Amherst Faces $1M Budget Shortfall Year After Year, Council Learns
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Amherst’s budget gap is not a one-year problem, and town officials said Monday night that it will not be solved with a one-year fix. At a Town Council meeting on October 5, Finance Director Sean Mangano told elected officials that town spending is growing faster than revenue by about $1 million every year, and staff offered a menu of strategies to close the gap, from speeding up zoning changes to a Proposition 2½ override.
With the School Committee, Library Board of Trustees and Finance Committee also in attendance, Mangano gave a Long Term Financial Presentation that he described as “a conversation starter.”
A Structural Problem
Mangano described the unsustainable situation in which town revenues are historically growing at a rate of 3% to 4% while departmental expenses are increasing by 4% to 5% per year. Because Amherst’s overall annual municipal spending plan stands at approximately $100 million, that 1% divergence translates directly into an annual deficit of $1 million.
Money difficulties in recent years “have caused a lot of tension and some challenging budget reductions,” the Finance Director said.
Pain Points
The presentation outlined a series of red flags and cost drivers that threaten to exacerbate the town’s financial strain.
Sluggish New Property Tax Growth. Revenue from new construction, which has historically provided vital budget expansion, hit a wall in FY26, missing targets. Projections for FY27 and FY28 show depressed levels continuing. Mangano pointed out that delays and cancellations of major development proposals, such as the Olympia Drive fire and permitting snags, have contributed to the new growth slowdown.
Inflationary Pressures. Health insurance premiums are climbing at about 11% annually. Electricity rates are expected to jump 10% to 20% upon contract renewal, while fuel and paving costs remain elevated.
Capital Debt and Interest Rates. With interest rates persisting above 4%, debt service for Amherst’s four major capital projects (Amethyst Brook Elementary School, a new DPW facility, a new Fire Station, and the Jones Library expansion) consumes an increasing share of capital allocations, putting direct pressure on the operating budget.
Charter School Tuition. Net charter school assessments pulled from the town and regional school budgets have quadrupled over the last 15 years, rising from $910,000 (108 students) in FY11 to $3.4 million (174 students) in FY26.
Leadership Conflicts. Mangano described the surfacing of conflicts among elected leaders as warning signs of the worsening finance squeeze and “disintegration of normal budget dialogue and compromise.”
Raising Revenue: Zoning, PILOT and a Possible Override
Mangano and Planning and Economic Development Director Jeff Bagg offered some suggestions for increasing revenue.
Development. Bagg urged the Council to finish zoning work already underway for Hampshire College, the downtown and East Amherst, and to advocate for projects. Zoning change can alter entire neighborhoods and is a slow and sometimes contentious process. Bagg noted that University Drive development zoning talks began around 2023-24 and tax revenue is not expected until FY27-28.
Tax Incentives. Bagg said the town may need to consider tax concessions to developers known as Tax Increment Financing (TIF) and District Improvement Financing (DIF). TIFs are a direct tax reduction offered as encouragement to a project developer, while DIFs represent improvement of the surrounding area by the town. Bagg promised a town economic development plan within 9 to 12 months.
Elementary regionalization: A regional Amherst-Pelham elementary district would bring in $300,000 or more a year in state transportation reimbursement, shared between the two towns. School Committee member Deb Leonard noted that regionalization usually saves money only when a school closes. Mangano replied that Amherst and Pelham already share a central office and union contracts but still keep two accounting systems and file two year-end reports.
State PILOT reform: Amherst receives about $334,000 a year as Payment In Lieu of Taxes for Massachusetts-owned land, placing it near the bottom of the state list. Edgartown on Martha’s Vineyard, with roughly 2,800 acres and 5,300 residents, receives about $2.8 million. The state values Amherst land at about $17,000 an acre, compared with $93,000 in Edgartown. Mangano suggested the town may need to fund legal support, perhaps with a consortium of college towns. He added that changing the formula without raising the overall state appropriation could upset towns that experience a reduction.
Proposition 2½ override: Mangano reported that since 2022, 127 communities have considered a tax override and 90 passed. Amherst last approved an operating override in 2010. Amherst’s average single-family tax bill ranks 68th in the state, down from 51st in 2011. However, he neglected to point out that Amherst passed a $98 million debt exclusion override in 2023 for the recently completed Amethyst Brook School. Amherst’s Average Tax Bill as a Percent of Income is currently the highest in the state (45.4%).
Belt-tightening Suggestions
On the expense side, staff focused on costs the town can influence.
Sharing services. Look for services that could be regionalized, such as the town’s dispatch center for smaller neighbors.
Collective bargaining. Work with union leaders on a shared understanding of the town’s finances. Wages are the largest cost.
Benefits review. Plan for the pension system to be fully funded in the mid-2030s, which should lower the assessment, and decide how to use the savings. Review optional retiree benefits for future retirees only; Mangano said nothing proposed would change benefits for current retirees.
Buildings and programs. Consider consolidating or disposing of unused property and re-examine whether the town still wants to provide every program. Mangano noted that school buildings have already dropped from four to two as enrollment fell.
Silence on the Jones Library Project
A significant number of Amherst residents have expressed frustration that in 2025 town leaders committed to a costly and arguably unnecessarily large renovation-expansion of the Jones Library. The total project cost has grown to $57 million including debt service, has seen slow payment of promised reimbursements from the library trustees, and threatens to wipe out the library endowment with no clear recovery plan announced. Construction completion has slipped by at least two months and is now scheduled for mid-2027. Repayment of loans for the project is projected to cost the town close to $1 million per year for thirty years. Many wonder why current warnings of a dire structural budget deficit were not contemplated before approval of the very expensive project.
Up Next
The Town Council’s next meeting, in two weeks, will include the annual tax classification hearing. Council President Mandi Jo Hanneke said fall appropriation orders and other finance items are waiting on the state’s certification of free cash. On November 2, the Council is expected to hear the annual Financial Indicators Report and FY28 budget projections and possibly continue Monday’s discussion of the long-term outlook.
Perhaps I am wrong but pursuing “New Growth” and more brick and mortar development seems so hard for several reasons….(1) how many sites are available for development in the near term? (2) And at some point there are only so many sites (3) And if one creates more development then that incurs more demands for municipal services which drives up costs and taxes (4) Our region does not have a well balanced tax and business base and has very little industry and offices. From Virginia to Ohio there are significant investments in a range of industries while the New England economies suffer. Massachusetts Senator John Kennedy wrote about this in the late 1950s. I read the Virginia Business Journal and it is breathtaking to see the financial depth and industry diversity in Virginia and the Sun Belt. (5) Even if new growth offers several millions annually in new revenues it seems that rising costs will not stop. (6) Is building more high rent corporate dorms off campus the answer? Forcing middle class families to pay more for college housing than they should? While I do not pretend it is the total answer I have suggested for years to combine capital projects such as Fire and DPW as Abbington MA and Mansfield MA have done. As a former New Yorker shared municipal services are commonplace but in MA there is a strong town centric mindset. And it is fair to assume that state aid will not increase nor College PILOTs. The Town should create a working group to analyze all potential revenue paths and rank them on their financial value and probability. And one could suggest a similar group for expenses as well. This is not a call for an endless committee but a working group with a fixed time to work, report and dissolve. Even if there are few revenue paths it is important to know this and budget on a worst case basis.
How can they talk about a possible 2 1/2 override to plug a $1M annual budget gap and NOT talk about the $8.4M the library owes the town or the nearly $1M in annual debt the town has taken on for the next 30 years to pay for the library project?
Also, saying that Amherst is middle of the road tax-wise is nonsense AND not counting the override for the school because it was a DEBT override is likewise playing with words. That’s a vote that I, and many others, supported and still support. Taking on that 30 year debt “outside” of the capital budget essentially raised our taxes permanently (pretty much all of us will have moved on from Amherst one way or another by the time it’s paid off). An additional prop 2 1/2 would be on top of that.
I hope the DPW Building Committee takes note of this situation and takes action to keep that project on/under budget. The Finance Director sits on that committee and the Town Manager is the sole decider about everything about that project, so there’s no excuse for them to let it run over.
Finally, none of this should be a surprise to anyone. Several of us have been warning that the models for financing the “4 capital projects” were overly optimistic and allowed some bad decision-making, particularly about allowing the overblown library project to move forward on the town’s dime.
And, at the same time, the town is spending money it doesn’t have, paying a Boston law firm to fight and defend the ZBA’s overreaching decisions, in an ADU appeal filed past the deadline and against its own building commissioner’s decisions.
A “win” in that case means creating more ADUs around town, housing 3 tenants (vs. 4) per unit.
It will have the same result the new bylaw proposed anyway – not even smaller in a by-right ADU physical size, but just rendering it less useful in easing the housing shortage.
The MA ADUs are meant to address the housing needs; in Amherst, that urgent need is student housing.
And the property tax increase from those new properties (ADUs) helps reduce the budget shortfall.
That’s something Amherst can use.
Maria, thank you for all your work. You bring up an example of why I have commented before that the trust is lost with this management. Quit playing games with our money. Tell us the truth about what is and what you want to do. Making it sound like the school was not an override that we’ll be paying for a long time, (which we supported) and there not being one since 2010 is just plain wrong and deceptive.
Amherst and Hadley could jointly commission a feasibility study to evaluate sharing municipal resources in public works, road maintenance, and fire services. With both towns facing rising payroll, health insurance, and other operating costs, collaboration could help balance their budgets by reducing redundancies and creating economies of scale.
The potential benefits come from spreading the costs of expensive equipment, facilities, specialized personnel, and purchasing across both communities. Shared public-works machinery, coordinated road projects, joint purchases of materials, and shared fire-service training and support might reduce recurring expenses and avoid duplicate future investments. The goal should be to maintain or improve essential services while lowering their combined cost.
This approach has produced practical benefits elsewhere in Massachusetts. Hamilton and Wenham shared public-works personnel and equipment with their regional school district, reporting more thorough maintenance at no additional cost, although direct cost savings had not yet been documented. Regional emergency dispatch provides a financial example: a study of Essex and Manchester reported that state support for the North Shore Regional 911 Center eliminated participating municipalities’ operating assessments. These examples demonstrate opportunities, not a guarantee that Amherst and Hadley would achieve the same results.
A jointly sponsored study should identify which resources could be shared, estimate net savings after implementation costs, and establish fair cost-sharing arrangements. It should also assess staffing requirements, emergency-response coverage, maintenance standards, labor agreements, and accountability to residents. Both towns should participate equally in defining the study and reviewing its findings.
Collaboration would not eliminate every financial pressure, but carefully designed agreements could lower the towns’ ongoing cost base and make future budgets more resilient. A joint feasibility study would give Amherst and Hadley a concrete basis for deciding where cooperation can deliver lasting savings without weakening the services residents depend on.
(written with AI assist)
PS: ditto on points made by others about payments not made by the state for PILOT, the library re: $9mm hole, and our likely inability to build out way out of the deficit, especially if encouraging short term gain through tax concessions (do we need to lure developers with tax concessions? at least not builders of private dorms)
One word response: PILOT
One of my friends and his family are moving into the new community housing on Ball Lane. But he told me, as marvelous as it may be to afford to own a house in Amherst, he wondered how the overall construction cost per unit was nearly $500K more than their purchase price of around $250K, especially when amenities that many families may expect — a garage, or even a second parking space — are absent there.
Of course, the housing there would not be affordable if the real estate tax assessed value of each unit were the full $750K, so presumably each unit will be taxed as if it were assessed closer to the roughly $250K purchase price. If the the Town must forego 2/3 of the real estate tax revenue for projects like that, and now plans to use TIFs (foregoing even more real estate tax revenue), how can that lead anywhere but into deeper deficits?
Additional ways to generate tax revenue besides building new taxable properties and raising current taxes include-
1. Institute a stormwater runoff sewer tax on properties with more than 300,000 square feet of impervious surface (roof tops, asphalt parking lots). Tax is calculated by the square foot. Residential properties and most small businesses in Amherst do NOT have that much amount of impervious square footage so would be exempt from the tax… but all College campuses in Amherst would certainly qualify for the stormwater runoff tax . Water treatment plants work harder to process water runoff.
2. Strategically arrange with college administrations that all businesses doing commerce on college campuses buy an annual town business license or user permit. This includes corporations renting campus laboratories and equipment to conduct proprietary research and development, businesses utilizing the college’s data center space and capacity for individualized purposes, entertainment activities, food services, sport tournaments and lodging. Zone the campus footprints as commercial property.
3. Require landlords (as part of their annual town rental registration renewal) to request of their tenants they register their vehicles with the town so the vehicles are subject to the excise tax.
4. Commercialize some space at the Jones Library
Where was all of this push back on the library when it came time to vote? It is okay for DPW and Fire Employees to work in buildings that are over 100 years old, but the library, last improved in the 90’s needs a renovation before the other 2 needs? Ridiculous, can’t wait to read when the next payment is made to the town from the Library Trustees while the town continues to provide service for the project- funding and inspections.
Do the Trustees of the Jones Library have the ability to take out a loan or a mortgage on the current library building to finance the money they currently owe to the town?
It seems like this “giant hole of debt” that Amherst is digging just keeps getting deeper. It seems apparent that any further spending in so many areas needs to be reined in until current bills get paid.
Asking the taxpayers to contribute more, is just not fair nor reasonable. An override is unacceptable after witnessing the fiscal irresponsibility that has occurred.
I would expect that the Town Council and the Town Manager would need to make sure we go no deeper in debt.
I am a bit lost on the numbers. Has the city already taken out loans for the DPW and fire station buildings? How much are these loans? Doesn’t adding $2 million more to road repair instantly throw the budget $1 million out of balance? The city borrowed $15 million for the Jones Library and will pay $1 million a year for 30 years? How much extra interest is the city paying for the Jones because the Trustees haven’t paid the city on the schedule they agreed to? And why are so many Amherst students leaving our schools? Amherst has the highest per pupil spending locally, meaning our charter reimbursement is higher than other towns. Why is Amherst spending so much more? How does our staffing and salaries compare to other local towns?