The town must reshape its approach to budgets and planning, Town Manager Andrew Maylor told the Board of Selectmen Monday night.

Maylor presented his five-year fiscal forecast along with a vision for putting the town on what he called a "road to fiscal stability."

The Obstacles

The national economic recovery has been slow and inconsistent, Maylor said, with the state's unemployment creeping upward in recent months. This is just one of the obstacles Maylor noted when dealing with balancing the town's budgets.

Unemployment has taken away from the state's revenues, which will likely mean a decrease in local aid. In years past, North Andover has paid for services and balanced budgets with help from local aid. But, Maylor said, we should not count on that going forward.

Perhaps the biggest obstacle to local fiscal stability, however, is an issue that has been looming for a while: health insurance and retirement costs. Health insurance is projected to increase 7.5 percent each year from 2015 to 2018. And other personnel benefits are expected to increase by 7.5 percent each year from 2014 to 2018. Contrast this with public works, schools and public safety, which are expected to increase 3.5 percent to 3.75 percent a year in that time.

A New Road

"So the world has changed, we should assume it's changed, and we need to make decisions not based on how things have been historically but based on what we've seen in the more recent past," Maylor said.

Going forward in what he referred to as "the new normal," Maylor pressed for less dependence on state aid and more local cost-cutting measures.

"One is to continue to focus on making sure the employee benefits are consistent with our ability to pay for those benefits," Maylor said. "And there are ways like health insurance reform, where employees will see savings too, not just employers."

Maylor did not go into detail about what changes he would like to see in employee benefits.

He also called for building the town's financial reserves -- as he did at Town Meeting when proposing three reserve funds be put into the budget -- as well as keeping debt service costs in control (working toward getting it down to 4.5 percent of revenues) by only borrowing for projects when it makes sense to borrow.

Other steps like energy conservation measures, sharing services with other communities, maintaining infrastructure to avoid huge messes and upgrading technology to streamline work may be needed as well, he said.

Selectmen seemed receptive to Maylor's ideas and vision.

"I'm all pumped up now," Selectmen Chair Bill Gordon said. "I want to implement all these things for the road to fiscal stability."