First Peek At Fiscal Year ’22 Budget: Public Meeting On Dec. 9

Photo: The town created its FY ’22 budget with the expectations that voters will approve a Prop 2 1/2 override in April.

John Phelan express the obvious in his opening remarks when presenting this coming year’s school budget on Monday, Nov. 23.

“We look towards a very unique year in budgeting in a very unique year in our time,” said Belmont schools superintendent as the town and school provided the public its first peek at the fiscal year 2022 budgets.

The “unique” year Phelan mentioned was seen during a topsy turvy nine months in which Belmont’s finances took a beating and where the town budget was revised twice – and likely a third time – as COVID-19 played havoc to fiscal assumptions.

During this upheaval, the fiscal year ’22 budget was being cobbled together. At first glance, a growing degree of normalcy has returned to the budgets: expenses such as overtime and road repair funding are back while the school district is seeking to add educators even as over all enrollment has declined by 250 students.

But the documents Phelan and Town Administrator Patrice Garvin presented before a mega joint meeting of the Select Board, Financial Task Force and the School, Warrant and Capital Budget committees are unique insofar as they are contingent on voters passing a multi-million dollar Prop 2 1/2 override at this April’s Town Election.

Just how big is the override’s price tag? That figure remains up in the air. What is known as currently calculated, the all town ’22 budget is approximately $8.1 million in the red.

It will be an especially unique new year as the town and schools will present sometime early in the new year a version of the fiscal ’22 budget if the override fails at the ballot box.

“So we will be preparing two budgets this year,” said Phelan, to allow the public see the impact on services and staffing with and without override funds.

The town will hold a Zoom public meeting on the impact of a Prop 2 1/2 override on the fiscal year ’21 budget on Wednesday, Dec. 9 at 7 p.m.

For Town Administrator Patrice Garvin, while “we are inundated every day with what is horrible about 2020,” she said that there are reasons to see the past year in “a positive note”: town services were continued to be delivered while measures were taken to soften the blow from revenue losses including hiring freeze and maximizing turn backs from school and town departments to build up the town’s free cash account.

Due to its conservative approach to the operating budget, reaching out for grants and award – including $2.1 million it received from the federal government’s CARES Act – and seeking new sources of revenue (the McLean development and two marijuana host community agreements), the town retained its top ranked triple A credit rating as it approached developing the coming budget.

All-Town Budget

What is known at this early stage of the budget process is the combined town/school budget- excluding the enterprise funds of $6.9 million – is being set at $144.5 million, a 3.8 percent increase from the pre-pandemic fiscal ’21 budget.

The FY ’22 budget breaks down as:

  • Town: $43.5 million
  • Schools: $67.6 million
  • Fixed costs: $31.4 million
  • Capital budget: $2 million

Due to the wild fiscal year the town underwent in 2020, the percentage change between the ’21 and ’22 budgets are significantly different. If compared with the “original” fiscal year 2021 – the pre-pandemic budget from March 2020 – the fiscal year ’22 budget has increased by 3.8 percent, which is in line with annual budget growth over the past decade. Substitute the original ’21 financials with the COVID-19 budget – in which town and school stripped out $7 million in expense savings – the increase jumps to 9.2 percent.

Highlighting the town budget, Garvin pointed out that while FY ’22 will be a minimal level service budget, there will be personnel adds to a few departments such as a social worker for the Council on Aging as well as a newly created town-wide procurement manager.

The town will increase the tree budget by $50,000 for the increasing number of damaged timber and replenishing deferred expenses such as $450,000 for equipment and furnishings for town departments as well as bringing back overtime.

View a detailed PowerPoint presentation of the ’22 town budget here.

Reporting on the schools, Phelan said while its current fiscal budget did take a significant hit due to COVID-19, it was able to employ educators to support remote learning and secure supplies and computers through federal grants.

Because those expenses were paid for with one-time funds, Phelan said the district will attempt to carry those expenses over to FY ’22 but not embed them into the annual budget but rather place them in what is being called the “COVID parking lot.”

“So we only provide these service (including technology specialist, aides and nurses) and ask for the funds if they are actually needed,” said Phelan.

The schools will be budgeting to a model created by the Financial Task Force II which has been working for eight months with the district and the Warrant Committee on the assumptions of anticipated expenses.

The detail presentation from Superintendent Phelan of the FY ’22 school budget can be found here.

At the end of the day, the preliminary fiscal ’22 is swimming in the red by $8.1 million, or about two-thirds as large as the $12.5 million in override funds the Select Board is seeking at April’s Town Election. The Board has said the override amount that will be before voters in the spring will be reduced sometime in the next two months.

To provide residents the real world consequence of the override measure, Garvin and Phelan will be creating a second budget over the next month of two that will show the services and staff cuts to town and schools if voters reject the override.

While both the town and schools expenses are set, the more interest part of the meeting was how the revenue side was looking. There were two nice surprises on that side of the ledger: the first a great leap in free cash to $11.2 million. A detailed explanation on this year’s free cash account can be found here.

There is also a healthy amount of state aid – $3.2 million – the town was not anticipating in fiscal ’21 as the town expected a drop of receipts by 20 percent. But after the budget was approved, Gov. Charlie Baker’s administration stated it would maintain the same amount of aid in ’21 as in the previous year.

But Garvin said the restored state revenue – which has yet to arrive from the state – is slated to go into fiscal year 2023 free cash account.

And every penny of funding is needed as the town has yet to find an answer to the bain of Belmont’s fiscal existence: a persistent structural deficit. With Belmont’s real estate classification at more than 90 percent residential and new growth limited due to a lack of open space, the “Town of Homes” is hamstrung by the four decade old Proposition 2 1/2 that places a 2.5 percent ceiling on total property taxes annually – which makes up 77 percent of tax receipts – as well as the 2.5 percent limit on property tax increases.