Tussling With Proposition 2 1/2
The news in the 1980 Sudbury Town Report was both good and bad. The Selectmen proudly announced a $1.50 reduction in the tax rate, and, in the same breath, predicted a bleak financial year ahead. Sudbury’s tax rate had risen only 2.2 percent in the last seven years, they pointed out, but what impact the tax-limiting referendum called “Proposition 2 1/2,” scheduled to appear on the November general election ballot, would have on Sudbury’s tax rate was anybody’s guess.
Two and one half’s premise seemed simple enough. It limited cities and towns to a two and one half percent increase in the tax levy over the previous year, forcing them to live within their means. But in a town like Sudbury with nearly 2,500 children enrolled in grades K through eight, it could mean Draconian cutbacks.
There were some in town who blamed the schools for the advent of 2 1/2. Since they were exempt from Town Meeting budget cutting, school administrators had become arrogant, and passing the Proposition seemed to be a good way to cut them down to size, even if it meant that other Town departments would have to take a hit as well.
The Selectmen projected deficits of $400,000, but noted that the Town’s cash position was healthy and might balance out deficits for the coming fiscal year. They further cautioned that approaching Annual Town Meeting with a four percent tax cap when inflation was running at 14 percent was not healthy.
“Our main focus for next year is to maintain a stable tax rate,” said Selectmen Chairman Robert Hotch. “But the job isn’t going to be easy. We have been able to hold our house together financially so to speak but the state continues to make our job harder and harder.
“We were promised $5 million in new state local aid and only $166,000 was distributed. We were promised state takeover of County court costs and $13-$18 million is being assessed to cities and towns for courthouse rental fees. We were promised a certain amount on the cherry sheet…$55,000 short!”
The first of many jolts came early. The Finance Committee was shocked by the near $1 million impact that the Lincoln Sudbury Regional High School assessment would have on Sudbury even though the school budget rose only by 3.9 percent. Part of the problem was an over-estimation of state aid for L-S. Even with a $243,000 cut mandated by the Finance Committee, school budgets were expected to impact the tax rate by $6 per thousand.
The cut was never made. The L-S School Committee voted a final budget of $5,879,901, an increase of 7.2 percent and nearly a million dollars over the previous year. Teachers lobbied for raises, saying there were no fat salaries. Committee member Alan Grathwohl noted that L-S had programs that were the envy of many small colleges. Four tenured teachers were dropped because of falling enrollment.
After a dip in state aid raised Sudbury taxes 58 cents a thousand and Fincom Chairman Joseph Slomski predicted that Special Town Meeting appropriations of $168,000 would raise the tax rate to $63.38, Executive Secretary Richard “Ed” Thompson organized a series of meetings between the Selectmen and other Town boards to set some priorities for the challenge ahead.
Early in this process, former Fincom chairman Ed Glazer was commissioned to prepare a report on the potential impact of Proposition 2 1/2. What he discovered wasn’t encouraging. If there were no local override and no alternative sources of funding were forthcoming, the Town would have to reduce its spending by a whopping $1,570,000, a tad over 11 percent. Experts predicted that it would be impossible to cut the budget that severely without impacting town services. If the referendum passed, the 1981 Annual Town Meeting would be saddled with making the cuts.
“If 2 1/2 passes it will mean that towns such as Sudbury will have to depend more on state revenues to support local expenditures,” said Glazer. “At Town meeting we will have a limit on the amount of property taxes that can be raised.
“Quite frankly, no one knows what the Massachusetts Legislature will do if 2 1/2 passes, either in terms of amending Proposition 2 1/2 or providing alternative sources of funding for local communities.
“As a former member of the Finance Committee, as a taxpayer of Sudbury and as a user of Town services, I am concerned about the potential impact of Proposition 2 1/2 on the Town’s ability to continue to provide the kind and level of services that many of its citizens desire.
“I am equally concerned that passage of Proposition 2 1/2 will potentially interfere with the workings of Town Meeting and inhibit the town’s ability to make intelligent decisions with respect to the financial issues facing Sudbury.”
After the referendum passed by a substantial margin, town departments met again to pinpoint possible cuts. A hypothetical budget prepared by the School Committee predicted that schools would be cut nearly a million dollars. Teachers advocated bussing cuts to save dollars and jobs.
The Selectmen detailed department cuts under 2 1/2: five police officers, no cruiser replacements, patrols drastically reduced, and four firefighters/EMTs laid off. The North Sudbury firehouse would be for housing of vehicles only. Ambulance replacement would be deferred. The schools might lose as many as 28 teachers.
“What about next year? Our most important job will be to take a leadership role in determining the allocation of scarce local resources,” concluded Ann Donald, the town’s first female selectman. “In making this determination, the town government, including all schools, must be considered as a whole unit which cannot remain healthy or viable if one of its parts is weakened or destroyed.
“Sudbury’s town government runs very efficiently. We have amalgamated, centralized, studied cost benefits, made innovations…and we must continue to do more…but there is very little latitude after last year’s 2 1/2 cuts to do much more budget cutting. We want to and we believe we can maintain current levels of services while giving appropriate cost-of-living salary increases. To do otherwise will have long-range effects that will be to the detriment of the town. It will be a difficult chore, but challenging, and we are dedicated to accomplishing the task.”
The selectmen were as good as their word, and thanks to new construction money that was exempt from the Proposition 2 1/2 levy, the Town struggled through 1981 only to face another challenge early the following year. Thanks to a delay in the establishment of property valuation figures, the Town was unable to budget or appropriate funds up to the maximum allowed under Proposition 2 1/2. This meant the Town’s tax levying capability for 1982 would be limited to one percent instead of two and one half percent. This translated into shortfalls in fiscal 1984 and ’85 of $350,000 and $600,000 respectively.
Again the Town was saved by the bell in the form of a windfall in state aid that allowed employees to receive a fair wage and goods and services to be delivered, but Sudbury wasn’t out of the woods yet. The reduced tax levy left Sudbury $300,000 under its maximum assessment. If this was not corrected, the Finance Committee warned, it would undermine the Town’s ability to raise needed funds in future years.
For the second year in a row a windfall of $408,000 in local state aid and a one-time $185,800 MBTA abatement saved the day, but presented a problem as well. If the excess monies were used to cut real estate taxes, the Town’s tax-levying capability under Proposition 2 1/2 would again be reduced.
So the Town found itself in the strange position of calling a Special Town Meeting in October to find a way to keep from reducing taxes.
The dilemma was this: if the Town used the increased state aid to lower taxes, the total tax levy–the amount collected in taxes–would also fall below the $12.2 million dollar limit allowed by Proposition 2 1/2. The following year, under the requirements of Proposition 2 1/2 the Town could increase its levy by no more than 2.5 percent of this year’s levy.
“Any significant reduction below this year’s limit would automatically reduce the levy limits in future years,” explained Finance Committee Chairman James Pitt. “If the levy limit is thus reduced, and unless free cash is available, jobs and services will have to be eliminated to balance the budget.”
Pitt pointed out that several options were available: 1. The funds could be used for requests facing Town Meeting. 2. Establishment of a stabilization fund or reduce the amount of free cash to be applied to town expenditures. He noted that the stabilization fund article on the warrant would allow Town Meeting the option of putting aside extra revenue to be re-appropriated in later years when the Town’s financial situation might not be as sound.
The voters at Town Meeting chose a combination of the two, approving plans to demolish or renovate Fairbank School, renovations of the town offices and the resurfacing of several roads as well as establishing a stabilization fund “bank” to deal with unanticipated local state aid and MBTA abatements. The appropriation of $293,654 from the Town’s free cash account to offset the tax rate, already approved by the Annual Town Meeting, was allowed to stand.
Again, the solution was a temporary one. By May of 1983, Thompson told the Selectmen that the Town was already $3.9 million in the hole and would most likely have to borrow again. The Town was already paying $50 a day in interest. Two months later, that situation changed when the Town learned it would receive more State aid for fiscal year 1984 than expected. Once again the Finance Committee had to figure out a way to cook the books or face lower potential for tax revenue in coming years.
When all the numbers were added up, the Town’s previously determined tax levy was found to be $443,438 under what it was entitled to under Proposition 2 1/2. If the levy was not brought up to the limit this year, it would be further restricted in future years.
Thompson calculated that $466,123 would be needed in free cash to cover the Town’s expenses. Cherry Sheet figures revealed that Sudbury would be receiving $414,484 more than had been estimated and that the free cash commitment was now too high. The new money pushed the tax levy down to $12,286,254 or $443,438 below the 2 1/2 levy limit.
A Special Town Meeting in October quickly solved the problem, appropriating monies for repairs, town services, unpaid bills and debt service as well as tax relief for the blind and elderly.
“The state of the town is excellent!” reported the Selectmen in 1985. “The level of funding voted at the April Town Meeting and October Special Town Meeting will maintain essential services without creating any real hardships. Two major reasons we’ve been able to live within Prop 2 1/2 are: 1. Prudent use of free cash and 2. New construction ($8 million of commercial and $23 million of residential). The Town is able to maintain the posture we have in both schools and town government because of wise use of Town funds and planning ahead.”
New construction and rising property values kept the Town humming in 1985 and ’86 despite fears of the elimination of federal revenue sharing programs which were worth #130,000 to Sudbury in fiscal year 1986. Property values had risen 30 percent from the previous evaluation in 1976. Houses now averaged over $175,000 and land $75,000 an acre. The tax rate, currently $22.06 for residents and $36.55 for commercial and businesses, was expected to drop significantly.
The euphoria continued well into 1988. “Other cities and towns would be envious of our financial position,” chortled the Selectmen. “A good feeling was running rampant in our community… one of togetherness. Much was accomplished with citizen involvement as it should be, and the town government contributed its resources as requested…hopefully we can keep up the momentum.”
Money was coming in from all directions. Taxes on new construction that took place in 1985 added $590,000 to the amount the town could spend in 1986. Cherry Sheet aid and an insurance rebate yielded a $150,000 windfall in ’86, allowing the Finance Committee to restore $143,000 to department budgets. Late in 1987 the Assessors announced that $39,865,694 had been added to the tax base through real estate and personal property tax valuations.
But early in 1988 there were signs that the good times were ending. Construction–especially commercial construction–was tapering off and the Town’s birth rate had increased 50 percent since 1977. The handwriting was on the wall; more classroom space was needed in a hurry. There was only one problem: No state reimbursement money for new school construction would be available in the near future. If the Town wanted a new school, it was on its own.
Superintendent of Schools Dr. David Jackson had more in mind than just a new school. He shocked the Finance Committee early in 1988 with a 16.8 percent increase in the school budget. Sixty percent of the hike would cover increased enrollment and the other 40 percent was for enhancement. Jackson planned to hire six new teachers for enrollment and 4.2 more teachers to implement planned new programs.
Jackson fretted that Curtis Middle School had one teacher per 23.9 students while Wayland and Weston had 20 pupils per teacher. Of 19 communities surveyed, he pointed out, Sudbury paid less per pupil than 12. Sudbury’s cost per pupil was $3,801 as against $5,441 for Lincoln, the most expensive. Jackson also asked for $500,000 for maintenance projects, which had been delayed for several years.
The request met with mixed reviews. “I don’t care what it costs,” said one mother in a letter to the Town Crier. “Do Prop 2 1/2 now before everything falls apart.”
The Finance Committee noted that if all School Committee requests were met, police officers would have to be pulled off the street, and Chairman David Wilson warned that the 1989 budget was headed for an override vote unless $1.8 million was cut.
But something had to be done. Enrollment projections showed that between 70 and 100 new students a year would be entering the system for the next six years, reflecting a 50 percent increase in Sudbury’s birth rate since 1977. The School Committee proposed an $11 million program to create three K-5 elementary schools using the Haynes, Noyes and Nixon buildings and adding from 24,400 to 37,500 square feet of new classroom space.
Architectural services to design the new additions and renovations were projected at $750,000, a sum that would increase the tax levy beyond the limits of Proposition 2 1/2. It appeared that the Town’s will would be tested by referendum for the first time.
As it turned out, three referendum questions were considered but never faced voters in 1988. A $1 million senior center behind Goodnow Library, $750,000 in architect’s fees for the new school proposal, and $40,000 for renovations at L-S, which had already been approved by Town Meeting and completed. Fincom Chairman Wilson explained that exempting that $40,000 from 2 1/2 would free up a like amount which could be used in the Town’s operating budget the following year.
The $750,000 in architects fees for the renovations and additions to Nixon School were finally approved by a Special Town Meeting, April 4, 1988, and the town appropriated $15,000 to plan the expansion of Fairbank School into a Senior Center.
Meanwhile the School Committee laid plans to look for an extra $323,000 on the Town Meeting floor, either from another department or a Proposition 2 1/2 override. The Finance Committee had recommended a K-8 budget of $6,789,446, in itself a 13.6 percent raise over the previous year. The Committee’s efforts were unsuccessful. Town Meeting approved an $8,367,086 budget which included debt.
The rumblings of upcoming disaster in 1989 continued through the summer. Superintendent of Schools Jackson sought a preliminary 8 1/2 to 13 percent increase in the school budget which eventually ballooned to a 22 percent increase or $10,199,820.
Something was going to happen, but no one in Sudbury had any idea just what.
Editor’s Note: This is an excerpt from Sudbury, 1890-1989, 100 years in the life of a Town, a 256-page sequel to A.S. Hudson’s History of Sudbury. Autographed copies are available from Porcupine Enterprises, 106 Woodside Road, Sudbury, MA 01776. Hardbound presentation copies are $26.25 including tax plus $3.20 postage. Trade paperbacks are $12.60 including tax plus $3.20 postage.