Deficits Loom As Natick Begins 2021 Budget Process

NATICK, MA — Natick is just beginning the next fiscal year's budget process, and the town administrator has proposed spending $161 million, about a $3.4 million increase over the 2020 budget.

As the town shapes the budget ahead of the spring Town Meeting, there will be discussions about financial forecasts showing that revenue will fall short of expenses beginning in fiscal year 2022. Patch spoke to Natick Town Administrator Melissa Malone to review some salient parts of the 2021 budget.

New Spending

The proposed FY 2021 budget does include some new spending. The budget proposes hiring two new police officers at a cost of $134,000 per year to help with traffic enforcement, although they would not be strictly limited to traffic duty.

"We receive a fair amount of concern [from residents] around traffic," Malone said. "With lots of construction and infrastructure anticipated, we're going to need the additional officers."

The budget also proposes hiring two new public works employees to take care of the Cochituate Rail Trail and the new Kennedy Middle School, new part-time teen center mentors, and two new custodians for Kennedy.

Malone is also proposing the creation of a Natick redevelopment authority at a cost of about $200,000 per year. Under state law, redevelopment authorities operate independently of a municipality, and have special legal powers to redevelop underused or blighted properties.

Employee Cost Increase

The town is anticipating an increase in pension costs in 2021 due to a negative investment return in fiscal year 2018. The cost will be almost 8 percent higher in the coming fiscal year. The rate of return has also been lower — the town expected an investment return of about 7.3 percent over five years, but that's now tracking at just under 6 percent.

The town is also expecting employee costs to rise between 1 and 3 percent under various collective bargaining agreements, plus a lower vacancy rate in upcoming fiscal years, according to the budget document.

Projected Deficits

Malone has prepared two different forecasts for fiscal years 2022, 2023, and 2024 — but both models project deficits each year of more than $1.5 million. One forecast has a deficit at more than $11 million in fiscal year 2024 if nothing is done.

The more severe projection — called the "actual forecast" — is based on the town's historical spending, projected future personnel costs, and a lower employee vacancy rate. For revenue, it assumes 2-1/2 percent annual property tax growth of up to $1.2 million per year, state aid growth of up to 3 percent per year, and other revenue — but a decline in other income sources like parking meters.

Under the "actual forecast," Natick would be in the red $1.9 million in 2022, $3.9 million in 2023, and $11.5 million by 2024.

Malone said she will propose future budgets that take into account the deficits, but said it'll be up to voters whether to accept cuts or pass a Proposition 2-1/2 override to raise more money.

"The town will need to determine what services need to be increased and what they want to have, and that's a discussion for the entire community to have," Malone said.

Natick's annual budget process began in early January when Malone released her proposed budget. The budget is now under review in the Natick Finance Committee before heading to Town Meeting this spring for approval.

The town will host a 2021 budget forum at the Natick Community Senior Center on Jan. 22 at 7 p.m. Residents will get a chance to ask questions about the proposal.