January 25, 2023 By Glenn Mangurian
Stew·ard·ship: the careful and responsible management of something entrusted to one’s care
Based on the positive feedback from my Fall 2022 five part stewardship series, I will continue with
relevant essays leading up to the Spring Town Meeting where a budget override will likely be
considered.
For the past several years Hingham town leaders have alerted residents about the need for an operating budget override to support school and municipal services that the community expects. In the fall, a preliminary financial forecast signaled that at least $4.9 million more in revenue may be needed to balance the budget and maintain Level Services. What is an override and why is it needed? While the operating budget process is relatively straightforward, understanding the process can be confusing. Several years ago former Select Board member, Mary Power, created a very informative fifteen part series- Inside Town Finances. I encourage residents to read the concise one-page website posts to be informed and better educated on various town financial topics.
Proposition 2 ½ Explained
Like State government, all cities and towns must submit and approve a balanced budget. Proposition 2 ½ is a Massachusetts law enacted in 1980 that places limits on the amount of tax revenue a community can raise through real and personal property taxes. Under Proposition 2 ½, a community’s tax levy limit increases automatically by two factors: 1) an incremental increase of 2.5% of the prior year’s levy limit (hence the law’s nickname); and 2) a dollar amount derived from the value of new construction and other growth in the local tax base since the previous year. If an operating budget is recommended that is outside the Proposition 2 ½ constraints, an override that will increase property taxes must be approved by residents by a majority vote by its governance – for Hingham, both at Town Meeting and on a Town Election ballot.
Operating Budget Process Overview
The overall Hingham Budget process consists of nine steps starting in October prior to the start of the town’s next fiscal year (July 1-June 30) and culminating with the residents’ votes at the Spring Town Meeting and town election. Here is a summary of the operating budget nine-step process:
1. October-December: School and Municipal departments assess their needs. Each school and municipal department reviews its current needs including the deferred/unmet needs from previous years and starts to develop operating budget requests.
2. Early December: Town leaders prepare a preliminary revenue Forecast for the following fiscal
year. The Forecast Group, which consists of Select Board, School Committee, Advisory
Committee (AdCom) leadership and Town and School administration, meets to discuss revenue
trends and projections for the upcoming fiscal year. This is a challenging task in that the group is
estimating future revenue growth months in advance. The preliminary Forecast is refined as the
budget process evolves. Ultimately, it becomes the baseline for the balanced budget presented
to Town Meeting and the need, if necessary, for a Proposition 2 ½ override.
3. December-January: The School Superintendent and Town Administrator prioritize their needs
and make their budget requests to their respective review bodies.
The School Superintendent and Town Administrator with their finance directors, cognizant of
the preliminary Forecast, prioritize their operating service needs into a budget request and
determine which unmet needs they choose to defer for future year(s). Multiple budgets are
prepared for reference:
- First, a Balanced Budget that is within the Proposition 2 ½% constraints. This Balanced
Budget would also highlight the reduction in expenses, personnel and service levels
consequential to achieve the Balanced Budget. - Second, a Level Services Budget that maintains current service levels adjusted for
expense growth from the previous year to sustain those Level Services. - Third, other budgets may be developed to include additional requests aligned with Town strategic goals.
The Superintendent and Town Administrator prepare a financial and narrative presentation for
their review bodies to support their budget requests.
4. January–February: School Committee and Select Board review the requests and determine
which budget level to approve and forward to AdCom. The two review/approval bodies hear and review the budget requests as well as understand implications of a Balanced Budget and Level Services budgets. The review/approval bodies also consider what needs are being deferred. The School Committee and Select Board determine what budget level they will approve and forward it to the AdCom. All Select Board and School Committee review meetings are open to the residents to attend in person or via Zoom.
5. January-March: AdCom reviews the approved budget, determines whether an override is
needed to balance the budget, and then makes its independent recommendation for Town
Meeting consideration. The 15-member AdCom has the responsibility to review and recommend to Town Meeting the overall Town of Hingham Budget for the next fiscal year. If the committee recommendation is higher than the Forecast level, AdCom must determine how the town should balance the budget. That decision could consider the use of one-time funds (for example, one-time funds from the Federal government or from the town’s unassigned fund balance or “rainy day fund”). Alternatively, AdCom could recommend an operating override to exceed the normal Proposition 2 ½% constraints. An override would raise money through a permanent property tax increase. All AdCom review meetings are open to the residents to attend in person or via Zoom.
6. March-April: Residents read AdCom’s operating budget recommendation in the Town Meeting
Warrant. AdCom publishes its recommendation and rationale in the Town Meeting Warrant, which is sent to all town residents in early April.
7. April: Public forums and information sessions are scheduled. Town leaders (AdCom, Select Board, and School Committee, along with Town Administrator and School Superintendent) hold open public information sessions to help residents better understand AdCom’s budget recommendations for the coming fiscal year.
8. April (tentatively scheduled for 4/24): Residents attend Hingham’s annual Open Town
Meeting and vote on Town Budget. Town Meeting is the legislative body of the Town that votes to approve the Town Budget.
9. April-May (tentatively scheduled for 4/29): Residents vote in the town election.
In years where an operational override is being considered, residents vote at the ballot during
the town election held on the Saturday after Town Meeting to approve the budget.
The Hingham Budget Process is currently in step 4 reviews. Those reviews will adjust the override
estimate as needed to balance the budget to maintain Level Services, reduce town services, or expandtown services. These meetings are open for residents to attend in person or via Zoom. The time, place and Zoom information is available on the town website or by calling the School Department (781-741-1500) or Town Administrator office (781-741-1451). Also, please visit Hingham new “Override Webpage”, which will be updated with additional information throughout the process.
I am glad that Hingham has a business development program. For many students, it may be the most important class they take. I am hopeful that the override doesn’t affect this important piece of high school education.