The Select Board on Tuesday discussed the comprehensive budget for the upcoming fiscal year with members of the School Committee and the Board of Assessors.

Town Manager Elaine Lazarus reported that the budget is balanced. Town departments were requested to submit level-service budgets. This caused some to make tough choices about items to trim from their requests to hit that goal.

She added that the budget fell “within the constraints of Proposition 2½.” This state law caps property taxes at 2.5% of the total assessed value of all taxable property, plus new growth from construction.

This submission contains the most recent proposed school budget. The School Committee is expected to vote on the latest version at its meeting this Thursday.

“The town is fortunate to have a robust amount of free cash again this year,” noted Lazarus. “But it’s not a sustainable or reliable revenue source over time.”

Free cash will be used to help fund capital projects, she explained, along with borrowing. Borrowing will occur for two proposed water projects as well.

Added Lazarus: “The tax impact continues to be an important concern, especially as we consider the challenges of seniors, young families and others struggling to stay in Hopkinton.”

Figures will be updated as new information is received in preparation for Annual Town Meeting on May 2.

CFO provides deeper dive

Kyla LaPierre, the town’s chief financial officer, spoke about the five-year forecast provided with the fiscal year 2027 budget. She called the numbers “alarming” if they are not taken into context.

She explained that there is a projected deficit of $34 million for FY 28 and $36 million for FY 29.

“I want to make sure that everyone understands that that includes capital requests as part of our five-year plan,” stressed LaPierre.

The forecast was based on the format previously used by the town, which LaPierre said makes it look “very misleading.” She suggested changing the format to remove the capital requests and free cash from the operating budget. Doing that would show a deficit of about $6 million for FY 28, not $34 million.

Free cash is not expected to be as plentiful in future years. Member Matthew Kizner pointed out that this will lead to borrowing at levels that residents are not accustomed to seeing.

LaPierre added that the town should “adhere to” a 5% guideline for free cash as a buffer for unexpected expenses.

“Anything more than that, we’re not budgeting correctly,” she said.

Member Amy Ritterbusch noted that Town Meeting members would get to vote on capital requests individually, “so they may not even all pass.”

LaPierre also noted that “prudent investments” allowed the town to triple its interest income. The town will be earning about $3.5 million, as opposed to the expected $1.5 million, a jump of more than 40%

Chair Joe Clark noted that the budget will be discussed in future meetings over the next few months.

School Committee chair Kyla McSweeney added that the “HVAC issue with the schools” is something that residents should “stay tuned” about as an upcoming capital expense.