Beverly officials begin FY26 budget hearings as analyst warns budget is not balanced and FY27 faces structural shortfall

The Beverly City Council’s finance subcommittee opened its FY26 budget hearings June 4, as the city budget analyst told councilors the mayor’s proposal is “not balanced” and warned the city faces a structural deficit in FY27 unless new revenues are found or services cut.

The analyst, identified in the meeting as Perry, told the committee the administration’s proposed revenues total $173,716,413 and that the mayor is proposing $7,761,503 more than FY25 — an increase Perry said is roughly 4.7 percent. “In my opinion, the FY26 budget isn’t balanced,” Perry said, adding that the administration’s use of limited one‑time reserves and a more generous Chapter 70 state aid assumption mean the city will have fewer options next year.

Why it matters

Perry and other officials told councilors decisions this spring — including using remaining excess levy capacity and reducing the overlay reserve — will ease pressure this fiscal year but make FY27 more difficult. Perry said Beverly may need $2.5 million to $4 million in new revenue to maintain level services for FY27 and urged the council to begin long‑range conversations now.

Key numbers and near‑term pressures

- Proposed general fund revenues: $173.7 million (administration estimate). - Proposed increase in mayor’s budget vs. FY25: $7.76 million (about 4.7 percent). - New growth used in levy calculation: about $1.2 million; administration proposes using $150,000 of overlay this year versus roughly $250,000 last year, Perry said. - Perry said the mayor’s proposal would exhaust remaining excess levy capacity (about $688,000) this year, removing that cushion for FY27.

Water, sewer and trash costs

Finance Director Brian Ailes explained planned enterprise rate changes the administration included in the proposal: the water rate would rise from about $3.90 to $4.25 per unit and the sewer charge from about $6.50 to $7.29, raising the combined water‑and‑sewer charge to roughly $11.54 — a near 11 percent increase from the prior year, Ailes said. He attributed the hike to drawdowns of retained earnings used on recent capital work, and cost increases billed to the city by regional water and sewage authorities.

Perry also highlighted solid waste as a looming municipal pressure: the general fund subsidy for trash runs about $3.9 million and is partially offset by roughly $1.27 million in trash fee revenue. He warned the current contract ends next year and predicted a material increase in the contract cost, saying policymakers should begin discussing how to pay for future increases and consider waste‑reduction strategies.

School funding and the largest share of new revenue

The mayor and school leaders defended the administration’s large allocation of new revenue to public education. Mayor Cahill told the subcommittee the city has increased school funding substantially over the last decade and that the FY26 proposal continues that trend: “we have put $7,100,000 in new money for our schools,” he said in his remarks.

Beverly Public Schools officials presented the district’s FY26 request as a roughly 9 percent increase over the prior year. The district’s presentation said roughly 83 percent of its budget funds wages and benefits and that contractual obligations and rising special education and health‑insurance costs are major drivers. The district noted it reduced or realigned 35.12 FTEs overall while adding more than 55 net positions since FY20 to address student needs, including instructional and related‑service staff.

Essex North Shore Technical School

Essex Tech Superintendent Dr. Riccio presented the regional vocational‑technical school budget and program updates. Essex Tech’s draft budget reflects a smaller increase than the city schools (the school reported a 4.5 percent increase after initial departmental requests were trimmed). Riccio said Beverly currently sends 206 students to the regional school and that Essex Tech remains at “minimum contribution” under the state formula. He described recent capital work — including a geothermal project and an animal‑science expansion — and said the school had four electric buses arriving in the fall and had secured a $1 million private donation for infrastructure work.

Policy context and next steps

Perry, the mayor and finance staff repeatedly reminded councilors that the city cannot increase or transfer funds upward in the mayor’s budget — the council can only reduce line items under state law when acting on the school budget’s total. Perry urged policymakers to weigh options that include raising new revenues (trash fees, school fees, or a Proposition 2½ override), cutting services, or a combination of both to address the projected FY27 shortfall.

The council scheduled three more subcommittee sessions (about four hours each) before a public hearing on June 18; the full council is expected to take a final vote in a special meeting on June 23.

Votes at a glance

- Motion to adjourn the Committee of the Whole: passed by voice vote during the June 4 session; transcript records the motion and a voice "Aye" but does not record a roll‑call tally. - Motion to adjourn the Committee on Finance and Property: passed by voice vote; no roll‑call tally recorded in the transcript.

Sources and accuracy

This article summarizes oral presentations, numerical estimates and Q&A captured in the June 4 Beverly City Council Finance & Property subcommittee meeting. Direct quotes and figures are presented as stated on the public record; where the record lacks precise tallies or formal roll‑call votes, the article reports the meeting’s voice‑vote outcomes and notes that no roll‑call totals were recorded in the transcript.

Ending

Councilors and city staff return to the FY26 hearing schedule over the coming two weeks to review department budgets in detail and to take public testimony at the June 18 hearing before the council votes in late June.