Selectmen discuss financial future in goal-setting meeting
Published on November 5th, 2003
STONEHAM, MA - Meeting Monday night at Stoneham's China Moon for their annual goals meeting, town officials flirted with a working budget model that would close a projected $4.5 million gap in FY05 by assuming 100 municipal layoffs.
With the Selectmen, Town Administrator David Berry, and Town Accountant Ron Florino all agreeing that 2005 would be the year that, "it's all going to catch up with us," the town officials agreed that some departments might have to be completely eliminated in the face of such dismal fiscal estimates.
"Every department head is going to be protective of their budget. So everybody will agree that yes we have to cut back, but they think it's the other guy [that's going to get cut]," said Selectmen Chairwoman Mary Pecoraro.
"Maybe we need to say there's a couple of departments that have to go away. Maybe there are other departments that need to take a larger cut than others. It may not look fair, but it's in the best interests of the town," Pecoraro added.
Identifying the police, fire, public works and school departments as the town's number one priorities, Town Planner Michael Gallerani, MIS/GIS Director Brian Clapp, Assistant Building Inspector Cheryl Noble, Tree Warden Jim Previdi, and the town's animal control officer were all mentioned as employees who might lose their jobs.
In addition, veteran's services, the Stoneham Public Library, and the town's senior center were also listed as departments that might be forced to assume disproportionate cuts in FY05.
"It's a shame that we have to cut. I've always maintained that every department has a function, but when you're in these times, some have to be eliminated...Granted, a town planner is nice to have, but if the town can't afford it, he has to be gone. Cutting across the board is just not going to work out. Who are you going to cut? Police and Fire?" asked Selectman Cosmo Ciccarello.
While the town officials maintained that layoffs or department cuts will be imminent unless the budget estimates change drastically, Selectman Bob Sweeney dismissed the idea that 100 people would lose their jobs.
"You can't layoff 100 people. It's impossible. It's not going to happen," Sweeney remarked as several Selectman nodded their heads in agreement.
Characterizing the Monday night discussions as brainstorming, Berry and Selectman Tony Kennedy also made assurances that none of the cuts are certain this early in the budget process.
"This is just a first draft version of the budget. The budget process really hasn't started yet so you really have to take all the numbers with a grain of salt. Most of them will change dramatically come January...We're not saying this is what we're going to do, it's just giving us a rough idea of what it would look like if we had to," Berry commented after the meeting.
Despite some arguments to the contrary, Berry also expressed his belief that the townspeople wouldn't allow the department cuts if alternative measures such as a 2 1/2 Override were presented to them.
"Those who have been here for a while feel that it's going to be very difficult to convince the townspeople to consider an override. At the extreme, it would be hard to believe that the town would be willing to cut 100 positions with alternative choices in front of them. You'd be looking at a completely different town at that point in terms of service and municipal functions," Berry remarked.
Although the possibility of an override was briefly considered Monday night, Ciccarello went on the record for the second time in recent months saying that he would not endorse an override if contract negotiations between the town and various employee unions include pay raises.
"If we give raises, I can't justify an override. I won't support it. If they get a raise, forget about it...You have people out of work right now and you just can't ask for an override when people are getting raises," Ciccarello asserted.
While many of the meeting's participants seemed to be in agreement with Ciccarello, Pecoraro and Kennedy felt that it would prove difficult to stop the pay raises from being included in the contracts.
"Part of the union thing is we're going for a three-year contract. And if that three-year contract was to go through, you can't just say, 'sorry, you can't get it now,'" said Kennedy.
"People who are working expect some sort of raise. But I see what you're saying. I think this is a bite the bullet year," added Pecoraro.
Elaborating on his own frustrations with the pay raises, Florino said that the unions make it difficult to work out compromises that could save jobs.
"The frustrating thing as a department head is that you have no control over raises. I could talk to my department and say, 'let's not give the raises and save a position.' But unfortunately, you can't do that with the unions," Florino vented.
An Unclear Fiscal Picture
Monday night's budget discussion centered on the idea that the town will find itself facing a $4,580,000 shortfall in FY05. Based on several shaky assumptions, such as the prediction that the Commonwealth will not further reduce state aid figures and that the town will only assume a little over $1 million in salary and health insurance increases, the predicted shortfall could grow or shrink once the official numbers are released.
One of the few concrete assumptions town officials can count on, Stoneham should receive an estimated $941,380 in new growth from property tax increases in 2005. While that may seem like good news, Florino claims that growth will quickly be eaten up by the loss of nearly $3.5 million in one-time revenues used in FY04.
"Those are one-time revenues that come May, we won't have to balance the FY05 budget. That's not to say that we may not have free cash from the FY04 budget," Florino reported.
Predicting a net loss of nearly $2.5 million in revenue from FY04 to FY05, the fiscal dilemma is exacerbated by nearly $1 million in increased unfunded pension liabilities and another $1 million loss from health insurance and salary increases.
With town officials assuming that citizens will approve the use of $1 million from the stabilization account and that the Board of Assessors will release $200,000 from the Overlay Surplus account, Stoneham will need to either raise or cut $3.3 million from the budget in FY05.
According to Florino, assuming that the average municipal worker earns $35,000-$40,000 a year, the town would have to layoff approximately 100 employees to close the $3.3 million gap.
However, because the town must assume unemployment costs for employees losing their jobs, that 100-person reduction represents a very rough estimate at best.
"Assuming that the average salary is $30,000 to $40,000 with benefits, there would be 100 layoffs not considering unemployment costs. For every three people you layoff, you would probably have to layoff a fourth person [to pay for unemployment]," said Florino.
Further muddying the fiscal waters, town officials have no idea how much state aid will be offered to the town this year.
With Kennedy and Selectman Charlie Smith receiving indications that the town should prepare to reduce a level-funded budget by an additional 5 percent and Florino hearing rumors that the state has received revenues higher than predicted, the status of the town's state aid could go in either direction.
Lastly, even if the 2005 estimates were to remain static, Florino indicated that he only included the "big ticket" budget items in his figures. With this in mind, the $4.5 million shortfall would grow after tallying additional expenses such as trash pick-up fees.
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