Town Administrator Nick Connors announced that the town is proposing a 7.7% increase in the operating budget, or $3.2 million, in the first draft of the fiscal 2027 budget. The school budget is proposed to rise by 3.96%, or about $1.35 million.

The budget reflects the cost of operating the town but also notes revenue from state aid (an increase of 2.38%), property taxes, motor vehicle excise taxes, licenses and permits. The budget balances short- and long-term views of the town’s financial condition while managing risks and evaluating staffing models and vacancies. Connors said the proposal also takes taxpayer and organizational impacts into account.

“The budget was developed consistent with the direction that we had discussed last fall to use conservative revenue estimates per the fiscal policy and use levy capacity where needed rather than rely on aggressive assumptions,” Connors said. 

The increase in the school budget represents 33.7% of the overall budget increase, and the increase to town departments equates to 27.7% of the increase. 

The recommended budget reduces general fund staffing by 1.5 full-time equivalent positions, resulting in about $82,000 in savings, Connors said. Personnel adjustments — driven by the police bargaining agreement, staffing changes and public safety overtime — are about $693,000.

The personnel adjustments are estimated to cost the average homeowner about $153 annually. Taxpayers can also expect an increase to residential property tax rates by $0.87 per thousand, to $12.87. A home valued at $956,516 would see an annual tax increase of about $849, including the CPA surcharge.

Commercial and industrial property tax rates are estimated to increase by $1.62 per thousand, to $23.77.

“I want to be clear this is an estimate and will change,” Connors said about the tax rates. “It’s based on the FY 26 certified values and will be refined once the final budget is adopted and the tax rate is set in December.”

The increase in administration and finance is driven by property and casualty insurance; town counsel; information technology; staffing changes; police and fire exams; election expenses and poll workers; salary reserve; and end-of-employment costs for town and school staff.

“That’s consistent with market trends,” Connors said. “It covers the full package.”

The town, however, is looking to save money in the community and economic development part of the budget, with the full-time public health nurse role transitioning to a contract nurse position. 

Connors said he did not want to “give a rosy picture of where we may not end up.” He presented that the “single largest pressure” is health insurance, with a budgeted 14.5% increase, or about $1.18 million. Health insurance represents 29.5% of the increase to the budget.

“I do anticipate that it will come down,” Connors said. “To plan conservatively, Patrick (Luddy) and I didn’t want to be in a situation where it ended up being on the higher end and we told you something tonight that was not reflective of what we could accurately forecast or that we would be coming back in a few weeks saying there is a crushing number coming from GIC (Group Insurance Commission). We see this as an opportunity to dial back down, reduce excess levy use or allow for any other changes that may develop over time.” 

The proposed budget fully funds the town’s pension liabilities in accordance with the funding schedule approved by the Public Employee Retirement Administration Commission (PERAC) and voted on by the Retirement Board, according to Connors.

The Solid Waste budget has been increased “to a holding number of 15% in anticipation of additional contract costs,” Connors said. This represents 6% of the increase to the budget.

“Our current contract is up for renewal and neighboring cities have seen significant increases, so again something where we want to try to reflect as best as we can where we think we may end up, with a hope and anticipation that we’ll do everything we can to lower that number as we move closer to the final budget that goes before Town Meeting,” Connors said.  

The capital improvement program is consistent with the town’s policy to fund capital at approximately 10% of the operating budget, Connors said. The debt and service increases by about 2% from the 2026 fiscal year.

Connors started his presentation Monday by noting that the current form of the budget proposes to use $2.8 million of excess levy capacity to balance the budget to meet fiscal policy.

The proposed use of $2.8 million would leave about $1.6 million in the excess levy capacity, which is the difference between the maximum amount of property tax a municipality is allowed to raise under legal limits and the amount actually levied. The money represents potential tax revenue that a community chooses not to collect, serving as a financial cushion or potential future revenue.

The Select Board looked at projections for town projects – from Pine Street to Hadley and Hawthorne – and how different expenses, as well as later income, will be affected by a lower excess levy with a potential need for an override in the future. They also noted the impact of overtime and rising costs such as health insurance.

Finance Director Patrick Luddy was asked to present additional scenarios that could reduce the tax increase.

“This is not something that only Swampscott is struggling with,” Connors said. “It’s the big obligations that everyone is responsible for, and whether it’s Danvers or Marblehead or Lynnfield or Manchester and Nahant, everyone is in a situation right now where it’s not just this year. There’s a valley that everyone is trying to navigate. What you all have done over time to get to today is giving us more options right now and gives us a little bit more time and gives us the ability to have some of these hard discussions that you’re talking about…We have more flexibility than other communities do certainly this year, even into future years.”