[Ed note: My Southborough accepts signed letters to the editor submitted by Southborough residents. Letters may be emailed to mysouthborough@gmail.com.
The following letter is from Al Hamilton.]
To the Editor:
Are you being over taxed?
In fiscal ‘25 (7/24 to 6/25) we raised by taxation $3,239,581 more than it actually costs to operate our local government. This amount is shown in the following year as “Free Cash” but is hardly free. It represents taxes paid that were intended to provide services for a given year that were not used for those services. In other words, we were overcharged for those services.
Given that I believe that we provided the residents in FY 25 with the set of services they required, this means that your tax bill for FY 25 was higher than necessary. How much higher? We raised $56,000,643 in local property taxes. The result is that we raised by the property tax about 5.8% more money than was actually required to operate the government. As compared to the entire revenue base of $69,589,107 the overtaxation was on the order 4.7%.
Clearly then year after year, the amount we budget and then raise by the property tax has been more that is actually required to operate our local government. And yet, we continue to do future budgets based on the last year’s budget even though that amount was in excess of what is actually required. Our budgets have become disconnected from the actual minimum costs required to deliver the standard of service our community requires.
What can be done?
First, we have to recognize that our budget process is broken. We can stop basing next years budget based on the current years budget and instead look at the longer-term actual costs of delivering a service.
Secondly, we can budget closer to the actual costs and rely more on transfers from the reserve fund (overseen by the Advisory Committee) if there is a shortfall. This may mean beefing up the reserve fund by several hundred thousand dollars but it could result in an overall savings.
Finally, we do need to recognize that steps to reduce the size of Free Cash will not bring the sum to 0. It is desirable to have a modest amount of Free Cash at the end of a period as part of a requirement to have a balanced budget but the sums we have been accumulating are symptomatic of a broken budget process increasingly disconnected from the actual costs of the services delivered.
Al Hamilton
35 Pine Hill Road
