A state law caps how fast Beverly can raise money. Its costs rise faster.
Every fight over City Hall, trash fees, or teaching jobs sits on top of the same problem. The clearest way to see it is to picture the whole city as one household, so that's the thread running through this page, in a short box at each step. Real Beverly numbers, plain language, no finance background needed.
A nonpartisan explainer. Figures from the city's own budget documents, with sources at the bottom.
This explains how Beverly's budget works structurally, the machinery that holds in any year. For how one year's gap actually got closed, see The FY2027 budget. To see how Beverly compares to every town in the state, there's the MA property tax explorer.
Picture the city as a household
- The capped raiseProperty taxes, the city's main income, can rise only about 2.5% a year. A state law called Proposition 2½.
- The bills that outrun itHealth insurance, pensions, the schools, and special education, climbing faster than the raise.
- The mortgageBorrowing for big buildings, paid back slowly over decades. Officials call these capital projects.
- The rainy-day jarThe city's savings cushion. Officials call it reserves.
- The one-time yard saleMoney you can only spend once, gone after a single year.
- The vote at the tableAsking residents to approve higher taxes for good. Officials call it an override.
The city can't raise money as fast as its bills grow.
Most of the city's income comes from property taxes, and the cap lets that income grow only about 2.5% a year, plus a little from new construction. The city's costs don't stop at 2.5%. Health insurance, pensions, and the school budget climb faster, roughly 4% to 9% a year. So the bills pull ahead of the income, a little more every year.
Your boss can give you a 2.5% raise. But rent, groceries, and insurance went up 6%. You're not overspending. The math just stops adding up, and it slips a little further each year.
Picture two lines. The top one is what the city has to spend. The bottom one is what it's allowed to collect. They start together and pull apart, like a pair of scissors opening. The space between them is the shortfall, and it grows on its own before anyone makes a single decision.
The exact dollar figures matter less than the shape: the spending line pulls away from the income line, and the gap widens every year. Both lines start equal in FY2026 because the city is required by law to pass a balanced budget.
Source: City of Beverly, Financial Forecast FY2026–2030 (December 2025).
Which costs are actually rising?
Not every cost grows at the same speed, and that is the real story. The chart below indexes each to its FY2026 level, so every line shows how much it has grown since. Any line above the dashed revenue line is a cost outrunning the money coming in.
Health insurance and pensions are the fast ones, climbing well past the 2.5% cap. The school budget, the single largest cost, grows around 5% a year (shown in the scissors chart above, not here). Debt payments and the city's own municipal salaries actually grow slower than revenue. One caveat: most of the payroll is in the schools, inside that line, and school salaries climb faster than the municipal ones shown here. These are the forecast's own annual assumptions: health insurance about 6% a year, though the FY2027 actual came in near 9 to 10%; pensions 4.5%; salaries 1.5%; revenue about 2.9%. By FY2030, spending is projected near $208.0M against about $194.3M in revenue, a gap of roughly $13.7M.
The city saw this coming, and it keeps getting worse.
This was not sprung on anyone. The city's own financial forecasts have shown this gap for years, and the latest, from December 2025, shows it steepening. Left alone, the yearly shortfall grows from about $3.9M in FY2027 to nearly $13.7M by FY2030. Next year, FY2028, the gap nearly doubles to $7.1M, which is why the harder decisions are already being weighed.
You ran the numbers and saw this tight stretch coming. You were right. And next year looks tighter, and the one after that tighter still, unless something changes.
How big the yearly shortfall would get if the city did nothing. It can't actually do nothing, since it has to balance the budget by law, so read this as a warning light, not a prediction. Each year it has to close that year's gap somehow.
Source: City of Beverly, Financial Forecast FY2026–2030 (December 2025).
How do we know it was foreseen?
The city's Financial Forecast Committee has projected this gap in report after report. Its December 2025 forecast puts the FY2027 shortfall at about $3.9M, then widening to roughly $7.1M, $10.0M, and $13.7M through FY2030 if nothing changes. The committee calls this stretch qualitatively different from prior years, because the one-time fixes it used before, a roads shift, unused levy capacity, a prescription-cost restructuring, no longer exist (see the next section).
For years, the city patched the gap with money it could only spend once.
Beverly has run shortfalls on paper for a long time, and it kept closing them with one-time money. A big slug of federal pandemic aid. Road repairs shifted out of the day-to-day budget. Unused tax room. Equipment it chose not to buy. Each worked exactly once. Now they're spent, and what's left are the hard tools: raise fees, or cut services.
One year you sold the old car; another you skipped vacation and raided the holiday jar. Those got you through, but you can't sell the same car twice. Eventually you're down to the hard choices: a side job, or cutting things you'd rather keep.
The problem was never any single one of these moves. It's that none of them come back the next year. In budget language, these are "one-time" sources, as opposed to steady, recurring money.
One honest wrinkle: the city does still finish most years with free cash, often around $10 million. So the money hasn't vanished. But free cash is one-time money too, and using it to cover recurring salaries would only strand those jobs the first year it dips. What the city does with that surplus, routing it into reserves and buildings rather than services, is less a dead end than a choice. That choice is the next section.
The city can't make the squeeze disappear. It can only decide how to carry it.
The shortfall is mostly outside the city's control. But how it copes is a set of standing choices, and each one helps in one way and costs in another. None is free. Here are the four big ones in plain terms, with the upside and the downside of each. Reasonable neighbors land in different places on all of them.
Every money decision a household makes is a trade-off: pay down the debt or take the trip, save more or spend now. There's rarely a free option, only different costs landing on different people. The city's choices work the same way.
Plan high, or plan low?
Guesses low on purpose. Money that comes in above the guess becomes savings.
Guess the income honestly, leaving more room to fund services now.
UpsideBuilds savings and keeps borrowing cheap. It also guards against guessing too high and running out of money partway through the year, which would force cuts mid-year, in the middle of a school year.
DownsideIt makes the shortfall look bigger on paper every year, and that bigger number is what gets used to justify cuts.
A big rainy-day jar, or a small one?
Keeps a large cushion, near 20% of its budget, roughly two and a half months of spending, the highest of its North Shore cohort. About two-thirds of that is the stabilization fund, a formal savings account; the rest is free cash, last year's leftover.
Hold a smaller cushion, closer to what comparable towns keep, and spend the difference on services.
UpsideA big cushion rides out a bad year and keeps borrowing cheap.
DownsideMoney in the jar isn't paying for services today. And drain it to cover everyday bills, and it's gone, with the same gap waiting next year. (How Beverly's cushion compares is in the appendix.)
Borrow, pay cash, or wait?
Borrows for big projects like the City Hall renovation, repaid slowly over many years.
Pay cash (which drains the savings jar), or delay the project, though a building left to decay only costs more to fix later.
UpsideSpreads the cost over the decades people use the building, instead of draining today's savings.
DownsideThe city owes the loan payments for years. And the key point: that borrowed money legally can't be turned into salaries. It's a separate pot, like a mortgage you can't spend on groceries.
Fees, cuts, a tax vote, or more growth?
Raises flat fees like the trash bill and cuts services, to avoid asking voters for higher taxes. It also grows the tax base, though it has eased off lately, lowering downtown building heights in 2023 and buying a Cabot Street parcel to keep it a parking lot.
Ask voters to approve a permanent tax increase (an override), chase new growth harder, pursue payments from large tax-exempt institutions, or change how much of the surplus goes to reserves rather than services.
UpsideA fee is easier than a town-wide vote and avoids raising everyone's taxes.
DownsideA flat fee costs a struggling household the same as a wealthy one, and it doesn't keep up with rising costs, so the gap returns next year. An override could fix it lastingly, but it raises everyone's taxes and the vote can fail.
Think the money's just sitting there? Try finding it yourself.
The pressure is real, it's getting worse, and the easy money is gone.
That's why the loudest fight, "they're renovating City Hall while cutting teachers," misses the mark. Those are two separate pots. The building money is borrowed and repaid over decades; by law it can't become next year's salaries, and spending borrowed money on everyday bills would only blow a bigger hole later.
The disagreements worth having are these:
- How much risk to carry. Keep a big safety net and cut now, or spend more on services and accept the danger of a mid-year shortfall?
- How much to save, and in what form. Is the rainy-day jar bigger than it needs to be, and should more of it be easy to reach instead of locked away?
- Band-aid or real fix. Keep raising flat fees that don't keep up, or ask voters for a permanent tax change that fixes the gap but costs everyone?
- Spend less, or bring in more. Where can the city honestly cut costs, like health care or sharing services with nearby towns, and should it grow what it collects by welcoming new development?
- Who carries the weight. Renters, homeowners, seniors, families, and big tax-exempt institutions don't feel these choices the same way. Who should?
Those are real, fair disagreements about risk, fairness, and priorities, and they're worth arguing loudly. Blaming each other over two unrelated bills just runs out the clock while the gap keeps widening.
This isn't a lone voice in the dark.
Beverly is a town worth caring about, and this is a real problem. We're already feeling it: a trash bill leaping from $100 toward $300 or more, jobs cut across city departments, even police and fire posts left unfilled. Those costs land on real households right now.
But most of the public energy goes to the symptoms, the size of the trash fee and the look of the City Hall project, and to deciding who to blame. The slow squeeze underneath barely comes up. Some people are digging into the real causes, on the City Council and in letters from residents, but it's scattered. This page is here to hand everyone the same map.
Where it's playing out, if you want to follow it or speak up:
- The Beverly Beat. A local newsletter that covers the budget meeting by meeting. Visit
- Open Beverly. A fellow resident's independent data portal on the same budget, with a meeting tracker, a capital-plan explorer, and a tool to look up any street's pavement condition. Visit
- City Council meetings. Anyone can speak for a few minutes, at City Hall (191 Cabot St.); the schedule lives in the city's Agenda Center. Can't attend? BevCam streams and archives.
- Patch (Beverly). Local news, plus opinion pieces by residents. Visit
- Local Facebook groups. Where the day-to-day reaction lives, for better and worse.
Is the city sitting on a pile of cash?
A common charge is that Beverly hoards money while pleading poverty. So let's check it.
The question is just: is this family's rainy-day jar bigger than the neighbors'? The fair way to compare is to measure each household's savings against its own spending, not in raw dollars.
Here's Beverly's savings cushion next to its six North Shore neighbors, measured as a share of each town's yearly budget.
Cohort median ≈ 14%. Beverly: 19.8%, the highest of the seven.
Reserves as a share of the yearly budget: free cash plus stabilization, most recent state figures. So the charge has something to it. Of the seven North Shore towns, Beverly holds the largest cushion, near 20% of its budget, roughly two and a half months of spending. Two different pots sit inside that figure: about 14 points of it is the stabilization fund, the formal savings account the city votes money into, and about 6 points is certified free cash, the surplus left when the books close. That is high but not reckless by rating-agency standards; what stands out is that Beverly sits at the top of its cohort on reserves while running services near the bottom. Two things keep it honest. Beverly's cushion is also the most flexible of the group, mostly free cash and general savings, where much of a town like Gloucester's is earmarked for specific purposes. And the real story is the habit, not the balance: year after year Beverly routes its surplus into reserves, debt payoff, and buildings rather than services, and keeps the jar topped up even as the deficit grows. That pattern of choices is what the companion piece on the city's fiscal identity examines in full.
Source: Massachusetts Division of Local Services Municipal Databank: certified free cash (FY2026) plus total stabilization fund balances (FY2025, the most recent reported), each measured against the operating budget. Reserves here are the sum of the two.