Swampscott’s 2027 fiscal year budget has been set at $87,041,794, but Finance Chair Eric Hartmann warned that the town’s financial “flexibility is limited” as Swampscott is “not immune to the economic pressures of today.”

“This was again a very challenging budgeting season but also a very collaborative one,” Hartmann said. “The cost to operate the town is growing at a rate that exceeds our revenue growth, and while we have several projects…that promise the opportunity for future revenue increases, they’re not online today, so we need to find a way to balance our budget using whatever means we have available to us until we can get some of those projects underway, producing additional revenues for the town.”

Town Meeting Members approved a balanced, level-service budget for the 2027 fiscal year. Town and school services will remain unchanged, though the budget reduces one-and-a-half full-time positions on the town side and one full-time position on the school side.

The original budget proposal relied on about $2.6 million in excess levy capacity, or unused taxing authority from previous years, according to Hartmann. That figure was reduced by about $1 million in the months leading up to Town Meeting, with contributions from both the town and the school.

“The Finance Committee supports the budget before you tonight, but we also want to be clear that excess levy capacity is not a permanent solution,” Hartmann said. “It gives the town flexibility but it does not eliminate the need to address the structural issues that we have in our budget, where recurring revenues are not meeting the recurring expenses that the town incurs.”

The 2026 fiscal year budget used about $2.6 million of excess levy capacity. 

“That past fiscal discipline has served the town well,” Hartmann said. “It’s given us more flexibility than many other towns and communities that I’m sure you’re probably hearing about in the newspaper.”

The town did not have to approve a Proposition 2 1⁄2 override this year, meaning it stayed within the state-imposed limit on how much revenue it can raise through property taxes. A Proposition 2½ override would permanently increase the town’s levy limit.

That said, the 2027 fiscal year budget does rely on taxing above the “typical 2.5% plus new growth,” Hartmann said. 

“We wouldn’t be able to do that if we didn’t have the excess levy capacity,” Hartmann said. “The distinction is it really doesn’t matter to the taxpayer. The taxpayer is still being asked to pay more than they’d normally under Prop 2 ½. The good news is we didn’t pay it in previous years because we taxed under, but now the time is coming when we have to ask for those funds.”

The town’s finance staff conducted a five-year forecast, suggesting that the town will need additional levy capacity in both the 2028 and 2029 fiscal years. 

“We recognize there’s uncertainty, especially after the first year, but the forecast was put together using assertive revenue forecasts and reasonable increases in our operating expenses,” Hartmann said. “If the forecast is right and we don’t have anything different, I’ll be standing here next year and the year after saying ‘by the way we need to use some more excess levy capacity.’”

Hartmann said the town’s excess levy capacity could be exhausted within the next two fiscal years, and the forecast currently predicts the town will need an additional $500,000 override for the 2029 fiscal year, Hartmann said. 

“It’s not a rosy forecast but it’s also not an immediate fiscal cliff,” Hartmann said. “The revenue assumptions that we’re using in the forecast assume flat state aid, so no increases in state aid. It’s a conservative assumption to be calling for no increases in state aid. It also does not include all of the revenue that may come from some of those developments in Vinnin Square or the hotel, also very conservative. If these revenues do materialize in the future, then the outlook could be better.”

Hartmann also noted that the Finance Committee wants the town to “act now” on opportunities like re-evaluating the financial impact of staying on state health insurance, understanding the long-term budgeting impacts of the collective bargaining agreements, considering targeted user fees for commodities like parking and residential trash pick-up, evaluating regionalization opportunities and supporting development opportunities that can expand the tax revenue base.

“These are not simple decisions, and none of them will solve the problem individually, but taken together, they’re the type of actions that could help reduce or at least delay the need for an operating override in the future,” Hartmann said. “We do believe the town has some flexibility if we start addressing some of these issues now.”