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Town Manager Andy Sheehan’s Budget Working Group met on August 31, and the discussion could prove to be a significant financial milestone for the Town.
Assistant Town Manager and Finance Director Victor Garofalo presented an updated forecast of revenue and expenses for Fiscal Year 2028 (FY28). The Town is currently in FY27, which runs until the summer of 2028. Town Meeting votes on a budget for FY28 in May of 2027.
The latest forecast shows that the Town anticipates $6.3M in additional expenses, a nearly 5% increase, with just $4.4M in anticipated additional revenue in FY28. That leaves a $1.9M forecasted deficit, which is actually smaller than prior forecasts due to more aggressive budgeting for revenue and increasing clarity on forecasted expenses. The original estimated deficit was in the $3M range.
The materials presented during the meeting offered five specific methods that could be used to close the remaining $1.9M deficit without ever proposing an override. Those options included:
- Using free cash to fund OPEB (Other Post-Employment Benefits)
- Dipping into reserves including the Stabilization Fund, Capital Stabilization Fund, and OPEB Fund.
- Dipping into special revenue funds like the Solar Revolving Fund, and CPA fund to pay for expenses like utilities and benefits for staff association with the administration of Sudbury’s Community Preservation Act program.
- Additional increase in budget for local receipts, though the Town has already increased anticipated revenue from this category by $740,000 for FY28.
- Cost cutting across every department in the Town, and both school districts.
After the first three strategies are implemented in this model, the cost cutting and/or local receipts budgeting would need to solve for an approximate deficit of $600,000. (Presentation materials embedded below)
The Budget Working Group members were generally receptive to the strategy proposed, though there was discussion that an override is eventually going to be required even if there’s a path to balancing the FY28 budget.
Notably, Sheehan and Garofalo have been pushing in recent years to build up Sudbury’s reserves, and received some criticism along the way. With a forecasted deficit for FY28, it may be the reserves they have built up in more favorable fiscal years that help spare taxpayers from an override.
Garofalo also told the members of the group that he expected this year’s certified free cash number to be stronger than last year’s already-robust number. There was discussion about continuing to invest in capital because pauses on those investments tend to come back to bite municipalities a few years down the road according to Town Manager Sheehan.
The discussion did not resolve the budget deficit, but it gave Town leadership a sense of which strategies to close the deficit would be received favorably by key boards and committees during the budget building process.
As always, the numbers discussed are part of a forecast that changes over time. The budget building process extends all the way to Annual Town Meeting in May of next year, with numbers continuously firming up as you get closer to the vote. There’s ample room for a changes in direction or strategies as the process unfolds, but the highlight from the August 31 meeting is that the Town sees a pathway for avoiding an override in FY28.