The first part of the Executive Summary was shared on Monday. This section layouts the revenue and expense assumptions driving the budget as presented.
Here are the assumptions incorporated into the FY26 budget:
Revenues Highlights
● The proposed FY26 budget does not include any revenues from the Budget Stabilization “Rainy Day'' Fund. The fund currently has a balance of $3,310,416. It is vital for the Town to continue to maintain and grow/stabilize the Rainy Day Fund rather than deplete it. Budget Stabilization reserves set the town up to be prepared in the event of an emergency, but equally as important, these reserves illustrate to bond rating agencies and financial institutions sound financial policy and execution. Well founded financial annual audits, an effective OPEB policy, passage of the Community Preservation Act, the implementation of a stormwater utility and increasing emergency reserves put the town in a healthy financial position to maintain a stable AAA bond rating and quell interest rates in an era of record high inflation.
● The Property Tax Levy and “New Growth” revenue forecast will decrease a cumulative $71,097 from FY25. Traditionally, the Town has used a ten-year average model for the new growth figure. However, the Town’s New Growth has plateaued and is now at the decreasing end of the arc from the front end of the pandemic years.
● State Aid is assumed at the Governor’s FY26 budget levels. Currently, the Town stands to realize a net increase of $493,534 in local aid from FY25. A final state budget is expected to be complete in July and we will readjust the final local aid numbers at the November budget hearing .
● The Town’s Local Receipts look to rebound past pre-pandemic numbers, while also recognizing that hotel tax revenue and cannabis excise sales taxes are both now in this revenue category. Staff assume an additional $1,681,052 in local receipts over FY25. The preliminary budget model was level service, but in evaluating the forecast, we believe FY26 will show an uptick due to several additional factors. A majority of local receipts are fees collected for Town services (e.g. licensing, building permits, ambulance receipts, recreation fees). Motor vehicle excise tax is slightly less than half of the revenue.
Expenditures Highlights
The main cost drivers in this budget are:
● The budget includes a 2.5% Cost of Living Adjustment (COLA) for all municipal personnel, including collective bargaining agreement commitments, which amounts to $610,000. School salaries are located in the school budget in Appendix B.
● The Benefits Budget (910) increased by $1,817,961 (almost 12%) from FY25 to FY26. The Benefits Budget has a number of different line items, including health insurance for active Town employees and retirees and School retirees as well as Worker’s Compensation and Unemployment Compensation for both the Town and the Schools.
The Benefits Budget has a number of different health insurance lines which have increased a total of $1,066,000 over FY25.
● The Franklin Public School District will see an increase in their budget of $2,925,148 over FY25, Further analysis is in the Future Trends section below.
Revenues Highlights
● The proposed FY26 budget does not include any revenues from the Budget Stabilization “Rainy Day'' Fund. The fund currently has a balance of $3,310,416. It is vital for the Town to continue to maintain and grow/stabilize the Rainy Day Fund rather than deplete it. Budget Stabilization reserves set the town up to be prepared in the event of an emergency, but equally as important, these reserves illustrate to bond rating agencies and financial institutions sound financial policy and execution. Well founded financial annual audits, an effective OPEB policy, passage of the Community Preservation Act, the implementation of a stormwater utility and increasing emergency reserves put the town in a healthy financial position to maintain a stable AAA bond rating and quell interest rates in an era of record high inflation.
● The Property Tax Levy and “New Growth” revenue forecast will decrease a cumulative $71,097 from FY25. Traditionally, the Town has used a ten-year average model for the new growth figure. However, the Town’s New Growth has plateaued and is now at the decreasing end of the arc from the front end of the pandemic years.
● State Aid is assumed at the Governor’s FY26 budget levels. Currently, the Town stands to realize a net increase of $493,534 in local aid from FY25. A final state budget is expected to be complete in July and we will readjust the final local aid numbers at the November budget hearing .
● The Town’s Local Receipts look to rebound past pre-pandemic numbers, while also recognizing that hotel tax revenue and cannabis excise sales taxes are both now in this revenue category. Staff assume an additional $1,681,052 in local receipts over FY25. The preliminary budget model was level service, but in evaluating the forecast, we believe FY26 will show an uptick due to several additional factors. A majority of local receipts are fees collected for Town services (e.g. licensing, building permits, ambulance receipts, recreation fees). Motor vehicle excise tax is slightly less than half of the revenue.
Expenditures Highlights
The main cost drivers in this budget are:
● The budget includes a 2.5% Cost of Living Adjustment (COLA) for all municipal personnel, including collective bargaining agreement commitments, which amounts to $610,000. School salaries are located in the school budget in Appendix B.
● The Benefits Budget (910) increased by $1,817,961 (almost 12%) from FY25 to FY26. The Benefits Budget has a number of different line items, including health insurance for active Town employees and retirees and School retirees as well as Worker’s Compensation and Unemployment Compensation for both the Town and the Schools.
○ Our original health insurance quote for our active employees and retirees under age 65 came in with an 18.3% increase. We worked closely with the Massachusetts Strategic Health Group and our Insurance Advisory Committee (IAC) this spring and made changes to bring the premium down. One of the changes included increasing the deductible on the High Deductible Health Plan (HDHP). These changes brought the increase down to 14.5% on the EPO and PPO plans and only 11% on the HDHP. These percentages are very competitive in the current municipal health insurance market, as we saw many Towns experience increases ranging from 10% to as high as 30%. For additional information, please see the narrative for the Benefits Budget.
The Benefits Budget has a number of different health insurance lines which have increased a total of $1,066,000 over FY25.
○ The Norfolk County Retirement Assessment continues to increase each year at greater than a 7% increase. State law requires the pension system to be fully funded by 2040, which may change. However, we expect over 10% annual increases in pension assessments in future years.
● The Franklin Public School District will see an increase in their budget of $2,925,148 over FY25, Further analysis is in the Future Trends section below.
* denotes the two pandemic impacted budget years (does not include federal stimulus funds)
** denotes a use of $1.8 million in Budget Stabilization funds in FY19; one-time free cash in FY25
*** assumes a successful override on June 3, 2025.
Future Trends
The constant pressure on local government to fund all of the work that needs to get done is continuing to be unsustainable. The Massachusetts Municipal Association continues to advocate for greater investment in infrastructure from the state and to relieve the many unfunded mandates the state is placing on local governments. Staff also work closely with our state and federal legislative delegation who have always been responsive to the town's financial needs. Regardless, there is only so much supply for the demand, which has strained local services and budgets across Massachusetts.
The federal budget looms large and will likely have an impact on FY27, but more likely a significant impact on FY28 for Franklin. Approximately $15-16 billion of the state's budget is based on the federal budget. If federal uncertainty affects the state budget, it will inevitably put pressure on the Town’s budget. We will need to keep these realities front and center in FY26 and beyond. The current federal budget is funded through September 30, 2025.
Throughout the summer and early fall, the major federal discussion will likely be around the federal budget going into next fiscal year. For local and state governments, FY26 will already be one-quarter of the way through before federal budget deliberations are concluded.
I would expect a five-year fiscal forecast to be available as we head into the fall, after the state budget is finalized, and we have better information on the federal budget. The federal budget year begins October 1, 2025.
Major cost or policy decisions heading into FY27 and beyond, include:
● Federal austerity and the uncertain financial impacts on the state budget that trickles down to local budgets from federal budget cuts.
● Continued health care cost increases in a state where 15% annual increases are now the norm.
● Norfolk County Pension assessments anticipate a 10% increase annually in future years.
● Affordability of the community. Housing and cost of living expenses are a major concern for many residents in Franklin.
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The Executive Summary can be found -> https://www.franklinma.gov/DocumentCenter/View/5322/FY26-Budget-Narrative
Sections
of the Summary will continue to be shared in advance of the Finance
Committee budget hearings scheduled for April 28, April 29, and May 1.
The FY 2026 budget page -> https://www.franklinma.gov/Archive.aspx?ADID=500
The FY 2026 Override info for the June 3 vote -> https://ma-franklin.civicplus.com/1089/Fiscal-Year-2026-Override-Information
