Reading is a facing a significant budget problem because costs are rising faster than revenue.
Revenue is not keeping pace with costs due to several structural reasons, including limited commercial growth potential in Reading, limited state aid, and a state law that constrains revenue growth. Property taxes are the largest source of town revenue, and in Massachusetts property taxes can only grow by a small amount each year – 2.5% (plus a small amount for new growth) – according to law.
If this problem is not addressed, the result will be additional reduced staff and services for both the town and schools in fiscal year 2019.
Cost increases have been largely driven by non-discretionary costs, such as health care and unfunded state-mandated education programs (programs and services required by, but not fully funded by, the state).
This revenue problem is not due to financial mismanagement. Town and school leaders have taken many steps over the years to operate more efficiently, including regionalizing services, restructuring programs and positions to fund new programs, using technology and automation to reduce costs, and cutting services that we have not been able to afford. Due to prudent financial management, the town has the best bond rating possible (AAA), which allows the lowest borrowing rates.
The fiscal year 2018 budget (beginning July 1, 2017) was not able to offer level services. This meant reductions in staff and programs on both the town and school sides. The Town Manager and Superintendent of Schools have stated publicly that they have done about all they can short of making deeper cuts. Without a solution, reductions for fiscal year 2019 will be greater.
The solution to the problem is called an “override”. An override is a voter-approved property tax increase greater than the 2.5% normally allowed annually. Overrides pass regularly in Massachusetts , especially in communities with a residential tax base and lots of students. A rule of thumb is that such communities need an override every ten years or so to keep pace with rising costs and it has been fourteen years since the last override passed in Reading.
The Board of Selectmen indicated their intention to vote on an override amount on January 30, 2018 to appear on the April 3, 2018 ballot. If the override is approved by voters, the property tax increase would be implemented for the FY19 budget, which begins in July 2018.
Yes for Reading supports and will advocate for an override because it will prevent further staff and service cuts for both town and schools, and will help maintain the level of service the community wants and needs to keep Reading a desirable place to live.