Flanagan: Tax Increases In Combined Debt Plan Would Be Gradual

ANDOVER, MA — The proposed combined pension and school financing plan would not result in an $810 year-over-year increase but would instead phase in over multiple years, Town Manager Andrew Flanagan emphasized in a presentation to the Select Board Monday.

The bill would increase through Fiscal Year 2025, according to a schedule he presented to the board.

The increments increase is because the borrowing for the West Elementary/Shawsheen building project would happen in increments, the town manager explained.

"It's typical to borrow over several years," Flanagan said.

Flanagan also presented probability estimates from an actuarial firm laying out which scenarios officials believe the town will save money through the plan.

The plan is to ask town meeting to authorize $175 million in pension obligation bonds to fund the town's growing pension liability as well as $115 million for the school project.

It would only make sense if borrowing remains cheap for the town, Flanagan said: the rate on return on the pension fund needs to exceed the rate the town pays for the pension obligation bonds.

"If rates spike and we get close to 4 percent, we'd probably never do this," he said.

Over the last 30 years, the town's retirement board has had a rate of return of around 6.25 percent.

Currently, the pension liability is forecast to grow about 8 percent per year, with town revenues rising at half that rate.

By Fiscal Year 2023, Flanagan said, "We can't fund the growth of the pension liability anymore without implementing service reduction."

The full meeting is available here from AndoverTV.

Christopher Huffaker can be reached at 412-265-8353 or chris.huffaker@patch.com.