. Free cash should be used for one-time expenses, not to balance an annual budget, she said.
Other financial articles recommended by the committee included a proposal from the School Department to create a new $20,000 transportation revolving fund, and a request from the Retirement Board to increase the base amount a cost of living adjustment would be calculated from. Full explanations of each financial article can be found posted to the town’s website.