Southampton faces budget deficit, mulls override

SOUTHAMPTON — Budget projections indicate the town is facing an approximately $2 million deficit in the next fiscal year, which will likely lead to a proposed override at this year’s annual Town Meeting to bridge the gap.

A budget outlook was presented at a joint Select Board and Finance Committee meeting on Tuesday.

The initial budget aiming to maintain level services for the town and to restore cuts made to William E. Norris School last year is approximately $24 million, a $2.4 million increase compared to last year’s budget.

While no final decisions were made to propose an override, it was discussed that with the current budget outlook, one may be needed.

“We’re not a very large community and many of our budgets are very small,” said Town Administrator Scott Szczebak at the meeting. “It’s a few staff members or a staff member and some office supplies. So really, our level service budget is usually the minimum that it takes for a department to operate.”

However, Szczebak said the $24 million budget is not exactly a level services budget and includes a “wish list” of items including restorations to significant cuts made to Norris School last year and capital plan funding.

With that, he said the $2.4 million increase will be reduced in the coming weeks because the town will not be able to fund that steep of an increase and there are areas that can be cut, Szczebak said.

“There’s definitely some reductions that can be made. You know this is kind of an all-in (budget) and obviously the biggest chunk is the restorative budget for Norris,” Szczebak said.

Last year, Norris School lost an equivalent of nine positions after a failed override vote, resulting in a significant reduction to services. Szczebak said to restore the cuts made to Norris School last year, it would amount to approximately $750,000.

Southampton also has to contribute to Hampshire Regional High School (HRHS), which is facing a budget shortfall as well. The town has not decided how much it is willing to contribute to HRHS, but it would have to contribute about $477,000 more than it did last year if it is to help maintain level services.

While it is too early to tell how much Southampton will contribute to the high school, HRHS’s approved preliminary budget is approximately $400,000 short of level services.

“I believe we are not the only community of the five that’s going to require an override in order to sustain the number that’s proposed right now by Hampshire Regional,” said Select Board member Jon Lumbra of the five towns in the Hampshire Regional School District.

Lumbra said that when the budget progresses, Southampton and Select Board members will have to be clear about the impacts if an override passes or not, specifically for HRHS. He said there could be the potential for multiple override questions — one for the town and the schools.

“I would like it clearly articulated (to) the town voters what their options are when it comes to the Hampshire Regional budget,” Lumbra said.

In the coming weeks, Szczebak said the Finance Committee and Budget Task Force will identify potential cuts to bridge the projected shortfall. While there is not a lot of wiggle room for about a third of the budget, that covers required costs to run a town like heating municipal buildings and retired employee payments, he noted.

Besides the Norris School, HRHS and capital plan deficit expenses, other main cost drivers for the next fiscal year’s budget outlook include health insurance and a $200,000 loss in revenue. Szczebak said the town has planned “irresponsibly” for health insurance coverage in the past four years, not increasing rates at all.

Szczebak said he estimated revenues conservatively this year, trying not to over-project any income sources. He estimated revenues will be about $22,155,000 this year, less than last year.

“This year, I did take a more conservative approach, obviously with the economy the way it is … I don’t see a lot of growth coming in,” Szczebak said.

Property taxes is the main source of income for Southampton, Szczebak said, resulting in about $16.4 million or 74% of revenue with a full 2.5% tax levy. But other income sources like cannabis and meals taxes, and ambulance receipts and building permits have slowed down after rising in years prior.

“We’ve had a lot of growth over the last couple years and that’s obviously slowed down, and it’s slowing down year by year,” he said.

The town’s stagnant revenue this year can be credited to multiple factors, Szczebak said. But towns like Southampton need more assistance from the state and federal government which are restricted by Proposition 2½.

“The biggest one is the lack of support from the state and federal governments. Towns are constantly restricted by Proposition 2½ and we really depend on the state government to continue giving,” he said. “You’ll see that things just haven’t been able to catch up with just the basic expenses of running any town or any organization, never mind just inflation alone.”

A more comprehensive picture of the budget is expected to be released later this month. The next Select Board meeting is scheduled for Tuesday, March 17.

The post Southampton faces budget deficit, mulls override appeared first on Daily Hampshire Gazette.