No Tax Relief For Residents In Fiscal Year 2021
By Kristen Arute, Updated: May 18, 2020
On Thursday, May 13th, the Fiscal Year 2021 (FY21) Financial Management Plan ("the Plan") - which was finalized by the Board of Selectmen on May 11th and voted on by both the School Committee and the Selectmen that same day - made its final stop in front of the Advisory Committee. After concerns were raised during a brief discussion, which was a continuation of Tuesday night's meeting on the subject, the Plan received the approval of all Committee members. This decision confirms that the Town of Hingham will not be deviating from its $126.47 million FY21 budget which was established in January prior to the widespread devastation of COVID-19. Instead, the Plan, which was drafted two weeks ago, puts certain measures in place to keep tabs on revenues and expenditures. “Rather than lift the hood, we’re setting up some triggers to review things on a reasonable basis,” said Advisory Committee member Dave Anderson. “We are approving the number that was approved pre-COVID.”
SIGNS OF TROUBLE
Even before the pandemic officials were predicting that FY21, which begins on July 1st, was going to be a difficult one. During a Board of Selectmen meeting on January 28th, Selectman Mary Power said that she felt that this was going to be a challenging budget year with only 2.2% revenue growth adding that most of the money is coming from taxpayer dollars. Of course, many taxpayers are now in a more dire financial position than they were a few short months ago when the budget was set, and there is no relief in sight. In spite of this, the budget will not be revised prior to Town Meeting.
The next step is to bring the budget before Town Meeting for a vote. The Plan, however, will not be part of that process. It was put in place in order to delay revisiting the budget until it was deemed absolutely necessary. The Selectmen intend to present to Town Meeting the original $126.47 M FY21 budget - which is larger than the FY20 budget - "as is" with no budget cuts or furloughs. Of course approving the budget isn’t the only decision that will take place on Monday, June 22nd, but almost every other decision is either loosely or directly connected to it. From purchasing the Benjamin Lincoln House for $772,000 to the construction of a $2.2M maintenance shed at the South Shore Country Club, the majority of Warrant Articles that residents will be considering are driven by the budget.
The FY21 Financial Management Plan establishes an understanding among the Board of Selectmen, School Committee and Advisory Committee that should revenues decline, certain measures would be put into place. The immediate solution would be to use monies from the fund balance account (the Town’s savings) to plug the holes in revenue. With certain sources of income, like meals tax, expected to be significantly lower this year, that deficit could be a sizable one. Advisory Committee member Tom Belyea expressed his opinion on using the "Rainy Day Fund" for this purpose. “I’m okay with the first round of using the fund balance,” he said, “but beyond that, the bleeding’s got to stop.” Committee member George Danis agreed. "I’m concerned with the precedent that we are setting here," he said. The financial plan that authorizes use of the fund balance does not include language related to a pandemic or anything else of this magnitude.
The Plan includes a structured schedule where monthly check-ins and quarterly reports would guide the decision making of Boards and Committees. Getting everyone on board was deemed critical, because the goal is to make the Town’s unique “wait and see” approach more palpable to voters. “What we were saying with the Plan was we need to be able to go into Town Meeting with a straight face and ask for the checkbook (for the full amount of the budget),” said Selectman Chair Karen Johnson who drafted the Plan. “And when we ask for the checkbook, we are only going to write the checks that we absolutely need to write and the schools have joined with us to say that same thing.” Karen went on to explain that the Plan was designed to give the Advisory Committee a mechanism for “external accountability” in that process so that when essential lists are developed both on the municipal side and the school side, representatives from each department “have to say it out loud. They’ve got to say it to somebody else, and they’ve got to take somebody else through their analysis as to why these expenditures are critical at this moment in time.”
However, the agreement is a non-binding one. As Karen pointed out to members of the Advisory Committee, “If you challenge either one (school or municipal) on a particular expenditure or a particular hire,” she stated, “they could still hire that person.” Ultimately the School Committee has statutory authority under Chapter 70 to expend the full $58M School Department budget as it sees fit, and the $68M municipal budget falls under the purview of Town Administrator Tom Mayo who is not obligated to make cutbacks. “The appropriation is there,” said Karen, “and as the Fiscal Year rolls out, the entire appropriation may be spent.” She added that the Plan “tries to slow down expenditures that might otherwise happen immediately.” Making reference to the measures established by the Plan, Advisory Committee Chair Victor Baltera said, “We have the controls, but if things do improve we would spend to the full amount of the budget depending on the revenue picture.”
Also of concern was the lack of detail that was provided to the Committee. "My question is whether anybody has started to prepare a supplemental budget with expenses that are likely to be incurred when the town and the schools will open," asked Committee member Andy McElaney. Tom Mayo described the situation as too fluid to make an informed estimate. "We have no idea what that will look like," he said. "I haven’t seen any of those plans, and I have no idea what those costs would look like." The only thing that was made available to the Committee was a "Tier One Q1" analysis. A clear picture of anything beyond that wasn't included. As a result, just prior to the vote Committee member George Danis asked, "I wonder if we should delay our vote until we get the more detailed plans." Victor Baltera agreed there was a lack of information and said "that’s why I was hoping to have them (the more detailed plans) tonight."
Some Committee members were uncomfortable with the long-term impact of the Plan. “I think it assumes a relatively rosy scenario moving forward. This downward economic cycle is going to last at least five years,” said Committee member Ed Gaydos. “I just worry not so much about next year but the 'out' years. Are we positioning ourselves with equal options three, four, five years from now? I think it's going to go on for five years. For at least five years.” Dave Anderson, who was quick to point out that he was "a fan of the plan" and wasn't advocating an alternate one, stated, "Seems to me there’s another choice which is to say rather than the plan that’s there, you would go to more budget cuts right away. We could say we need to cut 'x' amount out of the budget and keep our powder dry for the next 4 years." However, it was agreed that asking departments to take a look at their budgets so late in the process was unrealistic. "We won’t have them until it's too late to print the warrant," George pointed out.
NO TAX BREAKS FOR LOW-INCOME SENIORS
Also discussed at the meeting was the fact that tax breaks for seniors who fall into a certain income bracket would not be going into effect this year as had previously been planned. The Selectmen had already requested that the Senior Means-Tested Special Act, which would have provided $500,000 in relief to those who met eligibility requirements, be placed on hold due to concerns over modifications that the Legislature made to the language surrounding its implementation. "The changes were really central as to how we would administer the program in Hingham," said Karen Johnson. "One of the things that was important was that it didn’t unduly burden our departments, and this legislation was going to create an administrative burden." Dave Anderson asked, "So we are not lowering the taxes of people who would have benefited from that program?"
"That’s correct," said Karen. "Those seniors that would have experienced a greater amount of tax relief because of this program will not be experiencing that in FY21."
Victor Baltera, Chair
Robert Curley, Vice Chair
Julie Strehle, Secretary