Photo: Patrice Garvin, Belmont Town Administrator
With a combination of hiring and discretionary spending freezes, using the town’s free cash account (aka the fiscal piggy bank), and “kicking the can down the road” on capital projects and street repair, it appears Belmont just might be able to endure the anticipated collapse of local and state revenues to its fiscal year 2020 and 2021 budgets.
“I see [the budget] as solvable,” said Patrice Garvin, the town administrator who will be presenting an updated forecast of the town’s budget at a joint meeting of the Select Board and School Committee at 7 p.m. on Monday, April 27.
But the budgetary outlook for Belmont is fiscal ’22, which starts on July 1, 2021, is about as dark as Garvin can imagine as a massive tsunami of red ink heads towards the town.
“I am calling fiscal 2022 the juggernaut of budgets,” said Garvin. “I’m not looking forward to doing that budget at all” noting without the passage of a Proposition 2 1/2 override to pump needed income into town coffers, the town will be forced to rely on layoffs and cuts in essential services to balance that year’s books.
FY 2020: Put the budget in the freezer
Garvin said Belmont needs to prepare for a drop in town revenues – from parking fees, meals taxes, building permits, and payments to the Recreation Department – for the rest of fiscal ’20 by slowing the rate of spending.
“We don’t feel it’s going to be a significant shortfall but a shortfall just the same,” said Garvin. The effort will also
In its first effort to stabilize the budget for the remaining two and a half months in fiscal ’20, the Select Board on April 14 endorsed Garvins’ four steps to controlling expenses:
- Freeze non-essential spending, excluding capital items, revolving funds, and existing contracts. The school district will also apply a freeze to purchases through the end of June, said Phelan.
- All expenditures must be reviewed and approved by the town administrator before being submitted to the town treasurer.
- All overtime must be approved by the town administrator, excluding requests by the police and fire departments.
- Emergency expenditures are permitted but must be reported to the town administrator immediately after the bill is sent.
The town could save approximately $271,000 for the remainder of the fiscal year, said Garvin. On the school side, additional savings will be generated by the district’s idle buildings as they are not using electricity, water or heat, Phelan said.
The Select Board’s Adam Dash said while the amount of money being saved with the freezes are not large, “the money not spent will fall into free cash which we can use next year.”
“I think this is a no-brainer,” said Dash. “I don’t like the idea of … belt-tightening but I think under the circumstances we have no choice.”
Larger savings still could come from a hiring freeze of 13 open positions – nine full-time and four part-time – for the remainder of the fiscal year with potential savings in salaries and benefits of $463,726.
But the catch to realizing that savings are that four town departments – schools, assessors, library and cemetery – have authorization over hiring matters. In addition, Garvin has received some pushback on a total freeze on hirings as each department with a vacant position will contend “[the job] is critical.”
The Belmont Police Patrolman’s and the Belmont Superior Officers’ associations sent a letter on April 13 to the Select Board to allow for the immediate hiring of two of the vacancies; assistant police chief and captain.
“Leaving those gaps unfilled would not be good managerial practice in normal circumstances,” said the letter. “In the current context, doing so, in the view of the BPPA, is simply indefensible. The Department needs strong leadership at all established levels of the chain of command if it is to weather the tremendous strains now being imposed on it.”
Saying it is “a very charged environment,” Garvin created an independent five-member panel to recommend to the board which jobs should remain vacant and, essentially, “to take some of the politics out of [the process].” It will also make “it less about the individual department and more the need of the community,” said Garvin, adding that the board should consider extending hiring reviews through June 30, 2021.
Recommendations of the New Hire Advisory Committee will be submitted before the Monday, April 27 joint meeting.
At the school committee meeting, Phelan said the district would not be hiring new staff for the remainder of the school year, noting the two new elementary school principals selected this spring along with an interim principal for the middle school will not start until July 1.
Garvin said while proposing a freeze is unsettling to those affected, all departments are acutely aware of the hardships facing the town government.
“We have a good working team here,” said Garvin. “I think everyone realizes the fiscal challenges of the town and I’m encouraged to think they see the challenges and they want to help out” in building up reserves to be utilized in the next fiscal year.
FY 2021: A painful fiscal environment but doable
While the town and schools are set to conclude the fiscal year in good financial shape, to achieve a similar level of success in fiscal 2021 will require cuts, delays, and a great deal of finesse dealing with an uncertain future.
“As we start to unpack in the coming weeks the options before us … are not good options,” said the Select Board’s Tom Caputo looking forward to fiscal ’21.
Garvin and her staff have been spinning out fiscal models that correspond to different levels of revenue losses on the town budget due to a reduction in state aid and local receipts. One such revenue line item that will be hit is new growth – the additional tax revenue generated by new construction, renovations, and other increases in the property tax base – with revenues falling nearly by half to $500,000 from earlier projections.
The end result: Belmont can expect to see revenue wane in fiscal ’21 anywhere between $3.4 to $4.6 million, said Garvin. Yet she told the Warrant Committee that she sees balancing the fiscal ’21 budget as doable.
“I believe that I can take a very large portion of [the expected deficit], defer [expenses] in FY ’21” to later years while using the savings the town made in fiscal ’20, said Garvin. “But I’m not gonna lie, it’s gonna come with some pain,” she said.
One area of savings being suggested is a significant reduction in capital expenditures. The new fire truck, upgrades in infrastructure and repairs can be delayed for a year or so while reductions in town contributions such as the OPEB (other post-employment benefits) funds “are adjustments we don’t necessarily want to make but would have to,” said Caputo.
One area of savings in fiscal ’21 that is not on Garvin’s radar screen is layoffs or furloughs due in large part to the complexity of negotiating job reductions within the existing union contracts. In addition, any agreement will need to be approved and ratified by the time Town Meeting meets in late June.
There is a major X factor facing Garvin in her calculations: what the economy will be at any time in the future. Until this year, changes in state aid and town revenues were fairly predictable allowing budgeting to be pretty straight forward. Today, said Garvin, “I have no idea what the economy is going to look like” in six or seven months.
And even if residents are willing to “plug our noses” and accept the cuts, “in order to get to four million [dollars], you’re going to have some impact in services in some way,” said Caputo.
FY 2022: An unprecedented budget challenge
While the outline of a plan is being formulated that allows the town to limp through June of 2021, the first long-range forecast for fiscal 2022 is all rough weather ahead.
“The budget problem is FY ’22, it has always been FY ’22,” said Garvin. “And everything we do in ’21 is going to impact 22.” And with many of the reductions in spending simply deferrals of necessary payments, “those decisions we’ll be making in ’21 are just going to create a bigger challenge in ’22,” said Caputo.
Just how bad could the deficit be for fiscal ’22. Garvin wouldn’t even speculate before the Warrant Committee just that it will be “unprecedented.”
Garvin has hinted at the need for the passage of the operational override, similar to the Proposition 2 1/2 measure the Select Board had favored placing on the November 2020 ballot. If that isn’t successful, the remedy to the deficit will be job cuts.
“Right after the June Town Meeting … we just start right in on ’22 with a plan [in which] we don’t receive the operational override because if layoffs are required, we have to have that time to figure out how we are going to approach the unions,” said Garvin. “Something like this doesn’t happen overnight.”