The State of the Town; Between a Rock and a Hard Place

At a town-hall gathering to discuss the state of the town, Select Board Chair Kent Lew welcomed nearly three dozen citizens, both in person and via Zoom on Saturday morning, April 9. The goal of the meeting was to share information on the challenges of drafting a new town budget, as state-required spending will rise significantly while state aid is not keeping pace.

Kent, who worked on the town’s Finance Committee for seven years before his election to the Select Board in May 2021, presented graphs outlining the town’s expenses and income (now posted on the town website).

The Finance Committee believes they have written a realistic budget for running the town. It includes the cost of all the things we have to do, the cost to continue to do the things we have always done, and the cost of things we think we need to be doing. It’s basically the same budget we have always had, except that the costs of things we can’t avoid have gone up a lot.

Non-discretionary spending, required of the town, accounts for $1.3 million, or 61 percent of the total budget. Three-quarters of those mandated expenses are in the town’s contribution to education, both for public schools and, particularly, for vocational schools. Those contributions will rise 17.7 percent this year. As it turns out, Washington had no vocational education students last year; this year, we will be sending four students to three different vocational schools. Our town is required by the state to pay for their schooling and transportation. That’s more than $100,000 right there.

Then there are inflationary pressures, including the need to provide cost of living increases on wages for our town employees. As it is, the town is only planning to provide a 5 percent cost of living increase, lower than the 7 percent rate of inflation.

To Balance the Budget

Towns are required by law to create budgets that match revenues to expenses. Most of the town’s income comes from property taxes (the tax levy), which is what’s required after other sources are accounted for, namely state aid and local income.

The state won’t finalize its budget, including the aid it gives to municipalities, until July, well after the town budget is already set. In the past, the amount of state aid has remained static. This year looks no different. It will likely account for only 10 percent of needed revenue.

Local income accounts for about 12 percent of our revenue. That includes the motor-vehicle excise tax. Pittsfield Watershed makes a payment to the town in lieu of taxes. Currently, there is a small contribution from the room tax on short-term rentals in town. To encourage more townspeople to consider short-term rentals, Susan Colgan contributed an essay in the April Tracks with information on how to get started.

The remaining 78 percent has to come from the tax levy.

The overall budget is estimated to rise 14 percent this year. With state aid likely remaining flat and local income rising only slightly, most of the budget increase will have to be covered by the tax levy, which could go up as much as 18 percent.

Over the Limit

Due to a state law, however, we are not in a position to cover such an increase in the tax levy without a town vote. With an assist from Sean Connors, who has served on the Finance Committee for 25 years, Kent explained the complexities of Proposition 2.5, a state law that dates to 1980. The law places a limit on the town’s annual tax levy, and that levy limit increases 2.5 percent each year. If there is new construction in town, the levy limit also will rise accordingly. It is possible for the town to raise the levy limit further: That’s called an override, and it can only happen through the approval of the voters at an election.

Washington’s tax levy has been riding at the edge of the levy limit for much of recent memory. This year, the Finance Committee projects that the budget will surpass it: about $100,000 over the levy limit. We will either have to raise the limit or lower the budget before summer. If we don’t, the state won’t accept the town budget, they won’t set our tax rate, and, as Kent says, “our operations will grind to a halt.”

As Kent described it, “Prop 2.5 gives citizens a little rein on out-of-control taxes. But when the town is in a situation when you need to raise taxes, those reins can turn into hand cuffs.”

At the Annual Town Election, the Select Board will be asking the citizens if the town will raise the levy limit by $150,000. Kent pointed out, “Raising the limit doesn’t mean we have to spend to that limit, but if we don’t raise the limit, we can’t. Think of it as a credit limit on your credit card; if your limit is $8,000, you don’t necessarily need to use it. But, if you have a sudden expense like a car repair, and your limit isn’t high enough, then you’re in trouble.”

In Search of Cuts

Washington runs a tight ship, so there aren’t a lot of options when it comes to cutting expenses. One suggestion that has been made is to change the town’s transfer station to a fee-based system. This would transfer the nearly $50,000 annual expense out of the tax levy, so it is not subject to the levy limit imposed by Prop 2.5. Most towns in Berkshire County have shifted to a fee-based system for their transfer stations, rather than paying for the cost of providing the service out of tax dollars.

Kent has begun to research this. Even though no one is very keen on the idea, he says the Select Board and the Finance Committee have a responsibility to explore it as an option, under the circumstances. So far, that investigation suggests that a fee-based system, like Becket’s annual permit and per-bag fees, would cost the average town resident more than double what they are paying now, as part of their taxes. Even with that shift, the budget would still be about $50,000 over the levy limit.

The Finance Committee and the Select Board have considered minor, discretionary costs that could be cut, if push comes to shove, including expenses for community events, access to the Becket beach, maintenance of the town park and historical properties. The reserve fund, providing a small contingency in the budget, could also be cut.

They have discussed cuts to operational costs, which account for 20 percent of the budget, including such things as road repairs, fuel for highway equipment, the transfer station and keeping the lights on at the Town Hall. But after years of trimming, there is no fat left in these budgets. So, any cuts will have consequences.

An Assist for Seniors

Kurt Whitney of Lover’s Lane raised the issue of what he called “the elephant in the room: We have an aging community. We came out here to retire and we’re on a fixed income.” Fortunately, as he pointed out, “There’s a circuit breaker senior tax credit.” The Insights team will report on programs for seniors in an upcoming article.

Our Town’s Future

Recently, the Select Board obtained a grant for a study by the Collins Center for Public Management, providing a review and analysis of the town’s organization and operations. The team at the Collins Center praised the volunteerism and the strong commitment of officials in town: “Washington does a lot with a little.” However, they pointed to the unsustainable nature of this situation, which requires members of the Select Board to devote full-time hours to town management, without any background or expertise in public administration.

Dick Spencer, who has served on the Finance Committee for close to 35 years, commented that “running this town was not that complicated 35 years ago. It’s gotten very complicated. Grants have become a major part of town finances. The obligations assumed by members of the Select Board have increased at least tenfold.” He noted that the town has been lucky to have somebody doing a full-time job for $2,500 year. Jim Huebner did it, now Kent is doing it; who will do it next is an open question.

The Collins Center Report recommended that the town consider hiring a professional Town Administrator. The Report suggests that a professional administrator could seek out additional revenue, write grant proposals, and coordinate the implementation of those grants, as well as coordinating other town operations, noting that the town is currently lacking a point person to handle those needed tasks.

The Select Board and Finance Committee have begun to research the possibility of hiring a part-time Town Administrator, including whether sharing a position between two towns would be feasible. Currently, there is an opportunity for a grant which could cover a portion of a shared Town Administrator’s salary in the initial year.

Whatever financial benefits hiring such a professional might bring, they would come after an increase to the town’s expenses. The Collins Center Report recommends this investment as a step toward solutions to some of our complicated fiscal challenges.

May Votes

The Annual Town Meeting will take place on May 11, when we, as townspeople, vote on appropriations. At that time, the Select Board will be looking for approval to appoint a Town Administrator and for funding to do it.

On May 21, we will have our Annual Town Election, and there will be a ballot question about a levy override. If the town does not vote to override the levy limit, the Finance Committee will have to retool the budget and present it again later in the summer. At the end of the April 9 meeting, several attendees urged their fellow citizens not only to step up and volunteer to help raise money for the town—that every little bit helps—but also to help raise awareness of the budgetary challenges the town faces in the year ahead, sharing information about the state of the town.