By Sophia Spiegel
Boston University News Service
A new Massachusetts Municipal Association report warns that inflation, shrinking state aid and the limits of Proposition 2½ are creating a “perfect storm” for local budgets, one that towns like Franklin and Natick are already weathering through staff reductions, stopgap revenues and tax overrides.
“We’ve had to be extraordinarily creative in how we approach growth and business development,” said Franklin Town Administrator Jamie Hellen, who also serves as president of the MMA. “But any superintendent or city manager will tell you that you can only pull so many rabbits out of the hat. At some point, you reach in, and there’s not a rabbit left.”
Hellen said Franklin’s experience reflects a broader trend now documented in the MMA’s analysis, produced in partnership with Tufts University’s Center for State Policy Analysis. The study found that real municipal spending has grown just 0.6% a year since 2010, while Unrestricted General Government Aid, the flexible state funding cities and towns rely on for core services, has dropped 25% since 2002.
At the same time, Massachusetts’ 1980 law known as Proposition 2½ limits property-tax growth to 2.5% a year, and with no local income or broad sales taxes allowed, municipalities have little flexibility to meet rising costs.
“It’s really those three pressures swirling together,” said MMA Executive Director Adam Chapdelaine. “Inflation, the constraints of Proposition 2½ and state aid that hasn’t kept up — that’s what’s creating this tight pinch for cities and towns.”
‘A slow erosion of local government services’
Some wealthier communities have found short-term relief through tax overrides — voter-approved overrides to Proposition 2½’s cap on property-tax growth — to maintain services. But for many towns, that option isn’t viable.
“A lot of communities simply don’t have the property wealth or median income to support an override,” Chapdelaine said. “So we’re seeing a slow erosion of local government services — fewer public works employees, fewer health inspectors, fewer library hours — and we’re worried that without action, that slow erosion could turn into something much more rapid.”
That erosion is already visible in Franklin, which has operated at its maximum levy limit for the past 25 years and has failed twice by about 1% to pass tax overrides in the past two years. Despite a commercial base accounting for about 21% of its tax revenue, the town of about 36,000 residents has cut about a dozen municipal staff, including teachers, police officers, paramedics, and a part-time nurse at the senior center, while also raising fees for school programs, sports and facility rentals.
“The problem really hasn’t been our local receipts,” Hellen said. “Like the report shows, the challenge is that state aid to cities and towns has flatlined. UGGA (unrestricted general government aid) has flatlined over the last decade. UGGA is like our blood. It’s our lifeline. It’s our oxygen. It gives communities the flexibility to spend money where it’s needed most.”
To close gaps, Franklin has leaned on smaller, less stable revenue sources, including about $500,000 a year from cannabis sales taxes and a local hotel room tax. But Hellen said those efforts can only go so far.
“If we don’t fix the local aid issue, we’re going to see cuts that are going to be very dramatic and they’re going to be felt,” he said. “I know for a fact everyone on Beacon Hill knows that. The challenge is how we can work collaboratively with them to make sure we get our slice of the pie.”
Natick voters approve $7M override after years of structural deficits
Hellen’s call for collaboration has been echoed on Beacon Hill. In a recent interview on CBS Boston’s Keller @ Large, Senate President Karen Spilka said she’s not currently considering new taxes but is focused on “working with (her) partners in government” to “protect Massachusetts” amid tightening budgets.
As state leaders weigh broader fiscal solutions, towns like Natick are taking matters into their own hands. In March, voters approved a $7 million tax override, giving Natick some breathing room after years of structural deficits and the loss of American Rescue Plan Act funds, the federal pandemic aid that temporarily balanced local budgets. The measure, which passed 65% to 35%, reset Natick’s tax base, sustaining existing services but leaving little room to grow.
“It helped us in the short term,” Town Administrator Jamie Errickson said. “But the long-term issue remains. We’re not adding new programs or positions that would increase costs.”
Instead, Natick is focused on government efficiency. The town of about 37,000 residents has reorganized departments through staff turnover, implemented new software and expanded online services that began during the pandemic. Its OpenGov platform, first used for building permits, now processes liquor, health and inspectional permits, allowing three employees to handle more than 5,000 applications a year.
Errickson said Natick also uses Munis, a financial management system common across Massachusetts, and is exploring the use of artificial intelligence to automate routine administrative work.
“We’re looking for places where technology can improve service quality without adding cost,” he said.
Regional dispatch center expected to improve efficiency
Addressing the crisis, Errickson said, will require both local innovation and state-level flexibility. One example, he noted, is regionalization — combining municipal services across communities to save money and improve efficiency.
Natick is already working with Framingham and Wayland to develop a shared emergency dispatch center, a state-incentivized effort expected to improve efficiency and reduce costs once construction is complete next year.
“There could be other opportunities for regionalization in local government that are not just encouraged but incentivized by the state,” Errickson said. “That can lead to a more efficient use of resources, higher-quality services, or even some cost savings for communities.”
Still, he said, local innovation can only go so far without structural reform.
“I think there’s a way to consider everything from adjusting Proposition 2½ to providing more flexibility to town governments to increase revenue, whether through special fees or expanded enterprise funds that could help other services become self-funded,” he said.
The MMA is developing a series of policy recommendations, including renewed commitments to local aid, added flexibility under Proposition 2½, and new local revenue options. Those proposals, expected later this fall, will aim to give cities and towns greater stability before the next fiscal storm hits.
This story originally appeared in the MetroWest Daily News.
