GREAT BARRINGTON — Since 2012, voters each year have chosen to tap into free cash — the town's surplus account — to the tune of nearly $39 million in order to ease the burden on taxpayers.

Over the last five years, the annual amount has ranged from $3.5 million to $4.17 million.

But with the town facing a budget shortfall of $5 million in fiscal 2027, Town Manager Liz Hartsgrove is asking voters to approve a Proposition 2 1/2 override to shoulder more of the burden. If that fails, she said, the town’s reserves will drop to $454,000 — far below what state guidelines consider financially healthy.

"So there's basically no money left," Hartsgrove said during a Select Board meeting.

After years of using free cash to lower the tax rate, Hartsgrove said the town has hit its breaking point and can’t afford to use its little reserves for recurring costs. So she proposed a $42 million budget that will begin reducing the town's reliance on free cash and includes no new borrowing.

To make up for the $5 million shortfall, town staff made over $1 million in cuts; an additional $2 million will come from free cash, and the remaining $2 million will come from taxpayers by way of the override.

Free cash is generally recommended to be used for one-time expenditures, funding capital projects or replenishing other reserves. Using it to reduce the tax levy is typically considered a one-time benefit because it lowers bills that year, but doesn’t increase the levy limit for the future — a practice that can create a long-term budget gap as costs rise faster than the town’s allowed tax growth.

Around one in six communities in Massachusetts used at least some free cash for tax rate relief in 2022, according to state data.

In Great Barrington, this practice helped to lower property tax rates for years while simultaneously creating a structural gap between what the town spends and what it brings in. But that gap now needs to be made up.

The town's debt has also increased over the past decade. In 2019, capital spending jumped from an average of $3 million to $6.8 million. After two years, at around $3 million, it jumped to nearly $5 million in 2022, $8 million in 2023 and $13 million in 2025.

A significant portion of capital spending is for major infrastructure projects, including improving the town's long-neglected roads and bridges. These projects have historically been mostly paid for through borrowing, leading to major debt that eats a large portion of the budget.

About 17.75 percent of the general fund is tied to debt payments — more than double the healthy benchmark for a town of Great Barrington's size.

But despite those efforts to lower taxes, Great Barrington homeowners still see higher tax bills than their neighbors, leaving the Finance Committee concerned that raising taxes even more would “tax residents out of town.”

With the town out of options, Hartsgrove initially proposed an override to cover the entire $5 million shortfall, but in the face of pushback from members of the Select Board and Finance Committee, she came up with the compromise override of $2 million.

If it fails, the town will need to draw $4 million in free cash, along with a number of additional cuts, to close the budget gap.

That would include omitting all discretionary services and special articles, including the co-responder program, lifeguards and skatepark monitors, and denying the funding request from the Southern Berkshire Ambulance service.

It would also eliminate all capital projects that are dependent on free cash funding and cancel all planned service enhancements, such as arts and culture celebrations and employee professional development

The additional use of free cash would put the town into the “danger zone” in terms of money in its savings. The state recommends towns have at least 3 to 5 percent of their annual budget in free cash reserves.

For Great Barrington, that would be $1.27 million to $2.1 million in free cash. If the override fails, the town will have $454,000, Hartsgrove said.

Town meeting is May 2 and town election, where the override is on the ballot will follow on May 12. To prevent the need for a special town meeting, the articles are worded in a way that if an article passes, but the override fails, the backup free cash plan automatically goes into effect.