By MARK SARDELLA
WAKEFIELD – Acknowledging that it felt a bit strange to be talking about Fiscal Year 2025 just days into 2024, Town Administrator Stephen P. Maio presented his preview of the FY 2025 budget at last night’s Town Council meeting. FY 2025 begins on July 1, 2024 and municipalities begin the budgeting process six months ahead of time.
Maio began by reviewing the town’s current reserves, which he characterized as “much better” than they were entering FY 2024.
There is currently $3.3 million in the Stabilization Fund, he said, and $300,000 in the Special Education Stabilization Fund.
The town’s Free Cash sits at $6.5 million, Maio added, and there is $400,000 in the Reserve Fund.
The Town’s OPEB (Other Post-Employment Benefits) fund is at a healthy $29 million.
The Water Division reserves are at $1.1 million and the Sewer Division has just under a million in reserves.
Maio called the reserves “very healthy” adding that the reserves going into FY 2026 were as good as anything he’s seen in the last 10-15 years.
He noted that the current reserves aligned well with the town’s fiscal policy which calls for Free Cash to be at 2-8 percent of operating revenue, Stabilization to be at 3 percent of operating revenue and the Reserve Fund to be at 0.5 percent of operating revenue. He noted that Free Cash is used by the town to help balance the budget and limit the tax levy.
Maio said that projected reserves look good for the next few years, at least through FY 2027, when Free Cash is projected at $10.6 million and the Stabilization Fund at $3.8 million.
He said that the town’s healthy reserves demonstrate that the town is employing best practices with respect to budgeting and has resulted in the best possible AAA bond rating, which potentially saves the town millions when it comes to borrowing.
Maio outlined the town’s budget priorities moving forward, which include funding public safety, mental health and substance abuse services. Roads, sidewalks and streetscapes were grouped as another priority along with accessibility. Keeping up with capital improvements is also high on the priority list, Maio said, as is pursuing sustainable economic development.
Lake Quannapowitt will see heavy investment in the next few years, Maio noted, especially in terms of treating stormwater runoff entering the Lake.
Education, affordability and equity rounded out the budget priorities listed by Maio.
He then moved on to discuss the forecasted revenues that will be needed to fund the FY 2025 budget.
The tax levy is a known quantity, coming in at $90,989,340. State aid is projected to be up slightly at $14,250,000. Local receipts (excise tax, building fees, license fees, etc.) are projected at $8 million, The Municipal Gas & Light Department in lieu of taxes payment was listed at $974,415. Maio estimated that up to $1,780,000 in Free Cash and available funds would be used to balance next year’s budget. New growth was estimated to come in at about $1 million.
Moving to FY 2025 projected expenses, Maio listed operating expenses at $80,500,000, approximately 4 percent above the current fiscal year. Fixed costs (mainly health insurance) were estimated at $25,820,000. Capital was listed at $2,239,000. Town Meeting articles (trash and recycling) were projected at $2,400,000. Debt service was estimated at $2,617,000. A total of $600,000 was listed for the overlay account. State and county assessments for things like the MBTA and charter schools were pegged at $2,750,000. Cherry Sheet offsets were listed at $65,000.
Total anticipated expenses came to $116,992,858, which matched total projected revenues.
Maio conceded that there were some uncertainties in the numbers at this early date, such as the amount of state aid that the town will receive, local receipts and GIC health insurance rates. Snow and ice budgets and outstanding union contracts are other areas of uncertainty.
While the $14,250,000 projected for state aid in FY 2025 is up slightly over this year, Maio cautioned that state revenues are reportedly lagging and the governor has issued a number of “9C cuts” to the state budget that will impact Wakefield earmarks.
Maio based his slightly higher local receipts projections on year-to-date figures and the fact that hotel and meals tax revenues continue to do very well.
He added that the town’s healthy OPEB numbers could be used to smooth out any unexpected increase in health insurance costs.
Among other uncertainties related to the School Department budget, Maio noted that the local Unit A teachers’ union is still negotiating new contract terms.
Maio noted that the town still has significant ARPA funds that need to be appropriated by the end of this year and spent by Dec 31, 2026.
Town Councilor Edward Dombroski asked Maio about the impact of the migrant crisis on state and local budgets.
Maio noted that another influx of state money just went into dealing with the migrant issue, adding that the impact of that on municipal funding was the subject of ongoing discussions with the state.