By MARK SARDELLA
WAKEFIELD — With next fiscal year’s budget process about to get underway, the Town Council got a preview of the FY 2023 budget at their meeting this week.
“It’s nice to know where we are before we start,” Town Administrator Stephen P. Maio said before launching into a PowerPoint presentation.
He began with review of the current reserves.
The Stabilization Fund has a balance of $3 million, Maio said. There is $5 million in the Free Cash account. The Reserve Fund balance is $400,000. The Water Division and the Sewer Division each have a total of $1.8 million in their respective reserve accounts.
The town has accumulated $27 million in its OPEB (other post-employment benefits) account. OPEB refers to benefits other than pensions that state and local governments provide their retired employees. These benefits principally involve retiree health care benefits. The OPEB account is a hedge against the town’s future obligations to retired employees.
There is also $300,000 in the Special Education Stabilization Account, which is used by the School Department for unexpected SPED costs.
Maio said that the reserve accounts are all in compliance with the town’s Reserves Policy, which sets a minimum balance for each account as a percentage of the town’s operating revenue.
He listed the town’s current budget priorities, including public safety-mental health and substance abuse; roads, sidewalks and streetscapes; drainage; recreation for all ages; accessibility; capital improvements; sustainable economic development; Lake Quannapowitt; pandemic rebound; education; Town Council requests; affordability and equity.
He anticipated total revenue for FY 2023 at $107,281,000 He broke down that total into the following categories: Tax levy, $83,000,000; state aid, $11,500,000; Local receipts, $7,500,000; MGLD: $945,828; Free Cash/available funds: $1,260,000; and new growth, $3,000,000.
Moving to operating expenses, Maio listed the total of departmental operating budgets at $73,000,000. Fixed costs (mainly health insurance) were estimated at $24,100,000. Capital spending was listed at $2,000,000. Town Meeting articles were projected at $2,500,000. The debt service figure was $2,750,000. The Stabilization account will be funded at $100,000 and the Overlay Account at $600,000. State & county assessments (mainly for MBTA service) were estimated at $2,000,000. Cherry sheet offsets were projected at $55,000. The total of all anticipated expenses totaled $107,105,000.
With the projected revenue total and total projected expenses nearly identical amounts, Maio said that the budget could be considered balanced at this early date.
Maio then listed the following as areas of budget uncertainty: state aid, local receipts, health insurance, school priorities, snow and ice, COVID and federal policy. Maio said that he was expecting an increase in state aid of 3.6 percent, but that won’t be known for some time. He said that local receipts were looking good, based on this year’s numbers so far. He projected a 5 percent increase in health insurance costs. Another unknown was the cost of addressing learning loss issues in the schools as well as potential higher special education costs.
Maio referenced COVID relief funds that the town has received, including the $8 million in ARPA funds that the town has three years to spend, as well as FEMA funding.
Maio said that his FY 2023 budget projections were based on going to the full 2.5 percent increase in the tax levy allowed under Proposition 2 1/2. He noted that each half of a percent represents about $400,000 in the budget. A reduction of 0.5 would translate to a $38 saving for the average single family home.
This led to another discussion of whether the town should routinely increase the tax levy by the full 2.5 percent allowed by law. Councilor Edward Dombroski was adamant that increasing the tax levy by the full 2.5 percent should not be automatic.
“As a general operating approach, the idea that we assume 2 1/2 percent doesn’t make sense,” he said, in light of current inflation rates and a 40 percent increase in home heating costs. On top of that, he noted that the board had just heard about the solid financial position that the town is in.
“Just because we can go to 2 1/2 percent, doesn’t mead we should,” he said. He insisted that the town could come down from the 2 1/2 percent and still get a lot done for the town while giving taxpayers some relief.
Other town councilors defended increasing the tax levy by the full amount allowable.
Anne Danehy cited the investments made in the Wakefield Police Department to help them in their efforts to fight drug abuse and help those with mental health issues. She advocated using the town’s current financial position as an opportunity to continue investing in those types of programs.
Town Councilor Jonathan Chines said the board should consider the issue “from the perspective of equity.” He maintained that a reduction in taxes was “the least equitable way” to help struggling residents. He asserted that property tax relief does not help renters and benefits those with expensive homes the most.
Councilor Ann Santos said that she was trying to weigh the benefit of a $38 tax cut per household vs. a loss of $400,000 revenue for the town. She said that she was not sure how the town would be able to make up that amount of revenue.
Maio observed that there were a number of years when the town did not increase the tax levy by the full 2.5 percent.
Dombroski maintained the $8 million in ARPA funds that the town has received was a recognition that COVID has affected people’s lives and their financial situations. He asked the Town Council to imagine no tax increase at all this year. That, he said, would mean a $200 savings for the average taxpayer and the forgone revenue would be equal to just a quarter of the town’s ARPA funds.
“The financial impacts that people continue to suffer today are real,” Dombroski said.