Groton Town Manager Mark Haddad’s proposed FY 2016 budget, for the second year in a row, levies the maximum tax allowable by law. Haddad fired a warning shot over the bow of taxpayers by including a five-year forecast that shows the overall budget increasing by some 20 percent by 2021 — going from $31M in 2016 to $37.7M by 2021.
At an earlier Board of Selectmen’s meeting, Board of Selectman Chairman Josh Degen cautioned, “This 20 percent increase in only five years would price some people out of town.”
Much of this rapid rise will be due to the compounding of the costs of new hires, long-term union contracts with little flexibility to adjust for changing economic conditions, retirement costs and other substantial benefits.
Last year, the tax increase was due to the town providing financial relief for the Groton-Dunstable Regional School District by agreeing to exclude debt for the new Central Fire Station. Originally, the plan was to use the levy limit to pay for the new Center Fire Station and not increase taxes, but when the schools got into serious financial trouble, the town voted to change the way it paid for the fire station.
State law allows a community to assess taxes in excess of its levy limit or levy ceiling for the payment of certain capital projects and for the payment of specified debt service costs. An exclusion for the purpose of raising funds for debt service costs is a debt exclusion.
This year’s push to tax at the town’s maximum capacity is driven by the need to absorb the financial impact of several decisions made in the past including the hiring of more personnel, and increases in hours for some existing employees.
This year, the increase from all revenue sources plus the 2.5% annual limit on the increase in taxes is estimated to be more than 4%. None of these funds are earmarked to reduce taxes.
In addition to funds up to the 2.5 % limit on the tax increase, Groton receives revenue from the state, through local receipts and from the town’s ‘new growth’, which is the increased tax base coming from new houses or renovations to current property. For the first time, there will be an estimated additional $100,000 revenue from a town meals tax recently passed by voters.
And On The School Side of the Budget …
by Art Campbell
The Town of Groton’s operating budget is only part of the picture tax payers see. The rest of the picture is the budget put in place by the Groton-Dunstable Regional School Committee — tax rates are a result of both budgets, combined and approved or modified at Spring Town Meeting.
According to a news release issued by the Groton-Dunstable Regional School District, the School Committee will conduct a public hearing on its Preliminary FY 2016 Budget in the High School Library at 7:30 p.m. on February 11, 2015 in the Groton-Dunstable Regional High School Library.
The administration will present the FY 2016 budget before the Public Hearing at 7:10 p.m. During the FY 2016 Budget Public Hearing (7:30 p.m.), the public will have an opportunity to comment.
Copies of the preliminary budget will be available for review on the school website, at the Superintendent’s Office, Groton Town Hall, Dunstable Town Hall and the respective public libraries by Friday, February 6, 2015.
Joint Finance Committee / Selectmen FY ’16 Budget Review Meeting
This annual meeting was postponed from January 24 until Saturday, February 6, due to a snowstorm. The meeting begins at 9 a.m. in the Selectman’s Meeting Room in Town Hall.
The schedule, as posted in the Finance Committee’s meeting notice, is:
|Police Department||9 a.m.||SRO Officer/Shift Schedule & OT
|Fire Department||9:30 a.m.||Capital Requests/Lost Lake Fire Protection
|Water & Sewer||10 a.m.||Pepperell SRF Debt
|Parks Department||11 a.m.||
|Town Manager||12 p.m.||(IT/ Emp. Benefits/ Country Club/
OPEB/ 4 Corners Devt. / Budget Growth Issues)
|Assessing Department||12:30 p.m.||Consulting Contract/Training Hours
Last year’s increase in the school budget is carried forward in the FY ’16 budget, along with the district’s preliminary estimate of more than 3% increase for FY 2016 bringing the estimate to $18,259,212. However, resolution of the teachers contact currently being negotiated could exceed any set-asides already built into the budget, thus exceeding the estimated 3% increase.
Since Groton-Dunstable teachers have been without a contract for 16 months, and since they made significant concessions in their last contract, the contact currently being negotiated could exceed contingencies built into the budget and may involve significant retroactive pay, further driving up the FY ’16 schools budget.
New Hires and Long-Term Contracts Drive Higher Tax Burden
On the municipal side of the budget, new positions approved in prior fiscal years have a significant effect on current retirement costs, as do additional new positions and the increased hours that have been requested in the FY 2016 budget. Also, multiyear, union-contract driven salary and wage increases averaging 3% leave the town much less flexibility to adjust salaries to changing economic conditions. Also property liability and workers’ compensation costs show higher increases than past budgets. There was at least one raise that well exceeded the average 3 percent.
It will take several years for the full financial impact of new employees to appear in the budget because certain costs such as retirement assessments and workers’ compensation insurance benefits are not fully shown until a year or two after initial employment.
Retirement Assessments Lag Initial Employment
Retirement assessments are one of the costs lagging initial employment, calculated only once a year, and based on total annual salaries through the last complete income tax year. For example the retirement assessment that produced an 11% increase in the FY 2016 budget is based on the salary numbers available as of Dec 2013, the last complete year.
There have been double digit spikes in retirement assessments before, and there is a simpler explanation for this spike than given in the budget message. The notion that hiring an employee from another municipality forms the primary basis for a spike in costs is misleading. If Tax Collector and Treasurer Mike Hartnett was not hired to fill the vacant Treasurer’s position, someone else surely would have been, and Groton would be assessed a retirement amount based on the salary paid. The primary driver is that there is a person filling a vacancy.
New Positions Added
The actions that increases costs for the town are the new positions created where none existed before. Just before the end of 2013, the town added a new full-time fireman; two new full-time police officers and support staff for the Highway Surveyor, all new positions hired in the period before the Dec 2013 assessment calculation. They are now appearing in the Retirement Assessment Calculation and this accounts for part of the spike in costs.
Haddad’s budget message also notes a $17,000 increase in Workers’ Compensation premiums, another cost that reflects head count and is reviewed on an annual basis.
Dept. Managers Wanted Three New Hires
Department managers have requested three new full-time positions: one in the Fire Department, one in the Department of Public Works, and one in the Police Department. Haddad endorsed only one, the school resource officer. There were also requests for some increased hours.
The School Resource Officer position proposed in the FY ’16 budget replaces one that was dropped several years ago due to budget constraints. If voters approve this position, the salary cost, and corresponding health insurance cost will result in increases in the current budget of $71K, but as with other new positions the increase in retirement assessment and workers’ compensation insurance will not be felt until FY ’18.
Health Insurance Benefits Up 7%
Health insurance benefits increased 7% in this budget. Nonmunicipal health insurance is trending increases at 5 to 6%. The town’s estimate of 7% probably planned for at least one new full time employee.
The insurance budget line also covers auto and property liability insurance premiums. The Workers’ Compensation increase noted above does not explain the entire increase in that line item. The rest of the increase is likely due largely to premiums to insure the new central fire station. Also as older vehicles are replaced with newer ones, auto premiums rise.
Increases Driven by Past Decisions
The kinds of increases related to labor costs are unavoidable increases given past decisions. The only way to avoid these increases is to stop adding staff; the only way to reverse the trend is to cut staff. Similarly, wage and salary increases of 3% or more, resulting from multiyear contracts will continue into future years while inflation, this year at 1.5% is unlikely to reach that same 3%. Reversing that trend will take a long-term plan from administration.
2M Dollars Requested For Lost Lake Fire Suppression
In the debt budget, two million dollars is requested for fire protection at Lost Lake, although there is not much information on this item. More explanation may be coming. Spending two million dollars for fire suppression without further examination and consideration seems imprudent.
It also appears from the large increase in non-excluded debt, that the Town Manager plans to pay for the Lost Lake Fire Protection Plan with funds under the levy limit, not requiring a debt exclusion vote.
In addition, there is a proposal for a new Public Safety Radio Communications for the public safety departments that is projected to cost $650K, which will most likely be bonded.
All other areas of the budget seem in line with past years’ changes.
Reprinted, with permission, from The Groton Herald‘s January 22 edition. Russ Harris is the Editor of The Groton Herald.