Published September 30, 2020
By MARK SARDELLA
WAKEFIELD — At about the one-quarter point of Fiscal Year 2021, Town Administrator Stephen P. Maio last night provided the Town Council with an update on the town’s finances.
Maio talked about the unique fiscal year, which included COVID-19-driven budget shortfalls, as well as the town’s efforts to maintain programs and position itself for the long term.
He said that the town is looking carefully at its hiring and capital spending and trying to prudently manage reserves while using Free Cash to smooth out any rough spots.
Maio talked about the $98.5 million FY 2021 budget that was set before COVID-19 hit. That budget had real estate taxes coming in at $76.2 million. Maio had forecast local receipts (excise tax, local meals, hotel tax, etc.) at $7.25 million. (The FinCom was more optimistic, predicting $8.25 million.)
The Wakefield Municipal Gas and Light Department payment to the town in leiu of taxes was anticipated at $918,000
State aid was forecast at $10.9 million and new growth at $2.5 million. School Building Authority funds were a known quantity at $529,000. Available Funds were pegged at $248,000.
The $76.2 million total for FY 2021 property tax revenue was not impacted by COVID-19, Maio said. But local receipts took a $1 million hit in the revised COVID-19 figures, estimated at $6.25 million. Available funds remained stable in the revised COVID forecast at $248,000 as well as the anticipated MGLD payment of $918,000.
State aid dropped in the post COVID numbers from $10.9 million to $10.8 million. Maio allowed that the figure could end up even lower, especially if the governor orders mid-year 9C budget cuts.
Maio’s post-COVID New Growth number fell to $1.25 million.
The revised total FY 2021 revenue numbers after COVID came to $96.2 million, a shortfall of $2.3 million.
Maio talked about the $698,000 reduction in operating expenses approved by Town Meeting in June, as well as a decision to bifurcate capital spending with $1,009,000 approved at the June Town Meeting and the other half deferred until the fall. Total budget reductions came to $1,707,559 (plus about $1million of new growth lost). Maio proposed using $2 million from Free Cash to supplement the FY 2021 budget.
Maio said that future revenues depend on the shape of the rebound. He saw state aid increasing at a steady 4 percent per year. He anticipated local receipts rebounding by 10 percent in FY 2022 followed by a steady 4 percent increase per year.
He expected New Growth to continue increasing after this fiscal year at 4 percent per year owing to new construction and the National Grid power line.
He expressed a strong hope to return to $2 million in capital spending in FY 2022.
He called for holding budgets to a 3-4 percent overall increase annually.
Maio talked about “COVID-19 new normal costs,” including technology items and PPE.
Maio said that he hoped for rules changes that will allow some of the $2.4 million that the town has received through the federal CARES Act to be used to replace lost revenues.
He also talked about putting off the town’s $1.6 million annual funding of its OPEB account to the spring.
Maio projected out reserves over the remainder of the decade based on the conservative assumption of no unanticipated revenue and departments spending their entire budgets every year.
He listed $5 million in Free Cash and $3 million in the Stabilization Fund for FY 2021.
Going forward, the numbers in Maio’s projections were as follows:
FY 2022 – Free Cash, $4 million; Stabilization Fund, $3 million.
FY 2023 – Free Cash, $3 million; Stabilization Fund, $3.1 million.
FY 2024 – Free Cash, $2 million; Stabilization Fund, $3.2 million.
FY 2025 – Free Cash, 2 million; Stabilization Fund, 3.3 million.
By FY 2029, Maio predicted a return to $5 million in Free Cash and $4.2 million in the Stabilization Fund.
“We’ll still have adequate reserves and come out OK in the end,” Maio predicted.
Town Council chair Ann Santos credited Maio for the fact that Wakefield is “in such great shape” financially, adding that it was “amazing to have a forecast like this in the COVID era.”
Councilor Jonathan Chines worried that state aid could end up being less that Maio forecast. Maio said that he was more optimistic in part because state aid comprises only 10 percent of the town budget, unlike communities that are far more dependent on state aid.
Councilor Mehreen Butt talked about the coming hire of an Economic and Community Development Director, stressing the “community” elements of the position. She also called for hiring a “townwide social worker.”
Town Councilor Edward Dombroski noted that a lot of residents remain in a very precarious financial position and said that the town should do whatever possible to lessen the tax burden on local citizens. He questioned why a 3-4 percent annual increase in budgets was a given across the board. Maio agreed that he would like to see that expectation lower.