Healthcare Costs and Revenue Loss Could Cost Jobs

A $1.5 million budget deficit, created by healthcare costs and perpetuated by lost revenue from the anticipated Meadow Walk project, has created so tenuous a budget crisis that 50 town employees could face layoffs the selectmen determined last night.

Healthcare, Snow Removal Costs Hit Budget

Healthcare costs increased by 16.6 percent, or just over $900 thousand this past fiscal year.

The cost of snow removal went $400,000 over budget as the result of an unusually harsh winter and state local aid remained 20 percent below the 2009 level.

Twenty-nine teachers and other professional school personnel; nine Department of Public Works people; no more new hires for police and the fire department, one person from the senior center, and one professional librarian could lose their jobs, Town Administrator William J. Gustus said.

To balance the budget, the selectmen’s proposed budget would ask for a number of changes.

They would begin with $750,000 in cost shared health insurance fees; $225,000 in non-statutory school bus fees; a meals tax that allows residents to pay less and non-residents more that would raise $125 thousand; another $50 thousand in fees and a homeowner trash fee that would collect $350 thousand.

Level Services Budget Still Leaves Deficit

Select chair Al Merritt noted that the selectmen have prepared a level services budget that would," normally keep us in stable state," he said.

"However," Merritt said reading from his notes, the "level services budget produces (a) $1.5 million budget deficit."

Vice chairman Arthur Bourque spoke out against the trash fee, when he said, "We get very few services. We shouldn’t have to give up our trash collection."

Bourque agreed that the town needs to take more control of employee healthcare costs. "Times have changed," Bourque pointed out. "Our employees need to participate, more," he said.

Bourque pointed out that state aid to the town decreased by $1 million since the governor’s election. Bourque suggested that the unions ask the governor to increase the state aid.

Paying More For Health Care All Around

Chairman Merritt concurred on that issue. "The days of the five dollar and fifteen dollar co-pays are over. We need to realize that everyone will have to pay more for their care," Mr. Merritt said.

With a very precise explanation of how the town has come to this crisis Gustus explained that, "There aren’t too many other places we can cut other than personnel."

Final Decisions To Come At Town Meeting

Unless the town can agree at Town Meeting to the proposed budget and the cuts therein, the town could lose 50 employees.

Gustus explained that the town has weathered several tough years because it had put into a reserve account the revenue earned from the initial cash paid by contract to Lynnfield from National Development to begin the Meadow Walk project.

Over the past almost three years, costs have risen as the reserves declined, Gustus explained.

"A few years ago, the town received $600,000 from the federal government in stimulus funds to stabilize the schools," Mr. Gustus said.

Gustus explained that the town’s commitment to the laid off employees does not end when they are removed from the town’s payroll.

"We still have a commitment to them. We have to pay their unemployment for the first 26 weeks before the federal system kicks in," Gustus explained.

The 50 lost jobs would cost Lynnfield about $600,000 in unemployment wages, Gustus told the selectmen.

He explained that when the town signed its agreement with National Development, it foresaw a revenue stream that would keep the budget’s balanced all the way to 2013.

"As the funds came in, we were able to add $1 million a year to our reserves," Gustus explained.

But, when National Development’s project came to a sudden halt in early 2008, yet the town needed to meet its expenses, the reserves began to decline.