LENOX -- Town-government leaders are braced for austerity budget planning following warnings from number-crunchers that Lenox may confront its own version of a "fiscal cliff" within the next few years.

With minimal residential and commercial growth in sight and rising expenses for municipal services and health insurance payments to retired employees, the town could be on a long-term unsustainable path without spending cuts, a Finance Committee study reported.

According to a slide show prepared by the committee's chairwoman Lucy Kennedy and her colleagues, school-age and working-age population is declining in the county and town, while the percentage of over-55 citizens is growing. On the other hand, cultural, historical and open-space assets are fueling the tourism industry while drawing in retirees from New York and Boston as well as independent entrepreneurs.

But, Kennedy cautioned, the town is saddled with high debt payments in relation to its revenue -- a "caution flag," as she put it.

A portion of the $22 million debt involves loans to be paid off within the next five years for 1990s elementary and high school projects.

But Kennedy also projects an annual loss of about $1.3 million in state aid by 2017.

Even by stretching out some projects involving water, sewer, DPW, public safety and school upgrades, the study foresees $73 million in capital spending over the next decade.


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"Right-sizing" of expenditures to take declining population into account also is among the solutions suggested by the Finance Committee.

Potential regionalization of fire, police, DPW, water and sewer systems, as well as shared services with the schools, should be explored as soon as possible, the study recommended.

Reviewing recent staff additions, reconsidering health plans with an eye toward saving $100,000 a year and exploring the cost of school-choice students to the town also should be on the table, the report stated. All those steps could yield $750,000 in annual savings by 2017.

After discussing the study, the Selectmen instructed Town Man ager Gregory Fed erspiel to prepare two budget scenarios for 2013-14 -- one level-funded and the other based on a 2 percent increase in spending.

Potential proposals for a 2 percent budget cut or a Proposition 2 1/2 override for town voter action have been ruled out, said Select Board Chairman Kenneth Fowler.

"The only way we can realistically reduce budgets is in changes to services," Select man Edward Lane said. "We're going to have to have a very frank discussion on the way we do business." He proposed that every department head comb through their budgets "and say there's a better way we can do this job, or eliminate this job."

Unless taxpayers approve a tax override, "we're going to have to look at everything and turn everything upside down," Lane added.

Selectman David Roche emphasized that since school-related spending accounts for about 60 percent of the town's $23.4 million budget, "it's difficult for me to sink my teeth into an austerity plan when the whole town's not on board with it."

However, he acknowledged signs of cooperation from the School Department to explore ways of setting aside health-insurance funds for future municipal and school-district retirees.

"We have almost as many retirees as active employees," Roche observed.

But he advocated a cautious approach on services, pointing out that "we can't take a cop or a firefighter off duty."

"Our customer base -- citizens -- is shrinking," said Selectman Channing Gibson. "Our expenses are growing, but we're losing school kids and population. Our town is not growing."

Selectman John McNinch praised department heads for "stepping up to the plate during the five years I've been on this board. But they can't do it for much longer." Realistically, he added, a 2 percent budget increase is "the lowest we can go" pending a thorough re-examination of potential savings through a "think tank" session involving town boards and School Committee members.

To reach Clarence Fanto:
cfanto@berkshireeagle.com
or (413) 637-2551.
On Twitter: @BE_cfanto.