While only December, work on the upcoming budgets for Fiscal Year 2026, which begins July 2025 and goes through June 2026, is well underway. Voters will review and approve these budgets at the Annual Town Meeting on the fourth Monday in April. The School Committee presented their preliminary budget on Wednesday, December 11. The Town’s preliminary budget will be presented at a joint meeting of the Select Board and the Finance Committee on Monday, December 16. Check the Select Board’s agenda for the expected time.
The last few years have seen a return of inflationary pressures. While these pressures have eased lately, municipal budgets tend to lag behind and we find ourselves often trying to catch up to new costs. This is partly due to the long lead time between crafting proposed budgets and when the budgets are in play.
We are planning for expenditures now that will not be happening for up to 18 months from now. Getting these projections right is always a challenge.
A major factor facing both school and town budgets is the return of double-digit cost increases to health insurance. Medicare supplemental plans for retirees will increase 20 percent this January. While we are hoping increases in active employee plans will be lower starting in July, they are projected to be at least 10 percent higher. This increase, coupled with contractual commitments to modest wage increases, puts the combined new Town and School budgets above the amount of revenue we can raise within the cap of Proposition 2 ½. In other words, taxes will likely have to increase by more than 2 .5 percent to continue to provide the same level of services as are provided currently.
The challenge is particularly acute for the School District. School operations are more “people intensive” with pay and benefits making up the lion’s share of total costs. Any significant cost savings are found through managing staff head count, but staff deliver the programming residents’ desire.
Making the District’s budgeting process even more challenging is the student enrollment shift which requires Essex’s share of the total budget to grow. The reverse was true a while back but not quite as dramatic. Working through these challenges and still planning for a new Essex Elementary School in the next few years will require a great deal of effort and dialogue between the two communities.
For town operations, we are in a better position with more options for efficiencies and cost savings. The proposed preliminary budgets for operating and capital expenses will require a 1.8% percent tax increase for next year (assuming a typical increase to the School District’s budget not the expected higher increase). We are able to take advantage of shifting dollars from higher-than-normal capital expenditures this current year toward operating expenses next year which is helping to keep the increase lower than normal. Most all departments are proposing a “status-quo” budget keeping services and staffing at current levels.
The biggest challenge for the Town will be financing expensive facility needs and climate resiliency projects over the coming decades.
There is the Essex Elementary School already mentioned plus the need for a new DPW garage, upgrades to our water plants to remove PFAS, continued replacement of 100+year old water pipes and old sewer pipes that let in too much rainwater, a public safety complex that is out of the flood zone, etc.
Work is underway on a schedule that gets these projects done in a systematic way while trying not to overburden taxpayers.
Department leaders have worked hard to develop their proposed budgets for next year and beyond with capital needs. But much work remains on both the Town’s and School District’s budgets.
Between now and the end of March, the Finance Committee and the Select Board will scrutinize these proposals to come up with a final recommended budget for voters to consider at the Annual Town Meeting.
Public input during this time is welcome, starting at the meeting coming up on December 16.
