September 24, 2003
At the Selectmen's Meeting last night (9/23), it was detailed the extent of a financial error with the town's FY04 budget. Essentially, about $812k in revenue was counted twice. Combined with some actual receipts being less than initially planned, the town is out of balance by $896,372.
For perspective, if Bridgewater voted to fund $1M in a Prop 2 1/2 Operational Budget Over-ride, this would increase the annual tax cost for a $300k house by about $150 in year 1. Year 2 would cost $158, year 3 would be $166... By the way, the scheduled tax rate will be increasing from $10.99/k to $11.34/k, already increasing the annual tax bill by $105 with the upcoming tax cycle.
Another option being discussed is utilizing a Pension Holiday. Approximately $493k could be deferred. The State is still working out all of the details on the plan, but basically the town can skip a payment, and spread the payment over the next 25 years at 8.5% interest. At that interest rate, 25 annual payments of $48k would be required, with about $700k in interest costs.
Some have questioned the 'real difference' between finding out now, and knowing back in June. First off, from a technical side, since we as a town our out of balance we cannot set a tax rate. This will probably mean that tax bills will be late going out. Therefore, since payments will not arrive as expected, the town will probably be forced to borrow money (at a cost), to continue town operations. Second, it will be a practical impossibility to implement too many financial changes to make up this difference prior to January 1st (based on a Town Meeting on November 10th). Therefore, any reductions will be magnified by a factor of two. For illustrative purposes, back in June if Bridgewater voted to reduce the Fire Dept by $50k, one person would have been laid off. In order to save $50k now, two employees would need to be laid off.. This is because the savings is only one-half a year of salary per person.
Therefore, this mistake is major because it will cause twice as many cuts, or solutions that are twice as severe.
Keep in mind that none of the school project costs have been added to your annual tax bill yet. Many believe that these costs will exceed $1000 per year for several years about 7-12 years after construction begins. The Accountant on the Bridgewater School Building Committee estimated the costs for construction (not including purchase of Pawlowski Farm) will average $333.48 per year. No matter whose calculations you rely on, it is clear that there will be substantial tax increases in the future - that have already been committed to.
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