FY04 budget still coming up $1.5M short
Published on September 17th, 2003
STONEHAM, MA - Already committed to appropriating $1.1 million for October Town Meeting, town officials are wrestling with an additional $450,000 in unanticipated shortfalls needed to balance the 2004 budget.
The approximate $1.55 million needed for the 2004 budget falls into two categories: a $950,000 deficit the Town planned to address at last May's Town Meeting and a recently identified $600,000 in unexpected losses.
When the town put together the budget last spring, officials planned on transferring $950,000 from water and sewer surpluses to pay for $1.1 million in state charges. Although the budget also included a $150,000 line item for the sale of municipal property on Atwood Avenue, a recent decision to allow the town's Conservation Commission to sponsor a warrant article to allow the land to remain open-space has squashed any chance to receive those monies in time.
The remaining $450,000 in shortfalls includes $400,000 in recently discovered state charges, local aid cuts, and vocational school fees. The remaining $50,000 hole stems from uncollected Housing Authority trash fees the Town included in the spring's budget.
Although by some estimates the town stands to see over $2 million certified as free cash by the Commonwealth, many municipal officials warn that the majority of those funds should be placed in savings to address an estimated $3-5 million deficit for fiscal year 2005.
"We're hearing that the free cash could possibly exceed $2 million, that's why I don't want people to think of huge deficits or massive budget cuts. The debate is whether to save that money for next year and tighten our belts. Do you take the easy way out or save some money for next year?" commented Board of Selectman Vice-Chairman Tony Kennedy.
For now, the town's Selectmen will wait for a recommendation from Town Administrator David Berry, who will likely go public with his plan to address 2004's budget shortfalls sometime within the next two weeks.
Although Berry already submitted an August memo to the town's Selectmen, Finance and Advisory Board, and School Department listing early retirement incentives, hiring freezes, layoffs, department cuts and spending free cash as possible solutions to the problem, the Town Administrator has not decided what his recommendation will be.
However, Berry has indicated that he would prefer to avoid cutting departments or laying people off to solve the problem.
"If we're going to have to use some of the more drastic options, I'd rather do that for FY05 instead of doing that this year. We all agreed that we would try to put off those options for as long as possible knowing that 2005 would probably be the year we'd have to address those more drastic measures," Berry remarked.
Although Finance and Advisory Board Chairman John Warren agrees that town officials made a commitment to avoiding layoffs and department cuts for 2004, he feels that given the extent of 2004's additional budget shortfalls, the town should consider adjusting the budget early.
"I think what the Town Administrator and Selectmen did is put out every scrap they could to put together a balanced budget without town layoffs and without an override. Stoneham was one of the only areas around here that didn't have an override on the ballot so it's a pretty optimistic budget," Warren explained.
"You have to start making adjustments now and save everything to make sure you cut as little as possible next spring. Save every penny of it and make up for any budget adjustments right now. The problem that's coming in FY05 is huge, it's the biggest problem we've faced in a long time and the town's going to operate quite differently," added Warren.
Town Accountant Ron Florino agrees. Explaining that the town will have to account for a presently $1.8 million deficit in pension liability for 2005, Florino claims nearly all of the funds generated by revenue growth and property tax increases will be quickly wiped out.
"The pension liability alone will exceed our revenues so that growth doesn't help us at all with health insurance increases, local aid cuts, trash fee increases or any other fixed cost that will be going up in 2005. I don't see us being able to balance the FY05 budget. We're looking at a $4 million deficit right now and I don't see any new revenues being generated of that magnitude," Florino warned.
While Berry claimed it was still premature to call massive department cuts or layoffs a sure bet for 2005, he wants citizens to realize that those options are very likely.
"People should be aware that it's a distinct possibility. You just don't know yet with all the numbers flying around. We really haven't started the budget process for 2005, so it's premature to say that it's imminent," said Berry.
Because of the likelihood that 2005 budget cuts will largely exceed the approximate $2.6 million deficit identified in 2004, many town officials have stressed the need to rebuild the Town's stabilization or rainy day fund.
Although Florino and the Finance and Advisory Board have traditionally advocated saving as much as possible for 2005, the movement gained steam last week when Board of Selectmen Chairwoman Mary Pecoraro publicly announced her commitment to rebuilding the town's depleted stabilization account.
"When people see the free cash, they say, 'oh great, this is money we can spend.' But I think we should save it. It's a commitment of mine that we need to save it. I think it's a commitment to running the town efficiently. I just want people to be aware. I don't want people to forget that we used $1 million," commented Pecoraro, referring to the $1 million withdrawn from the stabilization fund this past May.
Despite a growing commitment by elected and appointed officials to save money this Fall to add on to the $272,000 remaining in the town's stabilization fund, the predicament between saving and spending is exacerbated by the town's low funded capital and reserve accounts.
According to Florino, with the reserve fund traditionally funded at $85,000 and capital needs at $150,000, the town will have to appropriate $69,000 and $120,000 respectively to fund the accounts to those levels. While those accounts could be left alone for the remainder of 2004, both Florino and Berry agree that doing so isn't advisable.
"We could not put any more in capital or in reserve funds but I don't thinks that's practical," said Berry, who has expressed a need to obtain capital funds to repair the crumbling limestone trim around Town Hall.
In addition to the Town Administrator's capital needs, Stoneham Superintendent Joseph Connelly will also request funding for capital improvements. With a leaky middle school roof that flooded the school's gym offices and girl's locker room two nights ago and Building Inspector Gene Argiro's request that the high school's exterior and fire doors be replaced or repaired, Connelly has argued at two consecutive summit meetings that the school system is in dire need of the funding.
When all is said and done, if the town wishes to fully fund the reserve and capital funds, avoid layoffs and department cuts in 04, and restore the town's stabilization account to a $1 million level, town officials will have to count on receiving approximately $2.5 million in free cash from the state.
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