Chief Assessor & Chairman of the Board Francis J. Golden, Director of Finance/Auditor Ed Bean, and Budget Director Mike Mastrobuoni presented FY27 budget outlook at City Hall.

By Harry Kane

A number of factors, like inflation and limits on local tax increases, have led to a “perfect storm” for many municipalities, but Somerville’s Finance Director Ed Bean said there will be “limited disruption of our services” during a Fiscal Year 2027 budget outlook presentation.

The financial management team presented a summary of Somerville’s financial condition in a slideshow presentation, with an overview of revenue and expenditure forecasts, at the special Somerville City Council and School Committee joint meeting on April 14.

“We’re seeing the headlines almost daily about the mounting fiscal pressures for municipalities,” said Bean. “Most municipalities are navigating this perfect storm of fiscal pressures.”

The skyrocketing operational costs and “rigid revenue limits” of Proposition 2½ are creating a financial crisis, he explained.

“We’re not in the same dire situation as other communities right now,” said Bean. “We are not experiencing the same level of distress.”

Some municipalities are facing significant layoffs and staff reductions due to budget shortfalls. He mentioned health insurance and state-mandated tuition for out-of-district special education placements as two “big budget drivers.”

“We do have a budget gap,” he added. “But I do believe we can contain that with limited disruption of our services as we move along into Fiscal 2027.”

For FY27, “We’re looking at a $4.5 million gap between the revenue projection and the level service projection for all the budgets – school and city – at this particular point in time,” said Bean.

Somerville’s growth in the past was due to an expansion of the commercial property tax base, he said. “Tremendous and unprecedented economic development and prudent management over time.”

The city’s general fund budget has grown from $211 million in FY16 to $381.5 million in FY26, which is an increase of 80.8 percent. The budget increase of the general fund this year was 5.54 percent, which is a lower increase than in recent years.

“This year we had to tighten our belts quite a bit here in fiscal 2026,” he said, due to commercial property tax growth that has declined.

Bean says revenue is on target in FY26. “We’ll probably exceed our revenue budget, but by less than 1 percent.”

The FY27 total revenue projection is $392,665,060 million, according to the April 14 report. That is a potential $12,738,952 million in revenue growth.

Early projections by the assessor estimate new growth in property taxes will decline from $7.8 million in FY26 to $5 million in FY27, said Bean.

“We frankly don’t think that the economy is going to turn around soon, so we’re going to pencil in $5 million for the next three years,” said Bean. “Most communities would envy getting $5 million dollars in new growth, so it’s a dramatic drop for us, but it’s still a very, very good number.”

Bean explained that development has stalled due to inflation and high interest rates that have made financing for new development projects more expensive, causing many planned commercial projects to be delayed or canceled.

“If we could get some life science interest in the city, that’d be phenomenal for all of us,” he said.

City Councilors and School Committee Members asked questions and made remarks following the presentation. Many of the comments focused on how budget decisions may impact teachers and students.

Ward Six School Committee Member Dr. Emma Stellman asked Bean about potential budget cuts at Somerville schools and whether critical services might be part of the funding reduction.

Bean answered by saying that schools are “the first priority” and that “they will not be exorbitant cuts.”