Key Takeaways
- The Committee projects between 10% – 22% in Property Tax Increases over Five Years
- The members anticipate deficits to grow to more than $4.0 million by 2028, and urged Town Meeting voters to exercise restraint
- Debt is expected to skyrocket to 83% of legal limit
On April 19, the Appropriation Committee released its customary report in anticipation of Annual Town Meeting on May 6. The report encapsulates Hopkinton’s financial health both for the coming fiscal year and projects it out over the next five years.
The committee’s goals with the budget were to sustain the town’s key services, enhance the services in our schools, and preserve the town’s financial stability. Thus, as expected, the budget funds at the same level the annual operating budget, it increases the budget for schools, and it meets the town’s contractual obligations (namely pension payments).
It also anticipates funding the $48.55 million request for the Hopkins School Addition, assuming the measure passes at Annual Town Meeting. What the budget does not include is funding for the Marathon School Playground proposal; the High School Track proposal; and the proposal to replace the Emergency Radio System, projects that were deferred.
Notably, the tax impact for everything proposed, including proposals that will require a vote to exceed the Proposition 2 ½ tax increases, is significant: The average Hopkinton home, now valued at $852,400, will pay $12,959 in property taxes annually.
At $15.81 per $1,000 of value, Hopkinton has one of the highest residential tax rates in MetroWest. By contrast, residents of Dover pay $12.19, Weston $11.84, and Wellesley $11.45. Newton’s citizens enjoy a relatively reasonable $10.18 residential tax rate.
HopNews has created an interactive tax calculator to help readers understand the personal impact of the capital projects that will be requested at Annual Town Meeting.
>> CALCULATE YOUR PROPERTY TAXES (requires Excel)
In looking toward the future, the committee is less optimistic, citing restrictions in new growth as a limiting factor.
“While immediate needs are met by this budget, multi-year projections will be a challenge in FY 2026 and beyond…it is difficult to see how the Town will continue to fund operating budget increases that are above the tax levy rise from the allowable 2.5% increase in the coming years,” reads the report.
The committee also acknowledged the difficulty the tax burden places on seniors and young families.
While the committee did not go so far as to recommend austerity measures, it did urge restraint from this point forward.
“Moving forward into FY25, capital spending should be focused on necessity. Equipment and vehicles that are immediately necessary to sustain services, and minimum infrastructure improvements to mitigate Town liability should be the only items approved for spending.”
Debt continues to be a worry
The Appropriation Committee is particularly concerned about rising debt levels. They noted that the town’s current debt of $78 million (for which we pay $9 million annually in principal and interest, or 8.3% of the town’s operating spending) is below the 15% statutory debt service cost, established in the Town’s Financial Policies. But taking the Elmwood School replacement at $90 million and the proposed Hopkins School addition and other FY25 Capital Articles at $52 million, our total debt will jump to about $220 million, or 83% of the limit.
They note that this level of debt will have a profoundly negative effect on our current AAA bond rating, leading to higher interest payments and the accumulation of higher debt.
In their five year capital plan, the committee projects a 10% increase in property taxes, and that assumes Town Meeting voters express a modest appetite for new capital projects. If Town Meeting voters continue to spend as they have in recent years, the committee projects a 22% increase in taxes over the same period.
FY25 Projects Funded from Borrowing
The budget proposal recommended several projects totaling $52 million that would be funded from borrowing. Taxes would be raised until the projects are paid off. Those proposals include:
- Hopkins School Addition and Renovation – $48,550,000
- Heating Ventilation and Air Handling System Renewal in the Hopkinton Public Schools – $700,000
- Paper Record Digitization- $667,500
- Drainage Improvements on Ash Street – $500,000
- Roadway Sidewalks on DiCarlo, Barbara, Peppercorn – $780,000
- Granite Street Culvert Replacement – $850,000
The budget also included about $4.7 million in pay-as-you-go projects, which come from available funds. These include smaller projects for the police, facilities, public works, and IT departments.
Conclusion
The committee continued to express concern about sustaining the town budget in the coming years, and they forecasted that an operating deficit of $4 million will reach Hopkinton by 2028, due to a lack of new revenue growth and increased expenses.
“The emerging structural imbalance in the budget, combined with an expected surge of requested school and other Town construction spending, will be a financial management challenge for the Town in coming years, which as discussed above, could see property tax rates rise by 10% to 22% within five years,” wrote the committee.
They also acknowledged increases in water rates due to PFAS and urged Town Meeting voters to take an active role in “setting priorities”.
“Added to a significant expected water rate increase for Water Utility customers in connection with costly plans to address PFAS contamination, Hopkinton taxpayers face a difficult road ahead. The Appropriation Committee believes that Town Meeting and voters will have an essential role in evaluating and setting priorities for service delivery and capital improvements in the coming years,” they concluded.
>> RELATED: For readers that love the details, dive in to the full report here
I have reviewed the Appropriations Report, and this article is an excellent summary of the major points. I hope residents are paying attention and realize how their vote at Town Meeting impacts not only their individual tax bill, but the financial health of the town and its ability to maintain a good credit rating. To essentially “max out” our available credit is a risky proposition considering we have other capital needs in the town besides the schools. Balance is essential, and I feel between the recent large investment in 2016 for Marathon and now the new Elmwood replacement, it’s time to focus on other infrastructure needs. Hopkinton needs to pause the school spending until after the new school is built, and see how it fits into the bottom line when it opens in 2027/2028- I guarantee the overall school operating budget will see a significant increase, which will put further strain on the town’s finances. Please attend ATM on May 6th!
I think this is a good start but I would like to also see the anticipated capital projects for the next 20 years (borrowing timeline) – i.e. waste water treatment facility, water well(s) and water treatment to expand number of homes on town water, new facilities for larger services (fire, police, dpw, etc). With our coming needs, debt levels and lower finance rating and corresponding increased costs, I believe we are looking at a figure of over $1 Billion in the near term, pushing ourselves over the borrowing limits, huge increases in taxes to pay cash instead of borrowing or appealing to be allowed to borrow much more money than currently statutorily allowed. We need to look as far down the road as we can to plan before a crisis of our own making hits – as Benjamin Franklin is oft quoted, “If you fail to plan, you are planning to fail”.
“The committee also acknowledged the difficulty the tax burden places on seniors and young families.”
They acknowledge but never actually DO anything constructive to address this.
Roadway Sidewalks on DiCarlo, Barbara, Peppercorn – $780,000. What is the reasoning for prioritizing sidewalks in this neighborhood? How much foot traffic is there in that area? I would love to see more sidewalks all over town but it’s not absolutely necessary and if we really do want to expand sidewalks wouldn’t we want to prioritize extending sidewalks along Main Street to connect with West Main St. so more people can in theory walk to restaurants and a grocery store?
Paraphrasing Mr Dylan: “Twenty years of bad decisions and they put you on the day shift.”
Why are we building a new school, when so many of the EMC buildings are empty. The old corp hq would make for an attractive school, and could be reconfigured for a fraction of what a completely new school will cost. If the taxes go up as proposed, I am leaving this town, after having lived here for 31 years.
That question has been addressed specifically, repeatedly, and in detail on this site. In a nutshell, retrofitting the building to meet state requirements for school buildings would come at a high cost and you get none of the cost sharing funding from the state we are qualifying for with the voter-approved plan.