Last June, the Select Board voted 4-1 to instruct Town Manager Andrew Flanagan to try to build a budget that would require no more than a 3.65% increase in the real estate tax rate.

Much more recently, however, Flanagan proposed a budget that calls for a 4.6% tax hike. Flanagan said the additional money will go toward the town’s unfunded pension liabilities, which he estimated at $150 million.

Despite the original instructions to Flanagan, the Select Board voted 4-1 on March 14 to support his recommendation. The annual Town Meeting, originally scheduled for April 27 and now tentatively postponed until June 23 due to the coronavirus threat, will have the final word.

The lone dissenter, Alex Vispoli, said the board should have stuck with the 3.65% limit, especially in view of the economic toll the coronavirus pandemic has taken.

“At the end of the day the reality is the Select Board approved, with my objection, a budget that will impose a punishing 4.6% tax increase to Andover residents and businesses starting July 1. Now given the disastrous effects of the pandemic this increase is unconscionable,” Vispoli said.

While the tax rate will rise by 4.6%, the average real estate tax bill will actually be $40 less in the next fiscal year, Flanagan said. The higher tax rate will enable the town to put an extra $1.7 million toward the unfunded pension liabilities, he said.

The increased value of new pipes installed by Columbia Gas will bring additional money to the town, according to Flanagan.

The Finance Committee unanimously supported Flanagan’s plan in March.

“By taking this action now, it saves the taxpayer money in the long run,” Flanagan said. While the Select Board voted last June to keep taxes within a 3.65% limit, members were agreeable to going beyond that figure if the addition went toward reducing the unfunded pension liability, he said.

Allotting additional money toward unfunded liabilities is consistent with the goals for the town manager, according to Laura Gregory, chairwoman of the Select Board.

Her colleague Annie Gilbert expressed a similar view.

“The goal the Select Board voted on last June was very clear that a 3.65% increase could be exceeded if the extra funding was used to address Andover’s greatest financial challenge: unfunded pension liabilities,” Gilbert said. “The town manager’s proposed budget, which we approved in March, is consistent with this goal, and the average tax bill will still be roughly $40 less than what was originally projected when we set the goal in June. The alternative to this would create higher annual increases to the taxpayer in future years.”

The pandemic is forcing the town to modify the proposed budget.

“The town manager is currently preparing a revised budget to reflect anticipated decreases in state aid and local receipts. However, the goal is for the changes to not adversely impact taxpayers,” Gregory said.

Select Board member Chris Huntress said the 3.65% figure was based on the average of the last 10 years of tax increases.

“That was a goal, but we didn’t set it as a mandate,” he said. He also said the town needs to take a more aggressive approach to paying down the unfunded pension liabilities.

“We are on the hook for these liabilities,” Select Board member Dan Koh said. Koh was the sole dissenter in the June 2019 vote in favor of limiting the tax increase to 3.65%. He said the “arbitrary cap” could hurt the town’s ability to deal with climate change and other problems.

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