10/30/2025
I recently wrote this response to a resident with budget questions:
"As an outgoing councilor who very shortly won't be making budget decisions, my focus has been to explain the finances without saying there is a right way to allocate funds. Rather, to show that significant compromise is needed in order to fund schools more, and that candidates should be talking about the cuts they will make if they are proposing more.
The first point I would emphasize is that our expenses are rising faster than our revenues.
On the expenses side, much of our costs are salaries and benefits. The new school contract is likely to require a 5.5% annual increase, possibly more, in order to maintain level services. That rough calculation comes from the 3-4% cost of living increases, and that steps are typically an average 2.5% increase. Most of the budget is personnel, but there may be ways to trim the transportation, utilities and other costs so they don't increase as much to pull the total increase down. The cost of benefits is separate. Last year that total cost increased by 6.27%, with health insurance, the largest benefit expense, at 9.88%. For next year, the Group Insurance Commission (which we are a part of) estimates a 15% increase in health insurance costs. All of these costs put enormous pressure on the rest of the budget.
On the revenue side, we are limited to a 2.5% property tax increase plus new growth (new buildings and additions), which has added around another 1%. Local receipts revenue has been stronger than that the past few years, but is a comparatively small percentage of the budget. State aid increases often don't keep up with inflation.
Any reasonable outlook should plan ahead for the next 5 years, using best financial practices (the State gives guidance on these). While in one year it can be workable to estimate revenues higher in order to spend more, you can't do that over and over again or you reach the ceiling, causing there to be no surplus. In municipal finance, surplus and debt service are the two primary ways to fund capital needs.
My understanding is that if we reduce our capital spending further (roads, sidewalks, buildings, vehicles etc.), we will not be keeping up with depreciation and will be deferring maintenance. That will ultimately cost us more later. The current plan as outlined in the latest Capital Improvement Program already relies on drawing from reserves to sustain the necessary capital funding over the next 4 years.
Altogether, it is a very tight situation with unknowns (such as possible loss of the $2 million per year we receive from Federal education grants). It's not that we can't increase school funding, but that we would need to reduce services in other departments, or reduce capital spending to the extent that we would be deferring maintenance in an unsustainable way. My wish is that candidates understand this situation and speak to the trade-offs in a realistic way. That may not win votes however.
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