CHELMSFORD -- The proposed townwide budget for next fiscal year will be about $560,000 in a deficit as the town seeks to properly account for town employees' retirement costs by including them directly in the operating budget.
The deficit won't likely last, Town Manager Paul Cohen said Monday at the Board of Selectmen meeting. At Town Meeting this fall, representatives will be able to devote free cash, which is money left over at the end of a budget year, toward closing the gap.
"I don't foresee I'm putting the town in any kind of peril by this action," Cohen said.
The proposal attracted opponents who said the town shouldn't go into the red to start fiscal 2015.
"It's the first time I can remember going to Town Meeting with an unbalanced budget," said Selectmen Bob Joyce, who was elected to the board just last week. "I have some problems with it."
Selectwoman Janet Askenburg said she was "very uncomfortable" with an unbalanced budget.
"I don't think it sets a good precedent or tone to bring an unbalanced budget to Town Meeting," she said. "I wouldn't over-budget my family's budget and I wouldn't over-budget the taxpayers' budget," she added later.
Askenburg suggested balancing the budget now, and then taking free cash available later this year to pay down employee retirement costs known as OPEB costs, or other post-employment benefits.
"My way works as well," Cohen said. "We're really incurring a deficit."
Both Askenburg and Joyce voted against Cohen's proposal but the other three board members supported it. Matt Hanson said he didn't have a major issue with the proposal because free cash -- an estimated $2 million -- will be available in the coming months.
Free cash would be certified in time to cover the deficit at Town Meeting in the fall, Cohen said. Towns are required to have balanced budgets only when tax rates are set, which takes place late in the calendar year.
The point of including OPEB costs in the operating budget, Cohen said, is to properly account for the true cost to the town. The town's credit rating would not be affected, he said.
"We have to recognize the OPEB costs," he said.
The budget will go before a vote at Town Meeting April 28. The Finance Committee previously supported the budget proposal 6-1.
The proposed fiscal 2015 budget of nearly $115 million includes $1 million for retirement costs, which include health care. Overall spending would rise by more than $2.6 million, or nearly 2.4 percent.
Follow Grant Welker on Twitter and Tout @SunGrantWelker.