By DAN TOMASELLO
LYNNFIELD — A number of factors have contributed to the town’s current $4 million budget deficit for fiscal year 2026, Town Administrator Rob Dolan said during the Select Board’s March 20 meeting.
In the wake of the town facing a $4 million budget deficit and the School Department needing $1 million for technology expenses, Dolan has proposed a $5 million override of Proposition 2 ½ for FY26 and beyond (see separate story).
Dolan said the town has a $4 million deficit while there is $2,192,266 available in new revenue for in FY26. The town’s deficit for FY26 is $298,117.52 and Lynnfield Public Schools’ deficit is $3,3,88,698.
“What we are seeing this year is a revenue problem, not a spending problem,” said Dolan.
Dolan said there are a number of budget strains that have caused the $4 million shortfall, especially a significant health insurance increase. He recalled that the Group Insurance Commission (GIC) recently approved a 13 percent increase for FY26.
“That is $1 million,” said Dolan. “That is half the amount that the entire town brings in for new revenue. The GIC is still one of the best in the country, but we know that health insurance and health costs are a national issue that is outpacing inflation at remarkable rates. Our health insurance is run by the state. We do not have the right to change co-payments, change plans or change the percentages in which our employees pay. If we did, I think this board and myself would consider any option. We have to by law and have a moral obligation to provide solid, good health insurance for our employees.”
Dolan recalled that the town’s collective bargaining agreements will be expiring at the end of June. He said the town is in the process of finalizing collective bargaining agreements with municipal unions, and most unionized employees will be receiving a 3 percent raise each year in the three-year contracts.
“In an atmosphere where inflation is high, we worked with our unions to have responsible contracts,” said Dolan.
The School Committee is still in contract negotiations with the Lynnfield Teachers Association (LTA). A group of LTA members attended the Select Board’s meeting.
Dolan said pension costs from the Essex County Regional Retirement System will be increasing 4.5 percent in the next fiscal year, equaling a $200,000 increase. He also said the town’s property and casualty insurance is “skyrocketing” and will be increasing by 15.7 percent.
Additionally, Dolan is anticipating that new growth will be increasing by $500,000 in FY26. He said 2016 was the “last year of the MarketStreet boom.”
“Outside of Proposition 2 ½, new growth is the only way for a community like Lynnfield that is primarily residential can invest more,” said Dolan.
Dolan recalled that the town is expected to receive $7,946,029 in state aid for FY26 under Gov. Maura Healey’s current state budget proposal, which includes $6,337,990 in Chapter 70 education aid and $1,308,778 in unrestricted general government aid in the next fiscal year. The projected local aid increase totals $180,000. He is anticipating that state aid will be decreasing in the next few years.
“The state has not been meeting its revenue markers for well over a year-and-a-half,” said Dolan. “This is not a political comment of Republican or Democrat, but we are seeing at the federal level massive reductions. It could be free or reduced lunch, Title 1 programs or, even worse for Massachusetts, the block granting of Medicaid that really holds this state together. If that money is passed down to the states at a rate of 30 to 40 cents a dollar, we have a massive state problem. What will be reduced? Local aid.”
Dolan is projecting that local receipts that include fees, permits, licenses, motor vehicle excise taxes and the local meals’ tax option will be increasing by $150,000 in FY26, totaling $5,650,000.
“Local receipts are not meeting expectations, and we are only anticipating a 1 percent to 2 percent increase,” said Dolan. “We are hoping the exercise tax will help that.”
Similar to homeowners, Dolan said the town has been dealing with historic inflation and rising energy costs. He also said non-discretionary spending such as fixed costs and contracts are “outpacing the increase in revenue this year significantly.”
While Dolan said he “hates the word override,” he said there are “very few options that remain to solve these issues.” He said Lynnfield is not the only community facing these financial challenges, and said other communities’ budget challenges “triggered the most overrides in the history of Massachusetts last year.”
“That will be beaten this year and there will be even more next year,” said Dolan. “The state is not coming to help us and the federal government is not coming to help us, and in fact they may exacerbate the problem. We are on our own with this issue.”