Holbrook officials said last week the town had achieved a financial turnaround, taking a free-cash account that had been nearly $400,000 in the red and turning it into a $1.2 million surplus for the current fiscal year.
The account had been in deficit for four out of the previous five years, according to state Department of Revenue data.
The town also lowered its residential tax rate slightly, by 10 cents per $1,000 of valuation, to $18.11, cutting the average single-family tax bill by $96, according to state data.
Timothy Gordon, chairman of the Board of Selectmen, attributed the improvement to the retirement of debt on which the town had to make payments in previous years.
In addition, revenue grew, tax collections improved, local aid increased, and the selectmen and Finance Committee guided the town toward conservative spending, according to Town Administrator William Phelan.
“With that surplus,” Gordon said, “we were able to give a little bit of relief to the taxpayers.”
Though the individual tax savings may not be big, he said, property owners are accustomed to seeing their bills rise by perhaps $100 a year.
State records show the average single-family tax bill in Holbrook, which was $3,943 in fiscal 2009, rose by $127 in each of the next two years and $89 the following year.
The town initially estimated the 2013 savings on the average single-family home at $7, but when asked about the discrepancy between that figure and the state’s, Phelan spoke to the assessor and said the original estimate included multifamily properties and vacant residential land. The $96 savings is correct for single-family homes, he said.
Included in the retired debt was some incurred to cap the town landfill, he said.
Holbrook has a split tax rate, with a higher rate for commercial and industrial property. State records show the commercial and industrial rate fell slightly, to $34.96 compared with $35.13 last year.
Holbrook also got its tax rate certified by the state before the end of the calendar year, a practice that allows communities to mail tax bills on time. Last fall, in Phelan’s first year on the job, Holbrook got its tax rate and free cash certified by Dec. 31 for the first time in at least five years.
“I really credit Bill [Phelan] for that,” Gordon said.
He said the free cash remains slightly below the state average as a percentage of the town’s $34.8 million budget, but since the average includes towns with significant reserves, he is pleased with the progress.
Asked if the change would improve the town’s bond rating, Gordon said free cash is one of many variables that affect the rating.
Free cash is also a fleeting number, according to Carolyn Ryan, a policy analyst for the Massachusetts Taxpayers Foundation, a public policy group. Often, free cash is “like a snapshot of a bank account on one day,” she said, and it may soon be reduced if a community makes a delayed payment on debt or a pension obligation.
“I usually take the free cash numbers with a grain of salt,” she said.
Phelan agreed that free cash is a snapshot, but he said Holbrook had not delayed any payments, and it made its pension fund payment at the beginning of the year.
An improvement in municipal finances has been difficult for communities to achieve over the last several years, according to Michael Widmer, president of the taxpayers foundation. Although fiscal 2012 showed slight improvements over the previous two years, it was still the worst three-year period for local budgets since Proposition 2½, the state law that limits property-tax increases to no more than 2.5 percent, went into effect in fiscal 1982.
Growth has been anemic in municipalities’ three main sources of revenue — property taxes, local aid, and local receipts from things like excise and meals taxes and building permits. A Dec. 13 report by the foundation revealed that in 2012, new construction, a main source of property tax growth, added just 1.5 percent to the local property tax levy in Massachusetts for the third consecutive fiscal year.
Widmer praised the state’s municipal health insurance law, enacted in July 2011. It aims to cut costs by allowing local authorities to make changes to health plans or transfer the community to the state’s Group Insurance Commission.
Last summer, Governor Deval Patrick announced that more than 127 communities and school districts had used the law to save money in its first year.
But communities are still groaning under the weight of pension costs and retiree health care, Widmer said. The unfunded liability for retiree health care is higher than for pensions, and it exceeds cities’ and towns’ ability to pay, especially with energy costs and other expenses rising, he said.
“This is fundamentally the squeeze that municipalities are going to face for at least the next decade,” he said.
Compared with four other communities south of Boston with populations between 10,000 and 11,000 — Hanson, Hull, Lakeville, and Norwell — Holbrook has the second-lowest average single-family tax bill for fiscal 2013 at $4,190, according to the Department of Revenue. Lakeville’s is the lowest, $553 less.
Holbrook was the only community among the five to lower its residential tax rate in any of the last four fiscal years. The town has the highest residential tax rate of the five, but because it has lower home values, bills are lower.
Home values rose, however, in fiscal 2013 for the first time in at least four years, according to Phelan. The average single-family home is worth $236,300, compared with $235,400 in the last fiscal year.
For 2013, Holbrook was able to keep its total tax levy nearly $500,000 below the limit set by Proposition 2½.
In an e-mailed statement, Selectman Brinsley Fuller said the town’s financial situation demonstrates fiscal responsibility on the part of the Board of Selectmen.
“To be able to secure positive finances and provide some relief for the taxpayers of Holbrook is a complete success and something we are proud of,” he said. “Not to mention, this is something that I can’t remember being done in quite some time. Therefore, it is about time.”