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Date: 12/16/2021
LONGMEADOW – Finance Director Jennifer Leydon laid out Longmeadow’s preliminary budget for fiscal year 2022 (FY22) to the Select Board, Finance Committee and School Committee on Dec. 6.
Leydon began by setting goals for the town and explained how she wanted to meet those goals. The first overarching goal was to maintain level services while staying under the maximum 2.5 percent increase to the tax rate. Other steps were maintaining a AAA credit rating for the town, using funding from the American Rescue Plan Act (ARPA) to mitigate health and infrastructure expenses and implementing updated financial policies to pre-pay for programs and encourage consistent tax collection.
The finance director also wants to work on “safe, responsive and healthy town government. To do this, she would keep existing employees and attract new ones by doing a wage study, negotiating contracts, aggressively recruiting and implementing the Department of Public Works study that was recently finished, though the report has not yet been released. ARPA funds will also help here, as Leydon wants to use them to combine two town buildings into one and upgrade the remaining buildings with ARPA and capital funding.
She spoke about generating more money from the schools with a mixture of solar leasing, increased grants and “priority project applications” to the Community Preservation Committee, Capital Planning Committee and Massachusetts School Building Authority.
Select Board member Mark Gold defended the compensation rate for town employees and reminded Leydon that Longmeadow has a 36-hour workweek for its employees. “If we’re 10 percent less [in compensation], it’s because they’re working 10 percent less,” Gold said.
Budget shortfall
Leydon then presented the bad news. There will be a gap between the expected revenue for the town and the expected expenses. She said if the town uses the entirety of the 2.5 percent increase to the tax levy, the gap will be $118,000. In recent years, however, the town government has sought to keep the tax levy increase to 1.75 percent. This would decrease the tax revenue to the town and increase the gap in funding to $514,000.
The enterprise funds for water, sewer and stormwater are revenue that the town uses for certain capital improvements. The rate, measured per 100 cubic centimeters of use, is expected to increase to $3.69 for water and stormwater will likely increase to $5.21, while the sewer rate will drop to $2.65. This means about $2.01 million will be added to these accounts, but the capital outlays from those accounts are expected to total $6.75 million.
Leydon recommended maintaining level services with a .7 percent reduction to the budget. She said this will close the gap and allow the town to realize its goal of adding just 1.75 percent to the levy limit.
Turning to the long-term picture, Leydon told the Select Board, School Committee and Finance Committee that she expects the top to hit the debt ceiling in 2033. At that point, the tax rate will be $25 per $1,000 of property value and the revenue will still not be enough to cover the town’s expenses, leaving a $1.8 million shortfall.
“Major decisions are going to be made. We really need to decide if the town and school collectively want to reduce spending now at about $500,000,” per year, or at $1.8 million all at once.”
Select Board member Thomas Lachiusa pointed out that there would be more shortfalls in the years following 2033, unless steps are taken.
Gold took issue with Leydon’s timeline for hitting the debt ceiling. Property values for 2020 have yet to be released and he said changes in values may allow the town to stave off the critical threshold for a time. This year’s $118,000 shortfall is, “probably the smallest that we’ve had in 10 years,” Gold said. He also said that the enterprise funds are financed independent of the general fund and should not be calculated the same way.
Longmeadow Schools Superintendent M. Martin O’Shea and School Committee Chair Kevin Shea spoke about parts of the school district’s budget that it cannot afford to cut, such as investments in social-emotional learning to counter the impact of the pandemic, and the “natural increases” or contractual obligations.
Tax classification
Ken Rodgers, president of KRT Appraisals, presented tax classification options to the Select Board. Tax rates are based on a formula. The value of taxes from new growth in town is added to the amount of property taxes in the previous year plus up to 2.5 percent, which results in the tax levy. The tax levy is then divided by the total value of taxed properties in town and the result is multiplied by 1,000.
This year, Rodgers said, taxable new growth between July 2020 and June 2021 was $255,438 and $58.49 million in taxes were levied in Fiscal Year 2021 (FY21). Following the formula, the rate for FY22 is $24.64 per $1,000 of property value, down from FY21’s 24.71 per $1,000.
Usually, Longmeadow adopts a tax classification of 1, meaning that all properties in town are taxed at the same rate, but there are other options. Municipalities are allowed to “shift” the tax burden away from residential property and toward commercial, industrial and personal (CIP) properties by as much as 50 percent. Because CIP properties only make up 6.5 percent of the town, a 50 percent shift would save the average homeowner $340 for the year, while the average CIP property owner would pay an additional $19,472 in FY22.
Other shifts in the tax burden include a residential exemption that makes owners of second homes and rental properties pay more than primary dwelling properties, or small commercial exemptions, which affect businesses with five or fewer employees and less than $1 million in revenue. However, that exemption benefits the property owners, not the business owners.
Gold questioned Rodgers on the differences between how property values are assessed for residential properties as opposed to commercial ones. Because commercial property sales are less frequent than residential ones, Rodgers said, they are based on figures from the surrounding area. Gold argued that commercial properties are undervalued and said the current process of determining property values “isn’t working.” While Gold said he did not want to “punish” businesses, he felt a single tax rate put an “undue burden” on homeowners.
As the issue was the subject of a public hearing, resident Tom Dignazio weighed in. He told the board that the “nature of diversity” of the businesses in Longmeadow makes splitting the tax rate impact businesses differently. Bigger businesses in town are not hit as hard as the small business owners, many of whom are also residents, he said.
With a vote of 4-1, the board accepted the single tax rate.