For a few years, the Select Board and Advisory Committee have warned that the Town would soon require a Proposition 2½ Override just to fund the Town’s general operations. They managed to avoid the issue over the past few years. But early this month, Select Board Chair Kathy Cook said the time is “here”. She believes they can’t avoid it for the next fiscal year’s budget and several to follow.
As they head into the new budget season, Cook, the board, and members of Advisory are starting to discuss what strategy to take for dealing with the “levy capacity” issue and getting approvals needed from voters.
For those unfamiliar — the levy is the amount of revenue the Town can raise through real estate and personal property taxes. Under the Proposition 2½ measure passed by Mass voters many years ago, Towns are capped at a 2.5% for the year over year levy increase —after “new growth revenue” and deducting the cost of “excluded debt” payments that voters previously approved. (You can read more in the state’s primer here.)
But Town officials in Southborough (and across many communities) complain that the cap is too low these days. They point to increasing expenses for level services (and employee benefits), burdens for financing future employee pensions and benefits, and state aid that Select Board members assert don’t keep up with inflation.
Recently, Cook and the Finance team met with Southborough’s DOR (Mass Dept of Revenue) representative, Andrew Nelson. The Chair relayed to the Select Board that Nelson recommended asking voters to approve a blanket override large enough to cover the next five years.
Cook suggested that, this spring, they might raise the levy limit ceiling.1 (She gave a preliminary projection of about $2Million for FY28 or a total $10 Million for 5 years. But she wasn’t ready to be held to that figure yet.)
Raising the levy capacity would require 2/3 approval by Town Meeting, and a ballot approval. (The ask would be separate from any Article that might also ask for a debt exclusion for a project at Neary School.)
Even if a 5 year increase was approved, each year, Town Meetings would still control the budgets determining the tax increases for that fiscal year. But for years 2-5, the override wouldn’t have to be approved through a ballot question (and a 2/3 Town Meeting vote).
Vice Chair Andrew Pfaff described that each year, the Town’s budget would “eat away” at the approved excess levy capacity.
Member Sam Stivers, who serves as the board’s designee on the MetroWest Regional Collaborative, said that at a recent meeting many area Towns were discussing taking the same approach.
According to Cook, Nelson also advised to not link the override to a specific budget. The strategy was successful in passing an override in Holden, where he lives. Cook explained:
different constituencies put signs in the yard saying “Support the Fire Department”, “Support the Police Department”, “Support the Schools” if that’s what your thing was.
Member Tim Fling expressed concern about the track for projected tax increases that the override could allow — especially if a Neary project also adds to tax bills.
Members discussed asking departments to present two budgets. The preparation would be to show voters what the budget impact would be if an override doesn’t get passed.
Cook planned to invite Nelson to speak with the entire board on August 11th. She also invited the Advisory Committee, so they could begin jointly discussing a strategy.
At this week’s Advisory Committee, Chair Marci Jones led a preliminary discussion on the topic. She described the potential levy cap increase of $10M to cover 5 years. She also talked about a potential one or three year override.
Member Al Hamilton (former Select Board member), said that he believes that Advisory should use the opportunity for some “tough love”:
I would like to see every department come up with a productivity improvement plan or an efficiency plan so that you know how do how do you deliver the same set of services for less
Member Tim Martel suggested that rather than raising the levy for unspecified funds, it should be linked to one of the burdensome long term costs the Town is grappling with, like OPEB (the non-pension benefit costs for future retirees).
Building on the idea, Hamilton suggested that instead of an override, the Town could look into borrowing money to pay for OPEB or future pensions. He believed that the debt interest may actually be lower than the the interest that would accrue in the pension fund.
Upon questioning as to why the Town hadn’t taken that approach, Hamilton acknowledged the issue of debt capacity given other projects the Town is looking at, like Neary School renovations.
To prepare for the joint meeting on the 11th, Jones planned to continue talking through their ideas and questions at Advisory’s August 5th meeting.
- Updated (8/3/2/6 4:15 pm): I initially wrote “levy ceiling” instead of “limit”, which I had misunderstood as interchangeable terms. Cook reached out to correct me. The ceiling is the maximum amount the Town can tax, regardless of year over year changes. According to Cook, the Town is nowhere near that ceiling.
ARE YOU KIDDING???
TO THE TAXPAYERS: Under NO CIRCUMSTANCES SHOULD THE TAXPAYERS AGREE TO AN OVERRIDE, which is PERMANENT. There are too many stunningly incompetent cooks on this board, utterly incapable of managing a budget, except to pass on unlimited increases to the struggling taxpayer. At some point, the budget must balance and cuts made. This is a one solution board: where are the options?? The Board should seriously consider Mr. Hamilton’s proposal that this SB should originate (!!) Unlike other municipalities, who manage their spending and make cuts to live within their means, this SB is incapable and unwilling to make cuts. TAXPAYERS: Please see the following important information on Prop 2.5 and Audit Committees.
The very fact that the majority of the board voted AGAINST an AUDIT COMMITTEE should be revealing to all taxpayers. Incredibly, Town Counsel advised AGAINST such a committee at the last town meeting as being not advisable — contrary to the fact that the STATE ADVISES IN FAVOR OF INDEPENDENT AUDIT COMMITTEES, as “best practice” as follows:
“Establishing an audit committee is highly advisable for town governments in Massachusetts. The Massachusetts Department of Revenue (DOR) Division of Local Services (DLS) strongly recommends creating an audit committee as a financial “best practice”.
An audit committee provides an independent layer of financial oversight. It serves as a vital tool for safeguarding public assets, maintaining taxpayer confidence, and improving municipal bond ratings.
Key Benefits for Town Governments
Best Practices for Structuring a Town Audit Committee
According to Mass DLS and established town charters (such as those in Hingham, Easton, and Duxbury), town audit committees should be structured carefully:
Proposition 2.5 overrides in Massachusetts are permanent.
Permanent vs. Temporary Taxes
When a city or town successfully passes a general or operational override, the approved dollar amount is permanently added to the municipality’s base levy limit. This means the higher tax limit becomes the new foundation for the community’s tax calculations moving forward, and it will continue to increase by the standard 2.5% automatically every year.
If a community wants a temporary tax increase, they use a different mechanism:
TAXPAYERS, CAUTION – HERE COMES THE usual mid-August (no one is around) “strategy” to actually invent a plan to “GET VOTER APPROVAL” to accommodate exploding expenses – instead of actively managing the budget and implementing cuts to spiraling out-of-control expenses. The town deserves better management, a presentation of options, and absolutely an audit committee like other towns. And PS – we need better advice and new town counsel. Town counsel never informed Town Meeting floor that many municipalities have them and the benefits thereof.
Thank you.
I have a proposal on an item that could be put on the town meeting ballot that would insure retired folks who have been contributing to the town tax base for a set number of years be given a substantial tax rate reduction. The option to do volunteer work in town doesn’t even put a dent in our rising tax rate. Many retired residents are finding it impossible to remain in town and are required to dip into their life time savings to try to remain here. My wife and I have been contributing to the taxes for over 43 years. Now being fully retired it is becoming a real burden not only on us but on many retired folks as well. Voting for a tax override on Prop 21/2 will cause for more tax increases on us again! We have always loved this town and my wife grew up here. We raised a great son here as well and have always appreciated the small town effect on our lives. But it has changed dramatically and we need to make some adjustments to allow our long time residents to get a break. This is an item that we should take seriously and take it under consideration!
Mike
I agree that the Senior Tax Relief programs that are on the books are miserly at best. Many are codified in state law and reflect what were reasonable relief decades ago but are now a pittance.
I suspect that your idea of giving tax relief to long term residents wont pass muster. At a minimum it would probably require an act of the legislature.
I am afraid there are only 2 realistic paths to controlling your tax bill.
1) A large increase in the town’s commercial and industrial base. This will shift the tax burden away from the residential base.
2) Controlling expenses. Labor is by far the largest expense. No meaningful control of expenses can avoid that. We need to have a serious discussion about automation, AI, and productivity as well as a discussion about how we are organized to get the most out of every tax dollar.
Here’s a third idea being implemented statewide: MAKE BUDGET CUTS — STOP OVERSPENDING across the board.
It doesn’t matter how many Costco deals get done, THE RATE OF SPENDING FAR OUTSTRIPS any perceived benefit to the tax base. A statewide report from the Massachusetts Municipal Association indicates that nearly three out of four cities and towns are operating near their maximum property tax levy limits due to inflation and flat state aid. Hit the link and read.
DO THE MATH. Look at the historical tax percentage increases and proposed increases in spending (including special projects and STM increases) — and publish them for the taxpayers to understand.
AND SB, a “strategy” to get votes for increases isn’t a STRATEGY and isn’t good budget management. It is artful pickpocketing. Resign if you can’t do the math.
Taxpayers: do not drink the Koolaid. As usual, there are NOT only TWO options. This is misleading nonsense. The most obvious option is to make cuts and REDUCE SPENDING, like many other municipalities.
As for “1) large increase in town’s commercial and industrial base,” this is misleading ignorance, spoken like a profound wisdom, when it is currently wrong and a long-time historical falsehood.
By and large, the market has chosen different more convenient locations elsewhere for decades for most property types. The few that have located here recognize they can line their pocket based on absolutely wrong, out-of-scale tax benefit on the back of the residential base.
As one example, for office product in decades, even in the best market conditions, has never reflected below double digit vacancy rates — and has often been in the high double digits. Why? Because the market prefers better closer-in locations, even in the tightest market conditions.
As for “2) . . .Labor is the largest expense . . .: why should taxpayers use their 401K retirement savings to pay for someone else’s pension? This needs to change in whatever ways possible, even if it involves changing the law. It’s time is over and a different way of handling benefits is crucially necessary. Pensions in the private sector went out with the Ford Edsel, and paying the current obligation is the unspoken, unaffordable financial disaster.
Again, numerous Massachusetts municipalities have been forced to cut spending, freeze hiring, or reduce local services, from Boston to western MA. If you are about to operate at a deficit, cuts must be made. You can’t spend what you don’t have, especially with current and upcoming debt obligations related to personnel and pensions. Cut hiring, reduce benefits, cut costs across the board; otherwise, you are bankrupting the town and ruining the tax base.
Also, we need an AUDIT COMMITTEE. It would be in the taxpayers’ best interest to see where the current dollars are going with certainty, i.e. an audit committee — nothing wrong with that, everything right that. The state advises it as “best practices.” Any SB member working against that should resign. Thank you.
I agree with Karen 100%! Time and time again we have seen consistent waste of our tax money! Project studies that are never implemented costing tons of dollars! Non-Maintenance on town facilities and schools until the cost skyrockets! As far as need for the legislature be involved I disagree! They don’t run our town we do! Heck they can’t even efficiently run the state!! I bet if this came to a vote it would pass easily. But then since when does common sense apply!
Mike
If you think it would pass, all you need to do is draft a bylaw and get the 10 signatures of registered voters and it would appear at the next Annual Town Meeting. I am skeptical that Town Meeting has the legal authority to do this but it certainly can try. I would be happy to help you draft such an by-law, but I am not committing to voting for it.
I also agree with you regarding maintenance. But maintenance costs money too.
I do need to point out that elephant in the room of the towns budget is labor costs both in terms of wages and benefits. You cannot meaningfully address the increases in your taxes without addressing labor costs. That is reality. So, I put it to you and Ms Shimkus, how are you going to reduce the number of teachers, police officers, firefighters, DPW workers, library staff, administrators, etc?
Mr.Hamilton: If Boston can do it then a small town like Southborough can also: I googled “City of Boston cost cutting”
Faced with a nearly $50 million deficit driven by high snow removal, police overtime, and rising healthcare costs, Mayor Michelle Wu introduced a tight $4.9 billion FY27 Operating Budget representing the city’s smallest growth rate since 2010. The plan relies on strict administrative cutbacks, delayed hiring, and targeted grant reductions rather than layoffs or property tax overrides. [1, 2, 3, 4]
Financial Pressures & Causes
Cost-Cutting Measures
We need more discussion rather than raising taxes. How about cutting taxes.
What is this business base you speak of ? I see many buildings on Rt9 empty and why should businesses be expected to pay for an out of control town?
Al, after hearing what is required got get this on the ballot I feel it is a waste of time! Many towns have raised their tax rate time and time again! Almost like they want to drive out middle and upper middle income residents as well as retired folks. As far as labor and maintenance is concerned this has been a large issue in this town. I have scene many times town DPW riding around in street sweepers when nothing to sweep! Also same with employees riding around in the brush cutter but again no brush cutting . There are serious issues with maintenance never done but being ignored. Once I saw three DPW folks to put up a street sign?? Another example is the proposal I presented for Jack Barron that reviewed a study done by Mass Dept of Revenue and it was totally ignored?? I have come to the conclusion that no matter what the people in this town vote for it is ignored and continually pushed to pass regardless of a majority NO VOTE! Sounds to me these town officials are following the same path as our inept state! There was a time the town was run according to the residents wishes not anymore!
I’m going to boil this down to provide clarity on the 2 primary drivers of our budget woes:
1. Contractual labor increases (driven by unions).
2. Unfunded state mandates.
Town leadership is powerless in these 2 critical areas.
For decades, town leadership has begged the state for help – they aren’t interested in helping us.
In fact, they’d rather continue pushing more of their own problems down to the towns (i.e. housing.)
Town leadership has been working tirelessly (as volunteers!) to lower costs while maintaining services and adding new sources of revenue.
So please direct your ire where it truly belongs.
There’s much more to it than that. Many cities and towns are making cuts, facing the exact same pressures. The whole tide has gone up. Look at other municipalities for how they are managing to make cuts. Taxpayers are interested in solutions.
Boston is making cuts, and many surrounding towns are making cuts. Please see the MMA REPORT (link below). Inflation pressures are hitting residents, skyrocketing costs are also inflating town budgets. The budget has to be capped and balanced at some point regardless of whether or not there’s an override. Get it?? The rate of spending is the problem. That is a leadership and management failure in light of other municipalities who are leading, and implementing a breather on unsustainable rate increases by managing costs.
Massachusetts municipalities are making budget cuts due to a structural “perfect storm” of capping local revenue growth while operational expenses skyrocket far past inflation.
A landmark fiscal report by the Massachusetts Municipal Association (MMA) warns that cities and towns have hit a severe breaking point.
The Strict Revenue Ceiling (Proposition 2½)
Skyrocketing Operational Expenses
While municipal revenue is legally limited at a 2.5% increase, the structural costs of keeping a town running are increasing exponentially. Local budgets are consumed by:
Stagnant State Aid
Municipalities rely heavily on the state house for financial support, but local officials emphasize that funding has not kept pace with the times.
Yes, it’s going to take some creative, out of the box thinking and good fiscal management, but it starts with cutting costs across the board. See the MMA report. Statewide, limits are reached. That’s it. This SB has a lot of excuses and mouthpieces spewing zero solutions. Benefits, pensions, healthcare solutions, skyrocketing operating costs — the town might look to the private sector and other municipalities for examples statewide for cutting costs and possible solutions to restore healthy financial footing. Thank you.