Dunstable's Dilemma

This year, we're all caught between a rock and a hard place. If our property taxes increase much more, the tax will exceed what many families (not just seniors) can afford. That's the rock. The hard place is knowing that the consequence of not approving an increase will result in some rather drastic cuts in services that we depend on for the well-being of the community. How did this happen?

For one thing, it hasn't happened overnight. Over the past 10 years, three things have been going on that have put us in this position: rapid growth of the community, double-digit rate increases, and state funding that has failed to keep pace with those increases.

Growth has added new expenses

Our community has grown a lot in 10 years. As a result, taxpayers have had to pay for some significant expansion of our municipal infrastructure. In that time period, we have partially financed the construction of a new high school, expansion of the middle school, and construction of the library. We have also carried the full burden of renovating the town hall, converting the old post office into a police station, buying a highway garage, constructing Larter Field, and buying some land on River Street, partly in anticipation of future municipal expansion. Even after several years of declining interest, payments on those debts still account for roughly 15% of our tax bill.

During that same time period, the increased population has made it necessary for both the town and the school district to add new staff or increase hours for existing staff to provide increased support for almost 1000 new residents. The taxes paid by the new residents, otherwise known as "new growth" in revenue lingo, are usually not enough to cover the increased expenses that are associated with that new growth. (The good news is that our hard-working town officials have managed to slow the growth. So, we can hopefully pay down some of our loans before we have to pay for any new infrastructure.)

Many expenses increase more than 2-1/2% each year

Whoever said "The only have to's in life are death and taxes," wasn't responsible for a municipal budget. The town and schools pretty much have to pay for health insurance, retirement benefits, electricity, heating oil and gas, gasoline for cruisers and buses, road salt and sand. When these non-discretionary expenses go up at double-digit rates, while revenue increases are limited to 2-1/2% , it puts some real strain on the rest of the budget. The money has to come from somewhere. We have deferred maintenance and denied increases that have been justified for years. Lately, we've been dipping into our savings accounts. These sorts of measures may work for a year or two, but we've been in this mode of operation for 5-6 years now. Eventually, the expenses we've been putting off become have-tos.

The result of all this growth and double-digit rate increases is that our expense budget has doubled since 1997.

State funding levels haven't kept pace with expense increases

To cover expenses, our two main sources of revenue are property taxes and state aid, which largely comes from state income taxes. The two graphs below show the historical trend of state funding allocations to communities and regional school districts state-wide, and to Dunstable and GDRSD specifically. It's not a coincidence that we have had to put override questions on the ballot whenever the state funding levels have leveled off.

The 1990-1992 flat spot was short enough for us to weather the cutbacks by tightening our belts for few years. Still, we saw some override questions on the ballots in those years. The more recent level period (2002-present) has been harder to weather. Schools are hit particularly hard by these cutbacks, because the state funding represents a larger percentage of the school revenue. We have seen a year or two when some additional funding has come through, usually in July, after our budgets are set. But in general, we are not that much farther ahead in state funding than we were in 2002.

There's a limit to how many years we can compensate for a revenue shortfall by trimming expenses, living without things we need, and dipping into our savings accounts. These overrides are on the ballot this year, because we've run out of room for adjustments and our savings accounts are drained.

We expected to get some relief from the Patrick administration, and apparently 2/3 of the towns in the state have received a significant increase in state aid. Unfortunately, we are not in that group. The increases this year for both our town and our school district are negligible compared to past years, and compared to what we need. This is because the Department of Education has recently adopted a new formula for calculating how state aid is allocated (Chapter 70 funding) that takes median income into account. The new formula shifts even more of the expense burden onto property taxes, which is a hardship on those who earn less than the median income. Dunstable is considered a relatively "wealthy" town, so the end result is that we get less state aid, and will probably continue to do so, until they change the formula. (Please read Sarah Campbell's letter to learn how you can lobby to get the Chapter 70 formula changed. )

Unfortunately, there's very little we can do to change the situation we're in right now. We still have to choose between living with some rather drastic cuts to our present level of municipal services or supporting a property tax increase. (Supporting both town and school overrides would add about $522 to the average annual tax bill ($130/quarterly) for a home valued at $400,000.)

We are truly caught between a rock and a hard place.