AMHERST — Even with concerns about rising health insurance costs, slowing new growth and flattening state aid, Amherst’s financial team is offering optimism to town, school and library officials as preparation for fiscal year 2027 budgets begins.
In a financial indicators meeting Monday, bringing together the Town Council, School Committee and Jones Library trustees, and serving as the kickoff to the budget season, Town Manager Paul Bockelman said that the town will not need to pursue a Proposition 2½ tax-cap override, but that there is a recognition of the constraints on taxpayers.
Under the projections outlined by Bockelman, Finance Director Sean Mangano and Treasurer/ Collector Jennifer LaFountain, the budgets for the municipal and elementary schools would be allowed to increase by 3.5%. An identical increase would be permitted for the assessment going to the regional schools, and for the town’s allocation to library operations.
“We’re starting at 3.5%, it’s more than we have in years past, we’ve always been at 2.5%, 3% range,” Bockelman said. “We’re trying to be more attuned to what the council has put in their past financial guidelines and being tighter on our projections.”
At this time last year, projections were for just a 2.5% increase in the budgets, though eventually the Town Council, with better-than-expected revenues, agreed to allow a 4% increase for all budgets, with a 5% increase given for the school budgets.
Bockelman said the numbers support starting at the higher level.
If the current estimates were to hold, the budget for town operations would go up $1.03 million, from $29.5 million to $30.5 million, the elementary school budget would rise by $981,723, from $28.05 million to $29.03 million, the regional school assessment would increase by $691,040, from $19.7 million to $20.4 million, and the allocation to the library, which also receives state funding and uses from its endowment, would go up by $83,795, from $2.39 million $2.48 million.
As it stands, this is a $106.2 million overall budget plan, up $2.96 million, or 2.9%, from this year’s $103.3 million budget. This would yield a $231,625 shortfall, which Mangano said is an acceptable estimate this early in the year.
Bockelman cautions that needs will outweigh the resources available, and that Amherst, like other communities, will probably face a double-digit percentage increase in health insurance.
“Rising health costs are going to be the thing,” Bockelman said. “It’s going to be brutal.”
Part of the reason for optimism, though, is a 13.1% increase in local receipts, Mangano said. That is a $990,395 increase, from $7.58 million to $8.57 million. The major adjustments include a $288,000 increase in revenue from permits, a $170,630 increase in motor vehicle excise taxes and $121,950 more in hotel and meals taxes, and a $200,000 jump in investment income.
New growth, which allows the town go beyond the 2½ growth limits set by the state’s Proposition 2½ tax-cap law, though, is falling. While it had been averaging around $650,000 in recent years, associated with developments like the mixed-use buildings that have been completed in downtown, such as One East Pleasant, 11 East Pleasant and 26 Spring, this has slipped to $400,000. Still, since the town had been lowballing the new growth estimates, the $650,000 will be projected for another year.
School Committee Chairwoman Jennifer Shiao observed that a pie chart on expenses shows that the combined elementary and regional budgets have fallen from 52% to 47% over the past 10 years, while capital spending has gone from 5% of the overall budget to 9%.
Mangano said this was a “very intentional decision” that, in part, allows the town to take on the nearly $100 million school projects and the $46.1 million renovation and expansion of the Jones Library.
Bockelman said that some of the capital expenses are also going toward school requests.
A sheet showing staffing trends indicates the town has added nearly 16 new positions since fiscal year 2022. Those include the launch of the Community Responders for Equity, Safety and Service department, four new firefighter/ paramedics and personnel associated with the more robust rental permitting program that is underway.
The town is also setting aside $50,000 for Other Post Employment Benefits, the ongoing liability. Doing this helps to maintain the town’s AA+ bond rating, which reduces the borrowing costs.
LaFountain also presented a chart illustrating another challenge, with the state aid purchasing power not keeping pace with expenses due to inflationary pressures.