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On Monday the Finance Committee met to discuss lessons learned after Special Town Meeting and to gear up for the FY25 budget cycle. Their takeaways from Special Town Meeting were pretty standard fare, mostly relating to getting more information and getting that information earlier in the process, but it was acknowledged that Special Town Meetings happen under a compressed timeline.
The main event was a visit from Town Manager Andy Sheehan, who was there to talk about the FY25 budget at a high level. Sheehan discussed some of the pressures the Town is experiencing with the budget and noted that Sudbury faces more challenges on the revenue side than the spending side. Specifically, the Town already doesn’t generate as much free cash as would be ideal on an annual basis, and it ends up spending less on capital projects than even the Town financial policies call for because the money just isn’t there. A contributing factor to the challenges, according to Sheehan, is the relatively small commercial and industrial base in Sudbury.
“We generally do not spend on capital what we should be spending. We don’t spend what our policies suggest that we should spend and we don’t spend really what’s generally accepted as a practical target. And then on the operating side we’ve got a number of identified, but so far unmet, needs…” (0:31:16)
Sheehan would go on to add:
“We’ve got no shortage of challenges. The biggest challenge, I suppose is the revenue picture. I don’t think we have a spending picture [problem]. When you compare us to other communities, other similar communities, we are understaffed in a lot of the comparable positions, comparable departments. So it’s not that we are bloated in any way. The fact that we don’t have a large commercial/industrial base certainly contributes to that.”
The comments about revenue challenges align with the 2020 report provided by DLS, in which they stated:
“Whereas the average Massachusetts town draws 71% of its general fund budget from the tax levy, in Sudbury that portion is considerably larger, at 86%. This is because the town lacks significant offsets from either locally generated receipts (e.g., motor vehicle excises, municipal charges, interest, fees) or from state aid (due to Sudbury’s high wealth factors and the regional high school receiving educational aid directly from the state). Furthermore, only 7% of the total property valuation in Sudbury arises from commercial, industrial, and personal properties, and therefore residential taxpayers shoulder the preponderance of the levy burden.”
When Sheehan brought up some of the “unmet needs” that have remained unmet for several years, he referenced some of the examples that were given earlier this year by the then-Interim Town Manager, Maryanne Bilodeau:
It was unclear during the discussion exactly how the Town could deliver a level service budget for FY25. And that would not even include meeting any of the Town’s unmet needs. There was discussion about various tools available to the Town to get itself into a stronger position, but they don’t exactly have a ton of financial options available. For example, debt was an attractive option for municipalities when rates were at historically low levels, but those quickly swung the other way and now the interest rates are downright scary. (0:43:53)
Sheehan encouraged the Finance Committee to keep an open mind about all available options. There was some mention of debt exclusions, operating overrides, capital exclusions as some of the options that are available to municipalities. To be clear: nothing is decided right now. Sheehan made it clear that the Town is looking at all options, and he will have more to report in the weeks and months ahead.
Adding to some of the concern for Town leadership is that they believe they’re starting from a position of being under-resourced. When asked what the Town thinks about a zero-based budgeting approach, Sheehan made a point to demonstrate why he thinks the Town is running a very lean operation compared to other towns:
“One of the things that gives me pause in that regard is that we’re not bringing in a tremendous amount of free cash. We had a good free cash number this year, but for the size of our budget it is not that large and I’ve worked in other communities with a much smaller budget that had a free cash number not so different from Sudbury’s. And so what that tells me is that, and this gets to my earlier point, we don’t have a bloated operating budget and I think if we did I think you’d see that in the free cash.” (0:38:07)
On the capital side, Sheehan said that the Town should be spending $6M-$7M on capital improvements annually and is not spending anywhere near that amount. He also pointed out that there’s a relationship between the capital and operating sides of the budget, and he felt that further sacrifices on capital spending for the sake of the operating budget would not be advisable.
The discussion added another level of detail to prior comments by the Town Manager about a need to get the Town into more sustainable shape financially and with regard to staffing and continuity of services. In some ways it was also a preview of what to expect in the next Select Board meeting. After that, the budget planning process goes into full-swing.