$2.7 Million deficit for FY2007 budget
Published on November 30th, 2005
STONEHAM, MA - A significant financial deficit currently estimated at $2.7 million threatens Stoneham this year as town officials prepare to set the FY07 budget.
According to Town Administrator Ron Florino, who was asked to draft an operating expense plan without the approximate $1 million worth of revenues generated this year through the trash fee, it remains unlikely that the deficit can be absorbed without significant layoffs should no new revenues be discovered.
"The biggest component of that deficit would be a 20 percent increase in health insurance, which will cost an additional $1.2 million this year," explained Florino, adding that pension liabilities, utility expense increases, and rising SPED costs form the rest of the predicted financial hole.
"It's possible," the Town Administrator responded when asked if the town could handle such a large hit. "But it's going to involve more layoffs. And there's going to be no way around closing departments."
With approximately $1.1 million sitting in the stabilization account, Florino will propose tapping at least half of the rainy day fund to offset the deficit, bringing the total shortfall to approximately $2.2 million.
Absent that avenue, the Town Administrator can only holdout hope for an increase in Chapter 70 or educational aid funding, state aid, or PILOT money.
However, according to School Committee member Marie Christie, the town can't afford to cross its fingers and count on state officials to fly to the rescue, a blunder that has cost Stoneham in recent years.
"Something is going to have to happen this year, and I don't think the state is going to rescue us," Christie argued. "Every year they say, 'next year', and we get into a hole further, and further, and further. If we got a dollar for every promise the state made, we wouldn't be in this situation."
With many town officials agreeing with Christie that increased state revenues can't even be remotely hoped for given past trends, some such as Selectman Tony Kennedy believe that all options must be placed on the table.
Opining that town officials have to approach this year's deficit realistically, the Selectman believes that a renewed trash fee is likely unavoidable moving forward. Kennedy further reasoned that with a number of citizens complaining about the trash fee's inequities last year, the current $150 fee needs to be examined, approved, and tweaked immediately to correct those problems.
"I do not personally like the trash fee, but we may have to continue it for another year. The Town of Stoneham has applied for some grants to research a pay-as-you-throw program, but you can't spend that money without being committed," Kennedy said.
"So the board is going to have to take a vote sooner than later. I'd like to think we would decide within the next month," the Selectman added.
While completely aware of the political taboo associated with the phrase, the Selectman also isn't afraid to say that the O-word should and must be an option included for consideration.
"We should look at an override. I think that figures into this if it's something where people ask, 'what choices do we have?' The board should look at it. I'm guessing any override would be smaller than the last time," said Kennedy.
According to Finance Board Chairman Richard Gregorio, who has successfully predicted the town's annual deficits for three straight years, while opinions like Kennedy's might arouse frustration and anger from citizens opposed to any fee or tax increases, Stoneham's options this year are quite clear.
Exacerbating any potential deficit, Gregorio considers it unlikely that the town's unions will accept a zero-percent salary increase during upcoming collective bargaining agreement. And since the current $2.7 million deficit is calculated with that zero-percent raise stipulation, the financial hole is likely to get worse than better.
"It's not very likely," the Finance Board member said of the zero-percent raise predictions. "From the employees' perspective, it would be one thing if we were talking about a one-year thing, but we have no idea when this [fiscal climate] is going to turn around."
"So I think it's fair to say that the collective bargaining agreement is going to [include a raise] of two-to-three percent. Basically a one-percent collective bargaining agreement would cost $220,000. So three percent would cost $660,000."
However according to Florino, he's unlikely to accept anything less than a zero-percent increase in any collective bargaining agreement.
Although unspecific about what he would exactly consider outside raises, Florino vowed to hold that line while being willing to make some concessions in exchange for the deal.
"I can't get into raises knowing that we're into a $2.7 million deficit," said Florino. "I'll hear what they're looking for, but it can't impact the budget even more; I owe it to [the employees] to at least sit down and see what they're expecting."
According to Christie, she acutely understands the dilemma Florino has walked into when it comes to collective bargaining negotiations. But regardless of what happens, she feels that the town needs to get its resulting budget policy for FY07 straight immediately.
"My personal opinion is that we can't run this town on the backs of the employees. But we don't have the money to pay them. It's a catch 22," said Christie, who refused to comment any further on the collective bargaining process.
"But what I don't want to see, and I think people are getting very tired of this, is [having town officials] come out with dire consequences that don't really happen. It leads people into a frenzy. So I'd like to get past that and come up with a budget approach that's realistic. And I think that's a do-able thing
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