Limited revenue, rising costs and state policies place strains on town finances
Dennis Galvin is a member of the Westford Finance Committee and has been tracking the town’s finances for years. The following is his assessment of the town’s financial situation as the finance review for Fiscal Year 2027 comes to an end.
The Town of Westford is in a tight financial box. Town Manager Kris Las calls it a “structural deficit.”
For town financial policy makers, it is the 800 pound gorilla in the room. If it is not tamed, tax burdens and town services will be negatively impacted. Westford Teacher’s Union President Kristina Jussaume framed the predicament, telling a joint meeting of the Select Board and Finance Committee: “the town needs more money; the residential property owners are overburdened; something has to be done; to do nothing would be irresponsible.”
On paper, Westford appears to be sitting pretty. Property tax revenues increase year over year. So what is the problem? The town finds itself dealing with financial factors beyond its control.
During this year’s finance committee meetings, Las summarized these factors: union settlements, rising energy costs, rising solid waste costs, rising health insurance costs, and rising retirement contributions.
Under the provisions of proposition 2 ½, which limits budget increases to 2.5% of the previous year’s budget, the town is not garnering the revenue it needs to keep pace with these rising costs. State local aid, particularly Chapter 70, critical for offsetting the revenue shortfalls caused by Proposition 2 ½, has not kept pace. Additionally, revenue sources that historically supplemented residential property tax revenue are also drying up.
Some 75% of the town’s revenue comes from property taxes. There are three classifications; industrial, commercial and residential. Finance Committee Chair Kristina Greene presented an analysis of these revenue streams at a recent Finance Committee meeting. Her analysis extended over a ten-year period from 2017 to 2026. During that time, revenues from industrial properties plummeted. Revenue from commercial property was stagnant, but the property tax burden on residential property dramatically increased from 85% in 2017 to 90% today.
So what are we to do? First, do not repeal proposition 2 ½, which is being suggested in some circles. Prior to that law, homeowners and businesses around the state were crushed by the double weight of state and local taxation. Some commercial properties, particularly in cities, were taxed at triple the rate of residential property. Arson was the way out for some.
Second, increasing the burden on local commercial properties under current state tax policies will only drive out what we now have, losing whatever relief they now offer.
The solution to our problem requires tighter fiscal management and innovation. Better state economic policy would also help. Management overhead in town departments has to be seriously reviewed and trimmed, union contracts must be reasonable.
Town negotiators must bear in mind, contract settlements at the line level of service, ultimately cascade up to higher management. The revenue cutout allowed by the community preservation act must be re-examined, and perhaps most critically, a serious and thorough examination of regionalization is needed, particularly in the areas of public works and public safety. On the state level the sales tax must be repealed.
Westford’s proximity to New Hampshire makes it virtually impossible to attract commercial business, which could lighten the tax load on town home-owners. A more equitable distribution of state local aid is also needed. Currently, revenue is taken from the towns and redistributed to the cities, where tax bases have eroded.
These are challenging times. We must communicate and work together and most importantly we must apply good sense.