MARBLEHEAD — Marblehead officials are warning of an $8.4 million gap in the town’s projected fiscal 2027 budget as preparations for the May Town Meeting begin.
Town Administrator Thatcher Kezer said the shortfall reflects what he described as a long-standing structural imbalance.
“The single biggest challenge from overhead is our structural financial deficit,” Kezer said. “The growing gap between recurring revenues and recurring costs.”
Kezer said the town is required by law to present a balanced budget to the Town Meeting.
“For the Town Meeting in May, we have to present a balanced budget,” he said. “There’s no way around it under the law.”
Officials said the deficit is driven by both declining revenues and rising fixed costs. Kezer said projected revenues available for appropriation are down by more than $2.2 million, while projected expenses are up more than $6.1 million, resulting in the $8.4 million gap.
Among the major cost increases are health insurance, pensions, and trash collection.
“Our pension costs are up $462,000,” Kezer said. “It’s an obligation — no say.”
Kezer also cited a sharp increase in employee health insurance costs.
“The increase is over $1.9 million,” he said.
A new trash contract is projected to increase costs by $844,000, according to budget materials presented to the Select Board.
On the revenue side, officials pointed to declines in interest income, motor vehicle excise taxes, and building permits. Kezer said interest income alone is projected to drop by $784,000.
“That is the result of our cash in the banks that is invested,” he said, adding that balances have declined and interest rates have fallen.
If the town balances the budget using existing revenue projections, Kezer warned the impact on municipal operations would be severe.
“We’re looking at over 50 positions,” he said. “That’s about 15% of the municipal workforce that we can’t pay.”
Kezer said the town would be forced to fund only the most essential services.
“We’re going to have to limit the services that we do fund to only the most critical services, such as public safety,” he said. “It’s that drastic.”
Several officials and residents said the magnitude of the projected shortfall has raised concerns about long-term planning and transparency.
“I think it’s time to get granular,” resident Jim Regis said during public comment. “You can’t talk about essentially $14 million between fiscal 25 and fiscal 27.”
Regis added that the potential request to taxpayers is significant.
“Now we’re at the cliff, and you’re saying, write a check for eight and a half million,” he said. “That’s a big ask.”
Officials also noted that a large share of the town’s budget is tied to staffing and contractual obligations.
“Fundamentally, 80% of our budget across the town is headcount,” member Moses Grader said. “So we fundamentally have a headcount issue.”
Kezer said town leaders will need to weigh difficult choices in the weeks ahead, including whether to pursue a Proposition 2½ override, which would require voter approval.
“Ultimately, it’s a community conversation about values,” Kezer said. “What does the Marblehead we want look like, and how are we going to support it?”
Additional public meetings and finance committee hearings are scheduled ahead of the May Town Meeting.
