By Geena Monahan—For the North Star Reporter
The fiscal year 2027 budget is projected to reach $120.8 million—$7 million higher than the current fiscal year—driven largely by a debt exclusion for the new high school and rising structural costs, Town Manager Michael Borg told the Town Council at its meeting on Feb. 9.
The proposed budget includes a $4.18 million debt exclusion tied to approximately $70 million borrowed so far for the new high school. The cost will begin appearing on residential tax bills in January 2027, affecting the third and fourth quarters of that fiscal year.
The town’s current FY26 budget stands at $113 million. Borg said that without the debt exclusion, the FY27 budget would total roughly $116 million, underscoring that it consists largely of fixed obligations, rather than discretionary spending.
“This is not an expansion year,” Borg said. “It’s a limited-growth year shaped by structural pressures, not new initiatives.”
Revenue inputs, requests and restraints
The town is proposing a full 2.5% levy increase under Proposition 2½, generating approximately $2.66 million in new property tax capacity. State aid is expected to remain largely flat, with only a marginal increase, said Borg.
Local receipts are projected to grow modestly, including continued gains in motor vehicle excise tax revenue. Borg noted that last year’s spike in excise collections may have been influenced by consumer behavior tied to concerns about potential tariffs.
Department heads were asked to submit unrestricted budget requests to provide a full picture of anticipated needs. Combined, those requests total $127.4 million, nearly $7 million more than what is budgeted.
Education accounts for the largest share of requests at $62.2 million, followed by $37.4 million in non-departmental costs, which include health insurance, pension assessments, debt service and other fixed obligations. Public safety represents the largest municipal service category at $16.7 million, while all other town departments combined make up a small share of overall spending.
“We don’t get a lot of flexibility,” Borg said. “A significant portion of this budget is non-discretionary.”
The projected gap is notably larger than last year’s shortfall of roughly $4.5 million, a trend Borg said reflects growing structural pressures.
“We do have an obligation to present a balanced budget,” he said. “This gap shows that current requests are not sustainable without adjustments or priority setting.”
Rising cost pressures
Health insurance remains the most significant cost driver, with premiums expected to rise between 10% and 15% next year, resulting in an estimated $2.2 million shortfall. Borg said current premium costs exceed claims by 109%, and the impact is felt across all departments.
Pension assessments continue to rise as the town remains on track with an 8% annual increase under its long-term plan to reach full pension funding by 2035. Borg said the strategy, while necessary, significantly reduces the town’s ability to expand services.
Combined, health insurance and pension costs account for nearly 20% of the total budget and are expected to continue growing, regardless of service-level decisions.
Personnel and capital planning
Borg said the town is not proposing any new full-time positions and is under a soft hiring freeze, with vacant positions held until the start of the new fiscal year.
Capital improvement project requests total $4.7 million, with the town planning to fund approximately $4.3 million. Borg said the focus will remain on maintaining existing infrastructure, rather than launching new projects.
Councilor Laura Wagner asked whether savings from capital projects that come in under budget could help close the remaining gap. Borg said the town routinely reviews active projects to identify unspent funds that could be reallocated through the Capital Improvement Stabilization Fund, and that there is potential to fund the full request.
Free cash and public process
Borg said free cash may be used as a short-term bridge to help offset rising health insurance costs and address higher-than-usual winter expenses, but emphasized it is not a sustainable revenue source.
“This is not revenue we can count on year-to-year,” he said. “It’s a bridge.”
Councilor Andrea Slobogan encouraged residents to stay engaged in the process.
“It’s really important to understand where your money is going and to voice your opinion,” said Slobogan. “But also realize that times are tough and health insurance is rising everywhere—not just in our town.”
Department-level budget meetings will continue through April 12, Borg said, with a final budget and detailed breakdown expected April 13. A public hearing is tentatively scheduled for May 11, with a Town Council vote planned for June 8.
“This is an active process,” said Borg. “Tonight’s presentation gives us direction. Now we have to do the hard work.”