By Liz Nolan, Contributing Writer
Northborough – Town Administrator John Coderre presented the annual Financial Trend Monitoring Report for Fiscal Year 2021 (FY2021) on Jan. 14 during a joint meeting of the Board of Selectmen, Appropriations, Financial Planning and Northborough School Committees. The pandemic has brought uncertainty and challenges to the budget process this year, and it may take a few years for recovery. Overall, Northborough has managed itself conservatively, and looking to sustain current services in FY2022.
“We all would like to enhance services…that we provide to the residents but that comes at a cost,” said Coderre. “Let’s protect what we have now while we look at ways to operate more effectively and efficiently with the resources that we have.”
Coderre said that when he works on the forecasts, no major budget surprises are assumed.
“I don’t think you can get a bigger budget surprise than a pandemic,” he said.
Pandemic impacts
The next 12-18 months will be important once the COVID-19 vaccine is rolled out and the economy opens up more. The overall consensus is that a slow economic recovery is expected.
The town’s operating budget is impacted when state aid decreases.
“You are going to start to see the ripple effects of this pandemic through the economy over the next 2-3 years,” said Coderre. “We aren’t sure what to expect. They are not likely to be banner years.”
Good news
Coderre said that Northborough is still in relatively good financial condition.
Local receipts were assumed to decrease more significantly than they did. The town originally forecasted that hotel and meals taxes would decrease by 80 percent due to the pandemic and restaurant closings. The decrease was 12 percent, which is credited to restaurant take-out options.
“Things are not worse than we had originally thought,” said Coderre. “It also means that as a starting point for planning for FY2022 will begin at a higher number.”
Other positives for the FY2022 budget is that there will not be a premium increase for health insurance for town employees.
Factors on future tax bills
State aid, new growth and local receipts have an impact on tax bills.
The town was able to strategically postpone some of the larger capital projects in FY2021, but can’t be delayed indefinitely.
Contributions to the Other Post Employee Benefits (OPEB) trust fund were postponed for FY2021 and FY2022. This fund provides health insurance benefits to retired town employees and will need to be reassessed.
Economic growth can suppress the tax bill, but additional development is limited due to lack of land. Residential values are escalating, which will in turn draw a greater portion of the tax liability.
Taxes will increase when budgets expand to include staffing or service initiatives.
The unused levy capacity will need to be used, which will increase taxes.
Coderre said the regular monitoring is “about transparency, accountability and having good information to make an informed decision.”
For more information click here to see the full video of the Jan. 14 meeting.
Click here for more Northborough stories.
