Milton town leaders are bracing for a tight fiscal cycle as early projections for the 2027 fiscal year estimate a conservative 3 percent increase in revenue, a figure that may be overshadowed by surging health insurance costs. During an October 17 meeting of the Milton Budget Coordination Committee, Town Administrator Nick Milano detailed a five-year financial forecast that anticipates $4.2 million in new revenue for FY27. Milano noted that property tax increases are expected to remain at the 2.5 percent maximum allowed under Proposition 2 1/2, while local receipts and state aid are projected with caution. Overall, the revenue forecasting is pretty conservative, Milano told the committee. It doesn't assume any use of free cash.

The conservative approach sparked a debate among committee members regarding the town's healthy reserve levels. Member Jay questioned if the town was intentionally underestimating income to generate year-end surpluses, noting that Milton has maintained millions in free cash for several years. Finance Director Amy Dexter defended the cautious stance, stating, 4.6 million sounds like a ton of money, but as a percentage of our overall budget, it really isn't that big. I'm a big fan of being conservative because things can swing the negative way quickly. Staff member Joanna added that relying on volatile sources like investment income would be unwise, noting that investment income is dependent on market value. If interest rates dip, that money goes down.

On the expense side, the committee identified health insurance as the most significant financial pressure. While the town’s forecast initially planned for a 7 percent increase in premiums, market trends suggest the actual spike could range between 12 and 20 percent. Mr. Daily expressed alarm at the current estimate, noting that major insurers like Blue Cross Blue Shield have reported significant losses. They are going to raise premiums, Mr. Daily warned. I don't know how we could justify an estimate of 7%. We should increase that. Milano clarified that if health insurance costs hit 14 percent, the town would likely need to rely on the Operating Budget Stabilization fund to keep the budget balanced.

The prospect of using reserves to cover recurring operational costs drew criticism from some members. Jay characterized the reliance on stabilization funds as deficit spending rather than a truly balanced budget. However, Winston countered that the fund exists specifically to prevent drastic service reductions during lean years. That's the point of the fund—to get us through without cutting services until we have another override, Winston said. It's a cushion so we don't lay off people or close the library. Remote member Maggie voiced concerns about the long-term sustainability of such a strategy, stating, I'm conservative and would not depend on an override every four years; that's not sustainable for long-time residents or commercial properties.

To help formalize Milton's fiscal strategy, Milano introduced new draft financial policies based on Department of Revenue templates. These policies aim to set clear targets for stabilization funds and establish guardrails for the use of free cash. Nathan, attending remotely, suggested the committee should model these policies with historical data to see what would have happened if we had applied them in the past. Jay expressed a desire to see the policies finalized before the FY28 budget cycle to ensure departmental requests follow a predictable structure.

The meeting concluded with the formation of a new Financial Projection Work Group, tasked with drilling down into the town’s assumptions and creating publicly accessible forecast scenarios. Lori suggested that the group should examine three plausible future scenarios—Scenario A, B, and C—with likely risk factors to better prepare the town for economic volatility. The committee chair appointed Jay, Winston, Amy Dexter, Joanna, Katie, and Lori to the group, which will begin its work as department heads submit their formal budget requests at the end of October.