Fiscal Discipline

Reading faces what many other cities and towns in the Commonwealth also face as it relates to the annual budget process.  Expenses, especially fixed costs such as health insurance and retirement contributions, are rising at a much faster rate than revenues.  Since Reading is overly reliant on local property taxes (72% of total revenue) as the priority funding source, it is constrained by the limitations of Proposition 2 ½. With somewhat limited options for additional localized revenues and state level support not keeping pace with actual inflation, the town will face challenges maintaining service levels in future budgets. 

The current projections to use distributions from “free cash” to support the annual budget on a 3 year pro-forma basis is concerning.  The budget should not be built on the assumption that ongoing costs can be supported by “free cash” that may not always be available in the future; this will make cutting (or at minimum, slowing the growth of) expenses that much harder in the future.  A Proposition 2 ½ override should not be the primary strategy to overcome this challenge.  The Select Board should challenge the Town Manager and staff to build budgets going forward that are not reliant upon the use of “free cash.” 

If the town continues to see growth in “free cash” balances in forward year’s due to increased revenue collection or spending less than budgeted; the Select Board should both challenge the Town Manager and staff to sharpen budget projections and investigate if annual budgets can be built without taxing to the levy limit.  Reading must be prepared for situations where macroeconomic headwinds, combined with unknown fiscal and monetary policy decisions going forward, could cause fiscal impacts down to the state and municipal level.

Major Building Projects

The town is planning to greenlight two significant building projects simultaneously, which will require the Select Board to provide significant oversight over the Town Manager & staff and third-party project management staff.  While both projects are warranted, they will face scrutiny and required approval by Town Meeting and voters at a special election for debt exclusion.

While prior approved projects are “rolling off” the tax rolls this year, both projects will cause a noticeable increase in property tax bills.  Due to construction industry inflation and labor challenges, coupled with general economic headwinds/uncertainty, these projects must be prudently managed to ensure the cost figures provided to Town Meeting and voters are accurate and reasonable.

Development/MBTA Communities

Town Meeting voted in November 2024 to update zoning regulations to comply with the MBTA Communities Act minimum requirements after over 2 years of study and planning.  While this state-led mandate has caused consternation (and lawsuits) in many other municipalities that are subject to the requirement, these zoning changes do not force any immediate required building.  Development of projects will likely take many years and will be subject already in place site plan review to ensure projects meet all other zoning/planning requirements. 

As with all new development throughout town, we must remain vigilant to ensure Reading continues to meet its affordable housing requirements to ensure development remains measured, incremental, and appropriate.  Maintaining the compliant district within the 40R Smart Growth District, coupled with the added update of an inclusionary zoning policy, should ensure Reading’s continued compliance with the minimum Subsidized Housing Inventory as required by M.G.L. chapter 40B.