Town Officials Grapple With Escalating Municipal Personnel Costs [with video]

Direction given by Groton Finance Committee to the Town Manager for preparation of the 2017 budget has some strong messages about constraining escalating costs facing the town on the municipal side.

FinCom Chairman Gary Green told Selectmen and Town Manager, "We suggest that municipal spending grow at 2.2 percent or less," and that the FinCom supported the recommendation. At an earlier meeting with FinCom, Selectmen and Town Manager, the estimated budget that was discussed given the available information was likely to result in a three percent increase.

The FinCom's guidelines for development of the 2017 budget came about as a result of information presented at this earlier meeting. FinCom member Bud Robertson reminded those present that the increases in the municipal wages, employee benefits, and debt service, along with current union contracts will total $457,000 for the 2017 budget, while "we have $324,000 for these expenses. This says we have to cut. We can't spend $457,000 when we have only $324,000." Robertson stressed, "We have to do something about manpower expenses. We will also have to look at reducing other expenses."

Selectmen Chairman Jack Petropoulos cautioned that when "the slice of the pie is growing at five percent and we have only three percent, eventually the costs grow bigger than the pie." He stressed that the town has to "slow the growth of personnel costs. It is an unfortunate but inescapable reality."

Colleague Josh Degen pointed out that for 2016 there is no cost of living increase for Social Security recipients and Federal retirees. In fact, he said, increases for these groups went up an average of 1.22 percent over seven years, while collective bargaining was up from two to 2.5 percent. "We need to keep parity here."

Degen called out for a change in performance incentive bonuses of two-plus percent for employees based on merit and the fact that this payment is added to the employees base salaries which in turn compounds the retirement costs for the town.

Green said the FinCom was frustrated last year when there was very little they could do to change the budget. He added that this year, "If you want to cut below the 2.2 percent recommendation, you have to do something drastic, either cut personnel or cut services."

Selectman Peter Cunningham commented that private companies can outsource services as a way to save money, "but the town can't do this." Petropoulos replied, "We could outsource things if we want to."

The Town Manager said he felt that the "2.2 percent is good. It is not to say that I like it," adding that he will bring it forward to his department heads and "go through the process and see what 2.2 percent looks like." He is due back before Selectmen and Finance Committee in early December with the 2017 budget based on the 2.2 percent guideline.

Selectman Degen told the Board that he had talked with the Town Manager about the growth of municipal expenses versus new revenue, adding, "The only way to increase the municipal side is to grow new revenue."

The Town Manager said that to even meet a three percent increase, "we will have to cut employees," pointing out that pension costs are going up four percent and health insurance is projected to go up 10 percent.

Robertson stressed, "We need to look at a five-year plan - not just adding 2.5 percent (which has been the practice every year). Contracts need to be negotiated, and we need to determine what we can do with pensions, what we can do with healthcare to slow the curve nowWe need to put a five-year plan together that reflects reality. We can start with working three years out. The 2.2 percent recommendation gets us under the three percent" and under the schools percentage. "Some things will go away and maybe they should go away," he said.

Petropoulos added that a major item for him was to protect the EMT services and he didn't want that part of the budget impacted.

The Groton-Dunstable Regional School District has not yet submitted their proposal for the 2017 budget but it is expected that these numbers will be available by the end of November.