By NEIL ZOLOT
WAKEFIELD – As the budget formulation and review season begins, Finance Committee member Douglas Butler said, “The town is in stable financial shape,” in a video conference meeting of the Town Council, School Committee and Finance Committee Thursday, October 26, with Town Administrator Stephen Maio and School Superintendent Doug Lyons also tuned in.
“We’ve delivered respectable budgets over the last 10 or 15 years.”
“It looks like we’re in a steady state,” Finance Committee member Daniel Sherman agreed.
“Better than predicted,” Maio confirmed.
Part of the reason for that is unexpectedly higher local receipts in Fiscal 2024, which include automobile excise taxes, fees, licenses and permits, and money derived from investments. It’s anticipated to be up to $9.4 million, above predictions made by the Finance Committee. The closest estimate was Sherman’s at $8.1 million. “We weren’t expecting that kind of total,” he admitted.
There were also lower costs for snow removal due to less snow and money returned from departments, including $400,000 from the School Department from revolving accounts and unused Elementary and Secondary School Emergency Relief funds.
Local receipts were $9.1 million in Fiscal 2023.
A large portion of the money came from building permits, a 67% increase over Fiscal 2022. “If you look at all the building, it’s easy to see,” Sherman thinks.
Maio expects that trend to continue. “I foresee a good year for building permits,” he said. “We’ve seen a resurgence in new construction. That will color what we do for the next fiscal year.”
Another unexpectedly high source of funds were returns from investments, $650,000 compared to $40,000 in Fiscal 2023, even more impressive when taking limits to municipal investment strategies into account. “There are rules as to what the town treasurer can do,” Sherman explained.
In addition to the local receipts, $111 million in revenue for Fiscal 2024 includes $88.77 million in real estate taxes, including $2.48 million in new growth; $960,000 from the town Gas and Light Department and $13,357.00 in state aid.
As of September 30 local receipts were $348,875 from excise taxes; $197,000 in hotel taxes; $155,548 from building permits and $130,322 in meals taxes. These figures were called “looking very good” in a powerpoint presentation prepared by and for the three committees.
Another positive factor is sensible use of American Rescue Plan Act aid, some $8,083,935. “We go after every grant, but need to use the money prudently,” Maio said. “The Town Council has been prudent in using ARPA funds and weaning off them. We can’t start a program without any way of moving forward once a grant dries up.”
Lyons said the School Department treats ESSER funds the same way.
Maio added, “Department heads have been good at being frugal and there’s no ‘go along to get along, use it or lose it’ mentality. We put priorities together to give the taxpayer the best bang for their buck. If you didn’t use all your appropriation, we’ll talk about it, but don’t get nervous. Don’t spend money just to spend money.”
State aid for Fiscal 2024 is $13,356,886, including $8.5 million in Massachusetts General Laws Chapter 70 education aid, $4 million in unrestricted local aid and $500,000 in reimbursement for charter school costs to the town when a local student goes to a charter school, most commonly the Mystic Valley Charter School in Malden.
That is offset to a degree by assessments from the state, which are $2,455,338, including $1,656,488 for charter school tuitions and $657,366 for the MBTA. Maio and Sherman noted the paradox of the state giving communities money to cover charter school placements, but then charging them for charter school costs, with over $1 million negative to the town.
The net state aid was $655,364 for Fiscal 2023 to 2024, a 6.4% increase. Maio pointed out “state aid is a good portion of our budget, while Gateway Cities, midsize cities that were once economic hubs offering a ‘gateway’ to success, but now under economic stress, are looking at 50% of their budget in state aid.” That means those cities will suffer more if state finances turn south.
The budget season started in mid-September with meetings of the Finance Committee Planning and Forecasting Subcommittee of which Sherman is chair, followed by reviews of predictions and forecasts by the full Faience Committee.
The annual October tri-committee meeting is followed by communicating guidelines to department heads in November and budget preparation from January to April before the spring Town Meeting.
The outlook of Governor Maura Healey and the disposition of union contracts will be among the factors in designing the Fiscal 2025 budget. The teachers, for instance, are working without a new contract. (Wakefield Education Association president Jessica Cummings brought that up in Public Participation at the School Committee meeting Tuesday, October 24. “We’d like a fair and equitable raise that reflects the current economy and what the town has offered other employees,” she said.)
In the tri-committee meeting Lyons said, “We are optimistic we’ll get this squared away in the next couple of weeks.”)
Forecasting is part of the process. “Not every community does what we do, multi-year forecasting,” Main said. “We’re looking at how we can sustain programs we want and that resonates with bond rating agencies.”
Factors in forecasting include inflation, hopes for a steady 5 percent increase in new state aid, continued new growth to maintain 3-4% annual increase in budgets. “We have to be ready for a downturn,” Maio warned. “Inflation is back and we’ll have to account for that. Let’s hope it doesn’t snow much.”
The powerpoint included forecasts for budgets up to Fiscal 2033. $112,868,829 is forecast for expenditures in Fiscal 2024, $466,964 less than $113,335,792 forecast for income, reflecting a 4.29 percent increase in costs and a 4.72 percent increase in income.
For Fiscal 2025 $117,477,134 is forecast for expenditures, $89,762 less than $117,387,372 forecast for income, reflecting a 4.08 percent increase in costs and a 3.57% increase in income.
For Fiscal 2026, $123,329,305 is forecast for expenditures, $1,206,989 less than $122,122,316 in income, reflecting a 4.98% increase in costs and a 4.03% increase in income.
Town Council Chair Jonathan Chines asked why that number was higher than Fiscal 2024 and 2025 and other later years. Sherman answered it was due to the costs of the Northeast Metropolitan Regional Vocational High School.
For Fiscal 2027 $128,231,787 is forecast for expenditures, $1,183,794 less than $127,047,993 forecast for income, reflecting a 3.98 percent increase in costs and a 4.03 percent increase in income.
By Fiscal 2033, $162,381,292 is forecast for expenditures, $1,322,268, less than $161,059,023, forecast for income, reflecting a 4.04 percent increase in costs and a 4.03 percent increase in income, but Sherman admits forecasts so far ahead are virtually meaningless. “My confidence level is in 2025 and 2026,” he said. “I have confidence in those years, but afterwards?”
Still he feels, “You have to put out a best guess…If you don’t think about the future, you could get hammered.”