HANSON – Back an override or make deep cuts in the budget – that’s a decision being made in town halls around the state this year.
Hanson Town Accountant Eric Kinsherf, who said all town department and school budgets were in, told the Select Board in a budget update at its last meeting on Feb. 25 the facts of budgeting life in town today.
“I’m going to just cut to the chase,” he said. “The best thing for the town to do financially, and maintain all these services, the town would need to vote an override. I’m thinking $2.9 million, and – if that happened – we’d be able to fund this [he said, holding up a sheaf of department budget documents] and we would not be touching any of our reserves, like free cash and so forth.”
An override amount could also go as high as $3.4 million, if new firefighter positions are included.
“It’s not an easy conversation to have,” he said.
“I think we need to have it, because people need to know, if we don’t pass an override, what’s going to happen – not in a threatening way, but in a factual way,” FitzGerald-Kemmett said.
That would bring the override question a $3.4 million one.
The board asked to see something more closely resmbling a final budget with harder numbers for Kinsherf’s next update.
Kinsherf argued there are two ways to decide the matter: Hold another department head working group session at Camp Kiwanee, as they did under the Madden Group’s strategic planning exercises; or give each department a dollar figure and ask them to come up with a budget to match it.
The bottom line is, if the override fails, the town would be see its reserves reduced to dangerously low levels and cutting services, Kinsherf said.
Town Administrator Lisa Green said the impact of an override failure would be devastating.
“All town departments, basically, are already operating on a minimal staff,” Green said. “So, this level of budget cuts is going to result in a loss of staff. The loss of staff is going to require office hours to be reduced significantly – 36 full-time employees will lose their jobs. That is taking most of the departments here in the town of Hanson, and putting them down to, maybe, one person.”
Select Board Chair Laura FitzGerald-Kemmett asked if the $2.9 million included in those new positions Fire Chief Robert O’Brien Jr., has said his department needs.
“No. It does not,” Kinsherf replied, “That would have to be a separate vote.”
“In talking to the Finance Committee, they would like to have one amount,” FitzGerald-Kemmett said, “Is there a way you could work on getting that [included]?”
Kinsherf said that, if the Select Board wished, he could add the approximately $348,000 needed for the Fire Department position into the override figure.
“I don’t think we’d have to raise all that on the residents right away,” he said. “I think the chief is going to get a grant for the first three years.’
FitzGerald-Kemmett said O’Brien doesn’t know if it will happen or not.
“There’s no easy way to even do it, because it’s going to be impactful” Kinsherf said, recommending, as an alternative, using $1.1 million from free cash and cutting $1.8 million from the existing requests, including the schools. He said it would be hard to identify that many budget reductions.
“Mathematically, that would work, and the $1.8 million would include the schools, because the [W-H] schools are asking for a $1.1 million increase. If the town departments had to take that whole $7.8 million, it would not be good,” he said searching for a word to adequately describe the impact.
Thinking of contingency plans, Kinsherf said, a $1.1 million draw from free cash would leave the town with $1.1 million in unappropriated free cash and $1.7 million in the stabilization fund – or all the town’s reserves – forcing the need to drain those reserves almost to zero if the schools insisted on the full amount of their assessments.
Board member Joe Weeks, knowing the Select Board has already asked the question – asked if the rest of the town’s operating budget is limited to a 2.5 percent increase, how big an increase does the W-H school budget pose for Hanson?
Taking the non-fixed budget, Kinsherf said he calculated the school increase to be about a 9-percent increase.
The schools make up 47 percent of Hanson’s overall budget.
“To be fair to the schools, their total budget is only projected to go up 5.7 percent,” Kinsherf said. “But they’re in the same situation as we are … their state aid is next to zero [in terms of an increase].”
FitzGerald-Kemmett said the Select Board has a limited, if any influence on how the School Committee votes on a budget. They’ve had discussions with the Committee on the effect of school increases on town budgets in the past, as well.
“We really haven’t had a lot of success in partnering with the School Committee and with the district on tempering the spending there,” she said.
She acknowledged that they have no control over how the school budget reflects the Committee’s role in funding the education of the town’s children, but asked Green how they could handle the money the Select Board does control.
Green repeated that about 36 full-time positions will be lost.
“Everything has to be on the table,” she said. “It’s unfortunate because, again, we’re already operating with a minimal staff. Many offices only have two people, some have three … but all departments are going to be impacted in some way.”
Green said voters have to be aware of how budgeting works.
“People don’t understand that, once these cuts are made, and they go to the Senior Center the next day to find it closed, you can’t just say, ‘Oh, I didn’t realize that was going to happen, let’s put the money back,’” she said. “It can’t happen like that.”
She explained that, once services are cut, they are gone until the town goes through the whole process to bring them back with funding.
“These are services – and [Senior Center Director] Mary Collins is a perfect example of this – people need us,” Green said. “They need town services. Maybe people don’t realize it right away. You might not need us today, but you could possibly need us tomorrow.”
She had another question for people looking for the services after an override failure.
“Who are they going to turn to?” Green asked. “It’s not just Senior, it’s Highway.”
Weeks said he wasn’t certain the town even has 36 people they can cut, and said they’ve been through this before. Last year, positions were cut, only to be brought back at the October Town Meeting.
“I remember being very adamant that I didn’t want to bring them back because I knew we’d find ourselves right back to where we are now, where we’re talking about cutting things again,” he said.
Kinsherf was asked what decimating the cash reserves in an attempt to balance the budget do to the town’s bond ratings, but he was also concerned what would happen if the town needed those cash reserves.
“This is a little like DEFCON 5 on the budget cycle,” he said. “Good thing we have the reserves, because, if not, it would be even worse.”
FitzGerald-Kemmett asked what would happen if there was a catastrophic event after the town had tapped into its reserves.
Kinsherf said the town would need special permission from the Department of Revenue Division of Local Services to deficit spend and would have to go before the Emergency Finance Board and most likely placed under some type of receivership. Bonding companies would also likely put Hanson on a watch list if its reserves were low.
“I don’t want to over-dramatize it,” he said. “That’s what it is.”
Asked how the town got to this spot, Kinsherf reminded the board of past use of free cash. His first year on the job the town used $478,000 of that one-time money to fund the budget. Last year’s budget was balanced using $1 million in free cash plus $1.2 million in unused article money from past years.
“We have to make up that $1.2 million this year,” he said. Realistically, he said the override would be good for about three years unless something structurally changes the way it does business.
“It’s a misnomer that, over the years the budget’s been mishandled,” Weeks said. “We are on top of it.” He lauded Kinsherf for finding funds where no one had thought to look before.
“It was underneath the couch cushions and underneath those cushions,” he said. “It is not a manner of mismanagement. It is not a matter of money mismanagement. We just don’t have the dollars.”