By DAN TOMASELLO
Published May 8, 2019
LYNNFIELD — The Finance Committee is concerned about the direction of the town’s budget and fears a Proposition 2 1/2 override might be on the horizon.
In a supplementary letter handed out during last week’s Town Meeting, the Finance Committee stated that it recommended the operating and capital budgets for fiscal year 2020. The FY20 operating budget totals $56,681,943, representing a 3 percent increase over FY19’s $55,008,308 appropriation.
“The decision to recommend the budget was not unanimous, reflecting differences of opinion around the pace of expense growth,” the Finance Committee stated. “As a committee, we feel that the sustainability of Lynnfield’s expansion of services is challenged by future revenue trends and do not see an opportunity similar to that of MarketStreet to grow revenues at the pace necessary to continue our current pace of expense growth.”
The Finance Committee stated it “believes there are three paths” the town could take moving forward. Under the first path, the FinCom stated, “The town could choose to slow its expense growth to ensure a pace that is a commensurate with projected revenue trends.”
“This could mean, for example, that we stop net new headcount growth and would expect the town administrator and selectmen to limit salary increases in future labor negotiations with town unions,” the Finance Committee wrote.
The second path the Finance Committee said the town could take involves becoming “more receptive to revenue-positive development opportunities” that include “voting in favor of developments the town has historically rejected.”
Under the third path, the Finance Committee said townspeople could support a Proposition 2 1/2 override in the future.
“The town could decide to finance the expense growth ourselves with a future Prop. 2 1/2 override,” the Finance Committee stated. “In full disclosure, the FinCom does not know with certainty when an override would occur or how much it would entail, nor can we guarantee that a focus on the first two paths would completely eliminate the potential for an override. Still, without shifting our views in the first two paths, we believe it is inevitable in time.”
The Finance Committee also aired concerns about the FY20 capital budget that was approved by Town Meeting approved. The FY20 capital budget totals $982,215.
“As it relates to the town’s capital budget, FinCom believes that a meaningful and consistent investment into capital expenditures is required and that a tangible action plan to address these issues should be a high priority town objective given aging infrastructure,” the Finance Committee stated. “The FY20 capital budget represents 1.7 percent of the town’s total expenditures, which is below FinCom’s preferred target level of 2 to 3 percent. Including the (2018) October Town Meeting capital expenditure to rebuild the town center septic system, the town’s two-year rolling capital expenditures are in line with this target, though we would like to see the FY21 capital budget return to this range. Given the aging infrastructure and physical plant of the town, FinCom would welcome a cohesive and well thought out plan to address future and substantial capital needs. This should include reinvesting expiring debt into capital expenditures and addressing infrastructure needs.”
In an interview with the Villager, Town Administrator Rob Dolan said he shares the Finance Committee’s concerns.
“The concerns are real,” said Dolan. “Revenues as it pertains to new growth are falling at a dramatic rate. It was previously $1.6 million or $1.7 million per year when MarketStreet first opened. For FY20, it’s $390,000. When there is nothing to replace that new growth, we are disproportionately reliant on property taxes, which are capped at 2 1/2 percent.”
Dolan also noted local officials are predicting a 1 percent increase in state aid and will be receiving very little in Chapter 70 education aid. He said the lack of local aid from the state compounds the town’s financial challenges.
“We don’t have a spending problem,” said Dolan. “We have a revenue problem.”
Dolan added that the FY20 operating budget represents a “modest and responsible spending plan.”
“Moving forward, it’s going to continue to be a challenge,” said Dolan.
The Finance Committee’s next meeting will take place on Monday, May 13, beginning at 7 p.m. in the Joe Maney Meeting Room.