By TOM GIAMBRONI
LISBON - The dreaded "T" word came up during this week's meeting of the school board's finance committee.
Board members were told approaching voters about raising taxes was one of the options they may have to consider at some point to offset a deficit spending situation that occurred this year and is expected to continue through 2016 unless something is done.
"There comes a point where you have to take a look at raising taxes" when spending begins to outpace revenue, said School Superintendent Don Thompson. "You have to cut expenses or raise revenue."
All school boards are required every May and October to adopt a five-year financial forecast, and Treasurer Cindy Altomare reported at the meeting the district has begun spending more than it is taking in for the first time in many years. She is projecting district spending will exceed revenue by $331,000 come June 30, the end of the fiscal year.
Fortunately, the district is expected to also end the school year with a healthy $3.5 million budget surplus, down from the record $3.8 million recorded last year. But that balance is expected to decline rapidly over the next four years if the deficit spending continues unabated, until Lisbon is $444,000 in the hole by the end of the 2015-16 school year.
Financial forecasts are generally considered unreliable beyond two years, but Altomare said the deficit spending trend should be a warning to board members, who need to begin developing a contingency plan to address the problem sooner rather than later.
"When you get into a deficit situation you have to go for more money or take a serious look at more cuts," she said.
Officials pointed out that in recent years the district has taken a number of steps to save money, such as eliminating jobs as district employees retire, consolidating bus routes, and hiring a private company to operate the cafeteria system.
But Altomare said it has reached the point to where the board may have to consider laying off teachers and other personnel, since that is by far the biggest expense of any school district, and delaying action would result in only more severe cuts down the road.
The other option is asking voters to approve a levy or income tax, and Altomare was pessimistic about the chances of either passing given the current economic climate. She noted school districts that had little trouble in the past convincing their voters to approve a new tax are now facing defeat at the polls.
"It's a tough sell," Altomare said.
Thompson said now is not the time to approach voters anyway since they are sitting on a $3.5 million balance. Altomare agreed, saying the time to do so is after the board has done everything else within its power to cut costs. To do so prematurely would only erode the district's credibility.
Board members said they understood the situation but also expressed concern about whether the teaching positions they eliminated in recent years have already impacted the quality of education Lisbon students are receiving.
"Cutting to the bone is fine, but you don't want to cut into the bone," said Gene Gallo.
"We haven't cut into the bone, yet," Altomare said.
The problem is revenue from the two key sources - the state and property taxes - remains flat or is expected to decrease slightly over the next four years, while spending continues to increase. Of the $337,000 in deficit spending, Altomare attributed $100,000 to the decline in revenue, while the rest is due to additional costs.
Contributing to the district's financial woes is the continued decline in enrollment because state funding in part is based on the number of students. Lisbon's enrollment declined from 1,043 last year to 1,003 in 2011-12. The high-water mark was 1,368 in 1998.
Since the district is now operating at a deficit, Thompson said employees will no longer be eligible for "good faith" bonuses they are entitled to during years when the district has an operating surplus. The bonuses last year ranged from $263 to $700 for the 162 district employees.