Haddad Warns of 'Serious Budget Concerns' [with video]
Town Manager Mark Haddad warned Selectmen Monday night that the recent municipal budget reductions to meet the major $2M shortfall in the Groton Dunstable Regional School Committee budget, coupled with the unexpected $50K increase for snow and ice removal this winter brings the town "dangerously close to the levy limit," which is generally used for the town's unforeseen emergencies. If the proposed FY2015 budget passes, the town will be only $71, 852 under the levy limit.
The levy limit is an important budget measure for Groton as it is a restriction on the amount of property taxes the town can levy. Proposition 2 ½ established this limit. In Massachusetts, municipal revenues to support local spending for schools, public safety and other public services are raised through the property tax levy, state aid, local receipts and other sources. The property tax levy is the largest source of revenue for Groton.
To begin to address the 'new' assessment of $1.5M for FY2015, (down from the original $1.9) from Groton-Dunstable Regional School District for FY2015, Haddad has set aside $402,000 in unexpended tax capacity, $378,000 raised by the annual 2 ½ percent increase over last year's school budget, a $300,000 reduction in the FY2015 municipal budget, and the April 1 ballot vote to fund the new Center Fire Station with a $448,000 debt exclusion through a 21-year bond. As opposed to a general override, debt exclusion is for the duration of the bond and does not become part of the operating budget in perpetuity.
Selectman Josh Degen suggested that with the concern regarding the tightness of funds under the levy limit, Haddad might want to consider postponing the hiring of a Human Resource Director for $74,000 plus benefits. Once there was a clearer understanding of how the funding would be resolved, then the decision could be made to move forward on the position.
Haddad told the Board that with new growth pegged at $15M, and assuming that the debt exclusion for the new Center Fire Station passes on the April 1 ballot and voters approve the municipal budget, Groton tax rate is estimated at $18.41 versus the current rate of $17.38 per thousand dollars of valuation.
Degen outlined a scenario where Groton approves the debt exclusion and approves the proposed municipal budget; and where the Town of Dunstable needs to do an override vote for a few hundred thousand dollars for their share of the regional school assessment at their Town Meeting and then do a vote by ballot. He stressed that if there is a failure of the override in Dunstable, the School Committee effectively has no budget.
Degen asked what happens on July 1 when there is no resolution to this. There are then two choices or the School Committee; one is to significantly reduce their budget; and the second is to go back and tell Dunstable to re-vote. Dunstable would have 30 days to call a vote bringing that town's decision to June 21. If the override question fails for a second time, the School Committee will essentially not have a budget.
One potential outcome is that School Committee could call a Super Town Meeting. Another possibility, if this is not resolved by July 1, is that the two towns could pay one 12th of the previous year's budget every month.
Haddad pointed out that there are specific steps that must be followed by the School Committee to resolve issues in the event of override failure and they have to ask Dunstable for reconsideration.
The following is the scenario from Degen that shows how the school budget would work:
> GDRS Groton assessment $1,403,000
> First debt exclusion vote on April 1 must pass for $448,000
> Passes and municipal budget proceeds as is.
> Fails - Groton need to slash municipal budget to achieve the amount requested.
> Town meeting passes budget then off to Dunstable Town Meeting May 12
> Fails at the May 12 meeting - then bigger problems
> Dunstable has around $100,000 available.
> Dunstable will need an override for around $300,000
> Dunstable votes around May 20
> Passes - everything is all set
> Fails then Dunstable selectmen on a request for a reconsideration ballot occurs 30 days after selectmen call for new vote. On or about June 25-27
> Passes all set.
> Fails Super Town Meeting called by the School Committee hopefully called in advance for around June 27-28.
> Passes all set. Groton funds in place. Dunstable either slashed their municipal budget by around 300k or they call for a special town meeting and subsequent override vote to fund their municipal budget.
> Super town meeting vote fails and the district must slash 1.5 million
Degen stressed that town officials need forecasts from the School District for the next several years. "We need answers and three year projections before any debt exclusion vote. "The Board of Selectmen, Town Manager, and Finance Committee require this information, especially if the School Committee needs an override for next year."
Fin Com member Bob Hargraves pointed out that residents won't see this in their tax bills until the February and May payments.
If the School District budget does not or cannot remain within the Prop 2 ½ limit and further overrides will be necessary, any amount raised by approval of the override becomes a permanent part of the town budget.
A working group was formed with a two members of the School Committee, Board of Selectmen, Finance Committee, Town Manager, Interim Superintendent and the Regional School District Business Manager. Haddad characterized their meeting, the first of several that are planned, as productive. He also said that he was expecting to receive a copy of the "Special Audit" that was done for the 2014 school year when the shortfall was discovered.
