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At the end of Town Manager Andy Sheehan’s presentation of the financial condition of the Town, several Select Board members thanked him for the level of detail that went into his presentation. Member Dretler was emphatic: “I have to say that I think this has been the best financial condition presentation in my seven years on the select board.” (2:04:00)
The headline is that the Town is headed toward a projected deficit in FY27 and FY28.
Much of the discussion among the Select Board focused on some of the assumptions made in the forecast. Town Manager Sheehan and Finance Director Victor Garofalo had detailed answers on how they made the assumptions. And they cautioned that forecasts get less reliable as you look further out into the future. But there were a few key drivers (1:56:20) that Sheehan emphasized in response to a question from Member Dan Carty about the jump in forecasted costs in FY27 and FY28:
- Rising fixed costs for insurance and employee benefits
- Collective bargaining unit contracts
- An anticipated regional dispatch assessment that could kick in
In short – as the forecasted cost of delivering services increases each year, the forecasted revenue eventually falls short of covering the costs. To maintain a balanced budget, the Town would either need to cut costs or increase revenue. Sheehan presented examples for both scenarios during the presentation. Here’s one where the Town would essentially reduce budget guidance to the cost centers to keep the budget balanced:
Though the guidance is an increase in the total budget, it starts to decline as a percentage of the budget each year moving forward. When costs outpace the budget growth, cuts are required.
And here’s a scenario where an override would cover the shortfall, at least for a little while:
These scenarios focus on sustaining the services the Town and the schools currently provide. But they do not fund identified needs for added positions on Town staff. Those were presented as well:
A good portion of the ensuing Select Board discussion focused on how the budget is doled out between the schools and the Town. Member Carty voiced concern that he felt the schools faced steeper cuts than the Town in the scenarios presented, and suggested doing a “lifeboat” exercise in which a choice is made about which cost center will essentially be thrown out of the boat to drown first.
Finance Director Victor Garofalo objected to the characterization about the Town guidance reductions relative to the schools. But the exchange highlighted the difficulties that the town may face in the years ahead. Tough budget decisions could be made through collaboration and cooperation, or they could look more like a time-honored tradition: ye olde municipal slap-fight.
Town Manager Sheehan continued with last year’s message about approaching the budget challenges as one community, rather than pitting various cost centers or departments against each other for finite resources. Member Janie Dretler doubled down on that theme by pointing out that the Town budget is just as much in service of the schools as it is any other group. She noted that public safety and the department of public works are funded by the town budget, and provide essential services to the schools:
“So I think it’s really important that people understand that as well. Because if you reduce services or budget on the town side, you’re reducing those services to the schools. You’ve got to get to school on safe roads, you’ve got to have safety, all those things. I think sometimes people forget that.”
2:40:00
No decisions are made during this presentation each year, but it sets the stage for budget conversations in the months ahead. Sheehan is operating on two fronts here: the Town needs a budget for the next fiscal year, but he’s also trying to lay the foundation for what he calls sustainable operating and capital budgets. If he can build consensus around a solution, it would break the cycle of a budgeting approach that has felt much more like a “one year at a time” exercise for many years in Sudbury.