What's Next
Beverly's structural deficit is documented and growing. Here are the options the city is weighing to close it (service cuts, fee increases, an override, and longer-term structural reforms), plus answers to common questions from residents.
Beverly's budget gap is structural: recurring costs grow faster than recurring revenues, every year. State law caps property tax revenue growth at 2.5% annually. On the expense side, health insurance premiums, pension obligations, and debt service on existing borrowing compound automatically and are largely outside the city's direct control, pushing expenditures up roughly 6% per year. That gap can only be closed with recurring fixes: changes to revenues or expenses that repeat annually. One-time actions like cancelling a capital project, selling a building, or drawing down reserves can shift the timing of pain, but they cannot close a structural deficit. The sections below cover what can actually move the needle, and some decisions that feel fiscal but aren't.
The Three Options
The Financial Forecasting Committee identified three broad options for closing the current structural gap. None of them are easy.
Cut Services
Closing the gap through cuts alone would mean eliminating up to 45 full-time city positions. The FFC noted this would have significant impacts on city services.
Raise Fees
Trash fee at $325/household would generate $2.7M. School fee adjustments and parking revenue increases could help. Together these may not close the full gap.
Override
A Proposition 2½ override would permanently raise the tax levy above the cap. Beverly's last override attempt failed. Override planning was added to the FFC agenda in December 2025.
Beyond the Override: Other Paths Forward
Closing a structural deficit isn't only about cutting costs or raising the levy. Beverly has several other levers available, some requiring policy decisions, others requiring longer-term investment.
Join the Group Insurance Commission (GIC)
Beverly is self-insured and spent $30 million on health insurance in FY2026 (the most recent reported figure), the city's single largest controllable cost. The Massachusetts Group Insurance Commission offers state-negotiated plans that have saved other municipalities millions of dollars in health insurance costs. Switching would require union negotiations (unions must approve the move), but could save several million dollars annually without cutting a single employee or service. Beverly's own FFC minutes flagged this as an option as far back as 2019. It's probably the highest-leverage structural fix available that doesn't require a ballot question.
Grow the Commercial Tax Base
Beverly's tax levy is overwhelmingly residential, meaning homeowners bear the vast majority of the burden. More commercial and mixed-use development does not just add jobs; it increases the levy limit under Proposition 2½ through new growth, permanently expanding the city's revenue ceiling without requiring an override vote. Every new commercial building, hotel, or office that opens in Beverly shifts some of the fiscal burden off individual households and grows the base for future budgets.
Payments in Lieu of Taxes (PILOTs)
Large tax-exempt institutions, including Endicott College and Beverly Hospital, benefit from city services like roads, police, and fire without paying property taxes. Voluntary PILOT agreements ask these institutions to contribute a negotiated annual payment to the city. Beverly's FFC minutes mention a PILOT committee that has been discussed and then gone dormant across multiple cycles. Reactivating it with a formal framework could generate recurring revenue from institutions that already have a stake in Beverly's fiscal health.
Other Revenue Options Under Discussion
The FFC's December 2025 meetings also flagged several additional revenue streams for future discussion:
- Cannabis tax utilization: Beverly has licensed dispensaries; local cannabis excise revenue may be underutilized.
- Short-term rental tax: Massachusetts allows cities to tax Airbnb and VRBO stays. Beverly's coastal location makes this a real revenue opportunity.
- Parking revenue expansion: Currently generating $600K annually; the FFC noted this could be doubled with pricing or district changes.
- Solar and cell tower leases: The city already earns lease revenue from a solar field and cell towers. More municipal rooftop and land sites could add to that.
- Regionalized services: Shared dispatch, assessing, or public works with neighboring communities (Salem, Danvers) can cut fixed costs without eliminating local services.
What About the City Hall Renovation?
Many residents have asked whether cancelling the $28 million City Hall renovation[2] would close the budget gap. The short answer is no, and here is why.
Capital budgets and operating budgets are different things
The City Hall renovation is a capital project. The City Council authorized borrowing $28 million for it in January 2026 on a 7–2 vote, with construction planned through fall 2028. As of July 2026, bonds have not been publicly confirmed as issued (municipalities typically go to market 6–12 months after a borrowing authorization). The structural deficit is an operating budget problem: recurring costs like salaries, health insurance, and pension contributions that exceed recurring revenues every year. These are governed by different rules and funded from different sources. Cancelling a capital project does not free up operating dollars.
If the $28 million is bond-financed at roughly 4.5% over 25 years, the annual debt service would be approximately $1.9 million per year, phased in gradually as bonds are issued.[3] That is real additional pressure on the operating budget, but it is a separate problem layered on top of the structural deficit, not the cause of it. The two require different solutions.
There's also a long-term cost argument that cuts the other way. Research on public-sector facilities estimates that each $1 of deferred maintenance creates $4 to $5 in future capital liability, because the replacement cost plus the return on the original investment both compound.[4] Beverly's roads fund is a live illustration: every year the roads appropriation was zeroed out to balance the operating budget, the deferred maintenance liability grew larger. The same principle applies to buildings.
But what about the debt service? Isn't that money fungible?
Some residents argue that the ~$1.9M/yr in annual debt service Beverly will owe once bonds are issued is money that could have gone to the operating budget instead, making the projects effectively competing. This is a more sophisticated version of the argument, and it deserves a direct answer.
The fungibility argument has two problems. Once a borrowing is authorized under Massachusetts law (MGL Ch. 44), bond proceeds are legally restricted to the capital purpose they were approved for; they cannot be redirected to pay salaries or benefits. The money is not fungible at the point of issuance. Beyond that, cancelling the project today does not deposit any money into the general fund. It avoids a future obligation, but it does not generate cash for FY2027 or FY2028, when the deficit is happening now.
Where the concern is legitimate: the debt service will compound an already difficult operating picture. A ~$1.9M/yr recurring obligation phased in starting around FY2029, layered on top of a structural gap that is already growing, makes an eventual override or other fix larger than it would otherwise need to be. That's a real fiscal tradeoff, and it's fair to ask whether the timing of the renovation is right given Beverly's financial situation, even if cancellation wouldn't close the existing gap.
Land Use Is Fiscal Policy
The options above address the immediate gap, but what about Beverly's long-term fiscal health?
Land use is part of the answer. Not all development generates the same tax revenue per acre. A mixed-use block on Cabot Street (dense, walkable, close to the commuter rail) produces far more tax revenue per acre than an acre of single-family homes in a low-density subdivision that requires the same roads, fire coverage, and school services. This is not a value judgment about neighborhoods; it is how the math works.
New subdivisions and road extensions also come with long-term maintenance obligations (roads to repave, water lines to maintain, sidewalks to repair) on a roughly 20-30 year cycle. If the tax revenue generated by that development does not cover those future costs, the gap becomes a liability on the city's books. Beverly's roads fund shortfall is one visible example of how that cycle plays out.
This framework, measuring the fiscal productivity of land rather than just its assessed value, is the basis of the revenue-per-acre analysis on the Property Map. It is also the core argument of Strong Towns, a nonprofit think tank focused on municipal fiscal resilience, whose work informed the framing here.[1]
Case Study: The Rogers Building
The Rogers Building on Cabot Street illustrates what land use decisions cost in practice.
In May 2023, the City Council voted unanimously to acquire the former Family Dollar building at 218-226 Cabot Street for $7.35 million via negotiated eminent domain. The city paid above the $7.1 million appraised fair market value in exchange for the former owner waiving all further claims. The purchase was funded with $2 million in free cash and $6 million in borrowing.
The stated reason was downtown parking. A private developer had planned to build 112 apartments across five stories on the entire site, including the parking lot. Mayor Cahill argued that losing roughly 100 public parking spaces would damage the downtown business district, and that recreating those spaces underground would have cost as much or more than the purchase price. The city retained the parking lot and set out to sell only the building.
A plan to use the building as a temporary City Hall during the municipal building renovation was abandoned in 2025 when conversion costs were estimated at nearly $2 million. The building has sat vacant since acquisition.
After a public engagement process, including a survey with more than 1,000 responses and two community meetings, the city issued a request for proposals. One bid was received by the June 2026 deadline. Beverly-based nonprofit Harborlight Homes offered $1.2 million for the building, proposing 54 affordable senior rental apartments with a ground-floor grocery store and additional retail. Harborlight would add two stories to restore the building to its original four-story height (reduced in a 1933 fire), bringing it from 33 feet to 54 feet. That would exceed current zoning height limits and require a variance from the Zoning Board of Appeals. Despite being a nonprofit, Harborlight committed to paying property taxes estimated at more than $880,000 over the first 10 years. Harborlight also proposed an alternative: 36 affordable ownership condos, with a purchase price of $0 and a city investment of nearly $2 million required to make it work.[5]
The city is reviewing the proposal. Any sale of the building will require City Council approval, just as the original purchase did. If the city does not accept the proposal, a new RFP would be issued.
Notes
- Strong Towns, "Roads and Debt," January 26, 2016. archive.strongtowns.org. Strong Towns is a nonprofit think tank focused on the financial resilience of cities and towns. ↩
- The City Council voted 7–2 in January 2026 to authorize borrowing $28 million for the renovation, with construction planned through fall 2028. Open Beverly searched Massachusetts Municipal Finance Oversight Board meeting minutes for 2025–2026 and did not find Beverly listed, suggesting the city did not use the state qualified bond program; bonds may not yet have been issued as of July 2026. ↩
- Illustrative estimate only, based on standard municipal bond assumptions ($28M principal, 4.5% interest, 25-year level-debt service). Actual debt service will depend on final bond terms, prevailing interest rates at issuance, and repayment structure. For official projections, consult Beverly's capital improvement plan and FFC forecasts. ↩
- Paul Leighton, "Who wants Family Dollar? City gets only one bid in its effort to sell the key downtown building," The Beverly Beat, June 10, 2026. ↩
- National Research Council, Investments in Federal Facilities: Asset Management Strategies for the 21st Century (Washington, DC: National Academies Press, 2004), p. 28, citing Kadamus (2003): "It has been estimated that the cost relationship is between $4 and $5 in capital liability created for each $1 of deferred maintenance." ↩