Town Administrator Lisa Wong discusses the fiscal year 2026 budget outlook during the Feb. 18 Selectboard meeting.
Reminder Publishing screen capture by Tyler Garnet
SOUTH HADLEY — During the Feb. 4 Selectboard meeting, Town Administrator Lisa Wong gave an initial budget report for fiscal year 2026.
“Fiscal year [20]26 does not look as rosy. This is going to be a tough year for a number of reasons,” Wong stated.
The presentation included three slides that go went over revenue, expenditures and how the town is going to deal with the budget.
The FY26 projected operating budget will be just over $58 million, a 3% increase over the FY25 budget of $56.8 million.
“To maintain the services, it’s about a three to four million increase in the budget and as you see we’re only looking at a million and a half at most increase in the budget,”
Based on the expenses slide, a level service budget will yield a budget deficit of $3.5 million to $4 million, which is about an 8% increase. Most department budgets will aim for a max of 2% growth with most at level spending which means cutbacks.
“That’s an 8% increase. Sometimes I might say level service budget is actually a 3% increase. The reason why it’s an 8% increase is because of a lot of different factors that are going up,”
Some of those factors include the health insurance trust is projected to increase by 19% which will add $1 million to the budget. The retirement is expected to increase 10.3% adding 500,000 to the budget and general liability is expected to increase by 15%, adding $70,000 to the budget.
Ledges and wastewater accounts are also set to increase by 2% and rising expenses but the state aid production is staying close to the same.
“Anything that’s over a 2 or 2.5% increase eats into other parts of the budget,” Wong said, “Those are basically the budget busters because those are going up at a rate more than new growth plus taxation plus state aid. We really don’t have many other sources to look at revenue that covers this.”
Even if all the other departments are level funded, there will still be a budget gap, according to Wong.
Based on the presentation, the School Department, general government, Public Safety, Public Works and Human Services are projected to be level fund which means cutbacks due to inflation and contractual increases. The last slide explained how Wong and her tea mare working towards a balanced budget.
“We’re still providing quality services. The big thing is we’re evaluating all the funding levels for each department. We’re exploring the savings as well.”
Wong explained she has multiple budgets for multiple departments and working with them to figure out what makes sense and priorities.
Level funding the budgets is going to take away around 70% to 75% of the deficit but Wong stated, “but that also means that if there’s contractual increases, there’s utility increases, there’s maintenance requests. For the schools it could be pretty big. There’s special education, there’s mandates that are frankly in the millions of dollars.”
Wong said she is also going to evaluate local receipts, health insurance funding, the use of free cash and evaluate further reductions in staff and services below level funding.
“We have really great staff and we have built really great teams and we have quality services that we want to maintain so we’re going to continue to fight for that,” Wong also said.
During the Feb. 18 Selectboard meeting, Wong led a line item budget discussion to see her process in trying to balance the budget.
The first document Wong broke down was the town’s appropriations and estimated receipts, which is still subject to change.
The second document broke down the line item budget that shows Wong’s tentative increases and decreases to help balance the budget.
The current spreadsheet shows that the FY26 budget is $57.9 million which is a 2.67% increase from last year’s budget.
Wong, as well as the school administration, have instituted a spending freeze as of Friday, Feb. 7, as a precaution while Wong continues working on balancing the budget. Guidance for spending approvals for necessary expenditures have been sent to their respective staff.
Based on the FY26 budget report timeline, some upcoming keys dates include a community budget hearing on Saturday, March 1, and a budget public hearing on during the Selectboard meeting on Tuesday, March 4.
The School Committee is scheduled to have their budget public hearing during its meeting on Tuesday, March 11.
The Selectboard is set to vote on their budget on Tuesday, March 18 with the School Committee set to vote on their budget on Thursday, March 20.
Meeting notices can be found at southhadley.org/calendar and the budget numbers can be found at southhadley.org.
