Jeff, a town finance staff member, led the Town-wide Budget Balancing Committee through preliminary figures for fiscal 2026, saying the town faces what he described as an $8.4 million structural deficit if current department and school requests stand.

The deficit reflects a mix of revenue and cost changes: modest projected revenue growth after property tax levy limits, the governor’s early “cherry sheet” that increased some state aid line items, and substantially higher shared costs such as health insurance and retirement contributions. Jeff said the town’s total revenue is up roughly 1 percent under the current assumptions, but shared costs alone consume most or all of that increase.

Why it matters: Committee members said the numbers, if unchanged, will push leaders to use significant one-time reserves or seek a voter override. Several members emphasized the town’s obligation to follow its financial policies, which generally advise against using one-time funds to support ongoing operating costs.

Jeff said the town started the budget process with $20,652,677 in free cash available after last fall’s town meeting and that preliminary new-growth estimates for FY25 came in at about $1,008,518; he said the working assumption for FY26 new growth in the model is $900,000. Jeff also presented an updated cherry-sheet estimate from the governor’s proposal that increases net state aid to Norwood by about $1,075,544 in the current draft (with town assessments rising approximately $387,000 under that proposal).

Officials discussed the main revenue and cost drivers. On revenues, Jeff described the conservative methodology used for many local receipt lines (for example, using a 90 percent three-year-average baseline for categories that can be volatile). He noted that meals and room occupancy receipts have trended higher and that investment income assumptions rely on roughly $50 million on average in the town’s accounts at a projected interest rate of about 3 percent.

On the expense side, committee members and staff focused on shared costs that are largely nondiscretionary, such as health insurance (Jeff used an 8 percent placeholder pending final GIC rates), retirement/pension contributions (pending final actuarial numbers), and debt service trends. Jeff said the town is projecting a 5.74 percent increase for town operations and an 8.11 percent increase for the schools under the preliminary requests; combined, those levels produce the roughly $8.4 million gap.

Fincom and other committee members pressed for more detail on several items before recommending the use of free cash. Committee members repeatedly cautioned that using one-time reserves to balance recurring operating costs would worsen the town’s long-term fiscal position and could make a future override harder to justify to voters.

Several participants pointed to a major local construction project — FM Global — as a near-term source of new growth that will begin to appear fully in the property tax base after the next June 30 valuation and could add roughly $1 million to $2 million in new growth in subsequent years. Staff and members agreed not to count speculative growth in the FY26 baseline beyond the conservative $900,000 assumption.

Committee members requested additional detail before making recommendations: a side-by-side of FY24 budgeted vs. FY24 actual receipts for lines where staff used historical averages; final GIC health insurance rates (expected from the GIC in early February); and finalized pension contribution numbers from the actuary. The group tentatively scheduled a follow-up meeting in early February to review updated health insurance/pension numbers and an updated shared-costs run.

The meeting closed with a routine motion to adjourn that passed by voice vote.