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AYER — Town administrator Shaun Suhoski has circulated a memo to the Board of Selectmen projecting a town-wide deficit of at least $470,000 in fiscal year 2008.

Using the governor’s budget to project state aid, roughly $20.6 million figures to be available for appropriation in the coming fiscal year, up from $20.1 million last year, reads the memo.

Still, there’s a “potential $470,000 deficit the town faces in developing its FY08 spending plan due to an estimated $960,000 increase in just three cost centers (the School Department, heath insurance and litigation defense),” it states. “The deficit figure will evolve over the next month as revenue projections, departmental spending requests and a requesting commitment from the stabilization fund are discussed.”

The missive was distributed just minutes before the board adjourned its March 6 meeting at 10 p.m. The issue was slated for discussion at the March 7 tri-board meeting of the selectman and Finance and School committees.

Board Chairman Frank Maxant couldn’t be reached for comment.

The figures were projections that estimated a $360,000 increase for health insurance, a $400,000 bump in the school budget and another $200,000 for litigation defenses, said town accountant Lisa Gabree.

The projection is far from complete, she said.

“It doesn’t include any kind of raises for anyone, contractual or not,” she said. “That was just for demonstration purposes.”

Gabree attributed the deficit to the Special Town Meeting decision in February to tap the town’s free-cash reserves.

“That $500,000 of free cash voted in February is normally used for the following year’s budget,” she said. “By voting in February, we automatically lessened our revenues by $500,000, which is leading to this deficit.”

The litigation defense costs stem from two wrongful-imprisonment suits, where the town figures to be sued for convictions in two cases that were later overturned by DNA evidence.

The memo included three steps that could help bring the town’s budget in line.

The receipt of $204,000 in school-building assistance funds from the state could be used as a revenue source, he said, while the selectmen and Finance Committee could tap the stabilization fund to cover $200,000 to $300,000 of litigation defense costs.

The boards could also ask the schools to adopt a “mid-level” funding request for the upcoming year, which would be lower than the $400,000 projected by Gabree.

Suhoski closed by noting that Ayer received only a 1.4 percent increase in state aid from the governor’s budget and said the town may want to ask its legislative delegation why that figure was “substantially smaller” than other communities in the region.

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