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July 26, 2013

Salem sees increased revenues

Revenue up, but so are expenses

SALEM — When selectmen resume their budget talks next month, they will be asked to consider some tough choices in the wake of rising town expenses.

But they will make those decisions knowing town finances are in better shape than previously thought. Selectmen heard the news last week from finance director Jane Savastano.

“That was good news,” Selectmen’s Chairman Everett McBride Jr. said yesterday. “It’s very positive.”

Savastano told the board a recent audit showed revenues for the last fiscal year were up $400,000 — from $4 million to $4.4 million.

She said unanticipated revenue increases and various cost savings, especially on municipal bonds, will help ease some of the pain for taxpayers. A substantial increase in the town’s general fund balance — money that can be used in fiscal emergencies — will also help, she said.

That amount has risen to $7.1 million, compared to $4.8 million a year ago, Savastano said.

A big chunk of the revenue is from the approximately $750,000 the town received last year from the state for bridge cost reimbursement. The town is reconstructing several red-listed bridges the state Department of Transportation has said are in urgent need of repair.

Officials also learned the town will retain its AA bond rating — the second highest possible rating — as they continue to tackle major infrastructure improvements, Savastano said.

Savastano said the 1.81 percent interest rate is the lowest she has seen in 15 years.

But her positive revenue report came on the heels of selectmen’s discussion last month that it could be another difficult fiscal year.

Savastano and selectmen agreed yesterday the town faces some serious financial challenges.

“It’s going to be a tough year,” Savastano said. “We have some payroll costs that are going to go up that we have no control over.”

Rising expenses, especially for employee health insurance, have forced selectmen and Town Manager Keith Hickey to cut funding for services. It’s also meant layoffs and reduced hours for some workers the last few years.

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