Fairhaven is not only town looking for Prop 2 1/2 override

By Beth David, Editor

Fairhaven Town Officials are asking Town Meeting to approve a budget with a $450,000 deficit, which means voters will have to approve a Proposition 2 1/2 override in a town-wide ballot. The Select Board is proposing two budgets for Town Meeting on 5/6. And the Finance Committee also submitted a budget.

The SB recommended budget  which is contingent upon the override passing, is $58,086,901 and will not require any cuts in service. The “non contingent” budget cuts $450,000 from the recommended budget. It includes a $200,000 cut to the School Depart­ment; and cuts $250,000 from salary reserves, which is used for raises and promotions for non-union employees. The original plan had been to take $150K from salary reserves and cut two of the four new firefighters, but the firefighter positions are restored.

The FinCom budget spreads out the cuts, but still takes $200K from the schools and $208,605 from salary reserves, and the rest from public works and tree department. 

The cuts to the salary reserves mean that some promotions in the works will not happen, such as an upgrade for the Town Hall Custodian to become a Facilities Manager responsible for all town buildings (except schools), not just town hall.

Ms. Ellison said the deficit is actually $750,000, but the town took $300,000 from Other Post Employ­ment Benefits (OPEB), to lessen the blow to taxpayers. OPEB is a retire­ment obligation the town has to the state. It is not fully funded, but at some point, it will have to be.

The town also could use free cash to fund OPEB, but instead used that, along with money from the capital stabilization fund, to pay for the middle school roof. The other option was to borrow the money, which still would have required a Prop 2 1/2 debt exclusion override. The debt exclu­sion is just for the life of the loan. The operational override is permanent.

Fairhaven is not alone in needing an override this year. A variety of factors has led to the problem throughout Massachusetts. In municipality after municipality that is asking for overrides, the mantra is the same: fixed costs, such as union raises have grown faster than recurring revenue (taxes and fees). Proposition 2 1/2 limits how much cities and towns can raise in property taxes (the tax levy).

Add to that steep inflation and the residual effects of the pandemic, and the financial situation is dire. 

Taxpayers may simply say “no” and tell the town to live within its means. But that is only realistic to a point. The town cannot simply decide not to provide services, nor can it simply find a second job or get creative to raise revenue.

Revenue comes from three main sources: State aid, property taxes, and fees from building permits, excise taxes, etc. Fairhaven has raised fees, which should help somewhat for next year, but does not solve this year’s problem. Property taxes are con­strained by the limits of Prop 2 1/2. And state aid is decided by Beacon Hill.

“Everything we do impacts some­body,” said Town Administrator Angie Lopes Ellison. “Everything municipal government does, impacts someone, some group. So you can’t just say cut this, or cut that.”

Fairhaven is not alone. Newton tried for a $9,175,000 override, but it failed in the election, although voters approved two debt exclusions for  school construction. The schools there have a $6 million operating budget gap.

The town of Dudley passed a $4,846,597 override for operational expenses for the school district and the town; Marblehead is looking for $2 million to $2.5 million; Hingham is looking for $7,890,467; Brookline is looking for $4,995,000; Athol is looking for $895K. 

Closer to home, Mattapoisett is asking for an override for a bond issue to pay for road costs, although no amount is specified on the ballot.

The upshot is that most cities and towns are having structural deficits. That occurs when recurring revenues are not enough to cover recurring costs. Some municipalities, including Fairhaven, have used one-tim money, such as free cash, to bridge the gap. But that strategy eventually fails. And that seems to be where many towns are this year. 

The election for the override is scheduled for June 5. 

 

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