Across the United States, cities and towns are grappling with budget shortfalls, rising costs, and the daunting task of maintaining essential services in the face of economic uncertainty. From South Hadley, Massachusetts, to Aurora, Colorado, and Salem, Oregon, local leaders are making tough decisions, weighing tax increases, fee hikes, and service cuts as they strive to balance their books for the coming years.
In South Hadley, the fiscal outlook has become increasingly dire. At a September 2, 2025 meeting, Town Administrator Lisa Wong and Superintendent Jennifer Voyik delivered a sobering fiscal year 2026 budget update. Wong began the presentation with a candid admission: “We certainly wish that we didn’t have to give you this presentation today.” The town is bracing for a $2 million increase in health insurance costs this year, with another major hike expected next year. These escalating expenses, coupled with slow economic growth and flat or declining state aid, have created a structural deficit that is projected to widen by about $2 million annually just to maintain current service levels, according to Reminder Publishing.
Wong explained that to sustain level services for fiscal year 2027, the budget would need to grow by $4.5 million—half of which is attributed to health insurance costs alone. For years, the town managed to keep health insurance expenses under $5 million, but projections now show those costs ballooning to $12 million by 2030. South Hadley has already taken steps to close the gap for fiscal 2026, including layoffs at the senior center, eliminating 19 teaching positions, adding busing fees, and reducing custodial staff and extracurricular activities.
But the cuts may not be over. The town will host a special Town Meeting in November to consider further reductions, including $100,000 from general expenses and $30,000 from unfilled positions. Officials will also seek approval to use $688,000 in free cash for operations instead of capital projects. Wong warned that if the use of free cash isn’t approved, “there will have to be cuts to staff and services.”
Looking ahead, Wong and Voyik painted a stark picture of the years to come. Starting in July 2026, South Hadley may be forced to reduce hours across departments, cut more positions, and even close libraries. The school district faces particularly severe challenges: for fiscal 2027, plans include eliminating three administration positions and 20 student-facing roles, slashing all sports and extracurricular activities, reducing electives, and trimming transportation options or raising fees. By fiscal 2028, Voyik said, “I don’t even know if we would have a school district at that point because cutting everything that I just put up there for FY27 leaves us with huge class sizes and not enough staff to educate students.”
To avoid such drastic measures, town officials are exploring a range of options: using free cash, addressing unfunded mandates, lobbying for more state and federal funding, seeking new revenue sources, and possibly asking voters to approve a tax override. Wong estimated that a potential $3 million override for fiscal 2027 could mean a monthly property tax increase of $10 to $100 per household, with the average around $50. Residents are encouraged to review detailed budget information at southhadley.org and participate in upcoming listening sessions hosted by the budget task force.
Meanwhile, in Aurora, Colorado, city officials are staring down a $20 million budget shortfall for 2026. The proposed budget, presented to the city council on September 16, 2025, outlines a strategy that blends reserve fund withdrawals with targeted fee increases. City Manager Jason Batchelor attributed the deficit to slowing tax revenues and rising costs, telling Scripps News, “We are generally dependent upon general economic conditions. Folks going out, spending their money on goods, dining out, things like that. That's how we get our tax revenue to provide services for our residents, for our businesses.”
A key blow came when the state slashed Aurora’s share of marijuana sales tax revenue from 10% to 3.5%, cutting $2 million annually from funds earmarked for capital projects. At the same time, revenue from the city’s 8% lodger’s tax has dropped sharply as hotel stays decline—partly a result of tighter household budgets and reduced federal government travel under the new administration.
To bridge the gap, Aurora plans to draw about $8 million from its $28 million recession reserve fund and raise various fees. Residents can expect increases in E-911 surcharges on phone bills and a possible 10% hike in recreation center fees. “We are raising some of the fees for our recreation program at our rec center… it might only be, you know, pennies on the dollar type thing,” Batchelor said. The city will also cut a few vacant municipal court positions and implement four furlough days per quarter in 2026, though no layoffs are planned. Employees will still receive scheduled pay and benefit increases. The budget is slated for final approval by the city council in early November.
In Salem, Oregon, the financial picture is a mix of progress and persistent challenge. On September 15, 2025, city officials presented a five-year forecast showing that, despite recent gains, the city’s general fund is projected to run a deficit by 2030. Voters approved a property tax increase in May 2025, expected to generate about $14 million annually for services such as the public library, parks, and Center 50+. Additional new revenue streams include a paid downtown parking program, a new in-house ambulance service, the conclusion of two Urban Renewal Areas, and opioid settlement funds through 2033, as reported by Salem Reporter.
But Salem’s budget woes are deeply structural. More than half of the city’s funding comes from property taxes, which cannot keep pace with rising expenses tied to wage increases, the state’s public pension system, and health insurance. “We will always have more expenses than what we can collect. That is the reality,” Interim City Manager Krishna Namburi told councilors. City leaders are focusing on investments that could reduce future costs, such as a co-response pilot program pairing mental health specialists with police officers and reinstating the downtown police bike team.
Chief Financial Officer Josh Eggleston noted that, thanks to the new levy and other revenue sources, the city will enter the new fiscal year with nearly $1 million more than expected—a one-time windfall. Yet, Eggleston cautioned, “That structural deficit still continues. Our primary funding source is still more than half property taxes, so you will continue to see that.” Mayor Julie Hoy expressed relief that the forecast finally reflected “real numbers,” providing a clearer path for city planning.
Salem is also considering longer-term funding options, such as raising utility rates, restructuring operations fees on utility bills, and seeking payments in lieu of taxes from the state for services provided to state-owned properties. Councilors voiced interest in ensuring that large businesses, especially out-of-state corporations, contribute more to the cost of city services.
As cities like South Hadley, Aurora, and Salem confront the realities of rising costs and limited revenues, their leaders are forced to make difficult choices—balancing fiscal responsibility with the need to preserve the services that make their communities livable. The coming months will test the creativity and resolve of local governments, and the willingness of residents to support new taxes and fees, as they work to secure their financial futures.
