Not much room for luxuries in next fiscal year

Published in the November 15, 2017 edition

By DAN TOMASELLO

LYNNFIELD — Fiscal year 2019 is going to be a tight budget year, Town Administrator Jim Boudreau said during the annual Budget Summit at the Senior Center Nov. 8.

Selectmen Chairman Chris Barrett noted the Budget Summit was scheduled a month earlier than previous years. In the past, the Budget Summit was typically held in early December before the holiday season kicks into gear.

“This scheduling change was made to allow the Board of Selectmen and Finance Committee additional time to carefully consider the spending proposals of town boards and committees, and provide voters adequate time to consider the town’s spending plan prior to Town Meeting,” said Barrett.

Barrett took a moment to recognize Boudreau, who will be leaving the town next month after agreeing to become Scituate’s town administrator.

“The town is in a stronger position both financially and operationally as a result of his management and his guidance,” said Barrett.

After Barrett concluded his remarks, Boudreau outlined the town’s revenue projections for FY’19 and gave an update on FY’18. In regards to FY’18, Boudreau said the town has about $3 million in the Capital Stabilization Fund and will have over $2 million in Free Cash after money is allocated to cover October Town Meeting’s expenditures.

“We anticipate our revenue will remain strong for fiscal 2018,” said Boudreau. “I don’t see any bumps on the horizon right now for fiscal 2018. I think we are in pretty good shape fiscally unless something unforeseen happens.”

Looking forward, Boudreau said FY’19 “is going to be a challenge.” He said the town generates revenue from three different areas: local taxes, state aid and local receipts. He said 98 percent of the town’s budget is funded by property taxes.

“A component of that is new growth,” said Boudreau. “It’s based upon development that comes on after a certain date. In 2012, our new growth was $178,000. In 2015, it was $2.5 million, which was the MarketStreet effect. In 2018, it’s back down to $435,000. In fiscal 2019, we are only projecting $325,000.”

In addition to the reduction of new growth, Boudreau is projecting state aid will be level funded.

“I don’t see state aid going up by more than 1 or 2 percent,” said Boudreau. “For us, that is a couple hundred thousand dollars. It’s not a whole lot of money. We are going to be relying on our tax base for the most part. The board is hoping some new all-alcohol restaurant licenses will keep driving up the meal’s tax. But the revenue picture is going to be tight going forward.”

Boudreau said the town “is going to have to be a lot more conservative with our budgeting.”

“We are going to have to be a lot more careful in our budgeting and we have to be very careful about adding things that will add costs in the future,” said Boudreau. “We are going to be aggressive with our capital budget to keep that going, but in terms of operating budgets, we are going to have to be very conservative going forward. At this point based on my revenue projections, I don’t see the total budget being able to grow more than 2 to 3 percent. That is going to be difficult.”

Additionally, Boudreau is projecting health insurance will be increasing as well.

“We anticipated last year it would be in the 5 to 10 percent range,” said Boudreau. “After talking to some people I know at the GIC (Group Insurance Commission), they are telling me right now to use 6 percent. For us, that is still over $400,000.”

Boudreau said the School Department’s budget will be increasing and town employees will be getting raises due to contractual obligations in FY’19.

“Our ability to hire and add new people to be funded through the tax rate is going to be severely constrained in my opinion,” said Boudreau. “If the town does decide to add positions, those positions going forward are going to be hard to be maintained unless they are funded by their own source of revenue.”

In closing, Boudreau told department heads the FY’19 budget is “not shaping up to be a budget that will support new initiatives.”

“I am going to caution everybody that even if we find the funds in FY’19, those numbers are going to keep dwindling down because that growth number is not going to change at any time in the future,” said Boudreau. “There is no big project on the horizon in Lynnfield that is going to bring in a substantial new growth number to fuel additional initiatives or additional positions in the budget. The good thing is a lot of things we needed to do we have focused on.”