Work is well underway on the Fiscal Year 2025 budgets covering town and school operations from July 2024 through June 2025. Voters will be asked to approve the budgets at the Annual Town Meeting next April. A preliminary budget crafted by staff will be presented at a joint meeting of the Select Board and Finance Committee on December 18 followed by weekly meetings all through January and February to finalize a proposed budget for the Annual Town Meeting. The School Committee will be undertaking a similar process. Public input throughout is welcomed.
Specific challenges are emerging. Regarding Town operations, there is a need to add more public safety staff (Deputy Fire Chief and Deputy Harbormaster) as well as added position for our utility operations (water and sewer.) On average, the all-in annual cost of a new position (salary and benefits) comes to about $100,000. Increased revenues from more ambulance runs, more transient boaters and new water and sewer connections can partially defray the costs of these positions if they are created.
Much more expensive challenges loom regarding the Town’s facilities and infrastructure. The Town has benefited from investments that were made decades ago but most of these investments have run their course and are at the end of (or past!) their useful life. Reinvestments are needed to allow critical municipal services to continue. A new facility master plan has identified some $100 million in new facility needs over the next 10 years, excluding the need for a new elementary school in Essex. New DPW facilities, a possible new public safety complex, renovated Town Hall, upgrades to the sewer plant and dealing with the new filtering required to remove PFAS from our drinking water are some of the more critical needs. And looking beyond 10 years, enhanced seawalls, elevated roadways, and enlarged culverts, etc. will all be needed in the face of a changing climate and rising seas. Taxpayers will not be able to afford the bond payments for all these needs thus hard choices will have to be made.
Each million borrowed will cost the Town between $100 -120,000 a year in principal and interest payments. In a few years each percentage point tax increase will generate about $300,000. Thus, for each $25,000,000 borrowed adds $2.5 to $3.0 million in annual expenses requiring 8 to 10 percentage point increases in taxation.
Helping the situation will be new property taxes from the CST project and freeing up funds once our retiree liabilities are fully funded. Combined this could represent some $3 million in available funds for new bonds – about a quarter of the need. The high school debt is retired as well in about 10 years. How we pace ourselves and what choices we are able to make will have a big impact on future tax hikes.
Reinvesting in facilities and infrastructure will be an ongoing challenge which will be addressed over time. A more immediate and vexing challenge that will likely come to the fore next spring is what level voters choose to fund the Manchester Essex Regional School District. For the current year, the originally proposed budget for the District required a Proposition 2 ½ Override vote by Essex in order for them to raise their required share of the District’s budget. Due to shifting enrollment patterns, Essex is currently picking up a bigger share of annual budget increases (it was not that long ago when enrollment patterns required Manchester to come up with a bigger percentage increase.) With the failure of the initial budget proposal, a reduced budget which relied on a combination of program cuts and further drawdown of reserve funds was approved by both towns on a second try.
Without an override Essex feels the most it can afford is a 2.5% annual increase in their appropriation to the District. Given the current shift in enrollment, this translates to an overall District budget increase in the 1% range, significantly below the typical 3 to 3.5% annual increase most school districts need to maintain level services. The reduction in offerings such a budget would cause will be a significant concern to parents of students. Last spring, voters approved the District’s budget on a second try. Had it failed, a third attempt would have been a “super town meeting” attended by residents of both towns where whatever budget is approved by a majority of attendees to this joint town meeting must be accepted by both communities. Such a trifecta of meetings may well play out next spring if those advocating for maintaining current operations and those wanting to avoid an override end up in a stalemate. Regardless of how many attempts are needed this spring, there likely will be intense debate in the coming months over the FY25 School budget.
Voters will be the ultimate arbiters of how these challenges are resolved. Given the high stakes, all voters are encouraged to stay abreast of the issues and provide input over the coming months as budget proposals are finalized for approval.
