Storm clouds gathering over town budget

Possible state aid cuts forcing Abington to revisit spending

Big cuts to state aid and unknown expenses. Possible drops in excise and meals taxes. A Town meeting date moved deep into spring.  These are not a few of Finance Committee Chairman Matt Salah’s favorite things.  

Abington’s budget for the fiscal year that starts July 1 was nearly ready for the printer when the COVID-19 pandemic began ravaging the Massachusetts and US economy, blowing holes of unknown sizes in government spending plans. 

“Where it stands is super weird,” said Salah. “We got through the last of [the department reviews] to the point where we had the budget balanced and we were essentially done with it.”

The budget’s first draft included additional teachers, a new town planner, spending on capital projects, and made a sizable deposit into the town’s stabilization fund, which serves as the town’s savings account. 

Now, town officials are readying different scenarios that could include a 10 percent cut to the budget’s estimated $56 million bottomline. Some of the tools at their disposal include spending and hiring freezes, eliminating new positions, cutting capital spending, negotiating with town unions to reduce payroll and benefit costs, and dipping into the stabilization fund.  

The biggest unknown remains the amount of money the town will receive from the state. Usually, by mid-May, municipalities have a solid sense of how much money will be flowing down from Beacon Hill. 

Traditionally, the state’s budget process works like this:the  governor files his budget in January, the House debates its version in April, the Senate passes its version in May, and the two chambers hammer out a final state budget usually in time for the July 1 start of the fiscal year. While the House and Senate may increase the amount of state aid, rarely does it dip below the numbers proposed by the governor, giving municipal budget writers a solid floor upon which they can build their own spending plans. 

That isn’t the case this spring. Gov. Baker had originally proposed to increase the total amount of state aid — both for schools and other municipal services — by more than $300 million or about 5 percent. Under that plan, Abington was slated to receive $12.6 million in state aid — approximately $1.2 million more than it did this year. 

It’s currently mid-May and the House still hasn’t even debated it’s version of the budget, and the state announced last week that tax collections in April fell by more than 50 percent compared to the previous year. 

Acting Town Manager Scott Lambiase told selectmen Monday night that a budget update he received from state Sen. John Keenan was not positive. 

“Basically what he said was ignore the governor’s numbers from January because we’re not getting any of that,” Lambiase said, adding that under a best-case scenario, he was hoping the town would get the same amount of aid it received this year. During the Great Recession, the Legislature actually reduced state aid in its 2011 budget.. 

The good news for Abington’s budget is that it’s main revenue source — property taxes — will remain largely unchanged next year. “We do have a stable course of income,” said Salah. “It’s the state aid that’s the biggest question.”

But the economic slowdown will impact the town’s excise and meals tax collections, which are driven by consumer spending, specifically buying new cars and going out to eat. In fiscal year 2019, the last year with full-year numbers, the town collected $2.5 million in excise taxes and $340,000 in meals taxes. Salah said in building next year’s budget, they had assumed neither would increase, and actually already budgeted a slight decrease in excise tax collections. Abington’s preliminary budget also did not include any revenue from retail marijuana sales; the town’s first retail shop is expected to open this fall. 

It’s this conservative approach to budgeting that has Abington in a stronger position for this recession than the last one, Salah says. This time, the town has nearly $3 million in its savings account, in part due to ending the past six budget years with million-dollar-plus surpluses. .   

“I think we’ve put ourselves over the past 10 years in a position where we’re able to handle this recession more capably than we would have in 2008,” he said.

For example, the town ended last year with a $1,6 million surplus. Normally about 40 percent of that money is put into the town’s stabilization fund and the rest pays for capital projects or unpaid bills (such as snow and ice removal). Salah said the town will likely defer any non-emergency capital spending in order to place even more money into the stabilization fund, which could help balance future town budgets. 

Lambiase told selectmen he would be meeting today with the town’s finance team to go over budget balancing options, and have a report for the board on Monday. The Finance Committee will meet Wednesday evening at 7 p.m. to also go over updated budget scenarios.