July 1 deadline: What happens if towns fail to pass local budgets in less than a month?

With less than a month until the July 1 fiscal deadline, coronavirus-related disruptions and delays mean many towns are facing the prospect of failing to pass local budgets in time.

With less than a month until the July 1 fiscal deadline, coronavirus-related disruptions and delays mean many towns are facing the prospect of failing to pass local budgets in time.

“This is the most challenging situation that I’ve been in in almost 30 years in Massachusetts local government because of the continued unknowns,” Hudson Executive Assistant and Chief Fiscal Officer Thomas Moses said.

What’s so important about July 1?

July 1 marks the end of the fiscal year for which towns have the permission of their residents to spend money. Residents must approve spending for the next year during Town Meetings, where dozens and sometimes hundreds of residents must be in the same place to vote.

Without that Town Meeting approval, towns typically don’t have the authority to spend money past July 1.

What’s the problem?

Social distancing requirements meant to slow the spread of COVID-19 have left towns struggling to balance the need to pass a budget with the health of their citizens. Town Meetings scheduled for March, April and May were pushed earlier this year to the end of June, with the hope that the pandemic would have slowed.

If those meetings fail to secure a quorum – the minimum number of residents needed to make votes valid – there is very little time to reschedule before the end of the fiscal year.

“I’m not sure about the willingness of everybody to go out,” Moses said. “We are taking the belt and suspenders approach and simultaneously preparing to request a 1/12 budget.”

What’s the solution? What’s a 1/12th budget?

The state this year will allow cities and towns to submit monthly budgets, spending 1/12th of the money the community approved last year each month, with some allowances for expenses that are paid in lump sums.

Towns can do that until a Town Meeting can convene and approve the new, fiscal year 2021 budget.

Using last year’s budget is cause for concern, because while many communities have severely cut back on planned spending due to coronavirus-driven funding uncertainties, budgets typically go up every year.

“We were looking at one of the larger budget increases” in years, Milford Finance Director Zachary Taylor said of the pre-pandemic plan. “It’s our challenge to unwind that mode of thinking and try to convince people ‘let’s just get into bare bones for now and see how it goes.’”

Funding increases like negotiated raises can’t be frozen without reopening the negotiation process, so at least a few communities are taking the money from existing services, like recreation programs and hours that town offices are available to the public.

Wayland is in a uniquely good a place to use the prior year’s budget, Finance Director Brian Keveny said, because the biggest drivers of budget increases – contracts with salary raises – have yet to be finalized.

“I don’t see any impact to the town,” he said. “Basically, just recycling what you did the same period last year. … It won’t be recognizable.”

Local finance directors say they are largely prepared for the month-to-month scenario, but if too many months pass without a Town Meeting, budgets may get tighter than they already are. That’s when painful cutting and layoffs could occur.

“If the picture seems like it isn’t getting any better, and you’re not going to have a Town Meeting,” Taylor said, “I think you would have to have those difficult talks.”

What are local towns doing?

Towns in the Milford and MetroWest area are taking one of two paths so far.

Some, like Milford, Hudson, and Southborough, still plan to hold Town Meeting on their rescheduled June dates, but have dramatically modified the look and feel of the meetings.

Southborough plans to hold its meeting outside on local athletic fields.

Milford officials haven’t finalized their Town Meeting plan, but are considering holding it in the high school in at least a couple of different rooms, linked by technology and human monitors. The auditorium, which is being looked at as the likely main room of the meeting, only fits 111 people with appropriate social distancing, which does not meet Milford’s quorum.

Others, like Wayland, decided this month to hold Town Meeting after July 1.

Alison Bosma can be reached at 508-634-7582 or abosma@wickedlocal.com. Find her on Twitter at @AlisonBosma.

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