LAKEVILLE — Fiscal Year 2025 could be “challenging” for Lakeville, said outgoing Lakeville Town Administrator Ari Sky at the town’s Dec. 4 budget outlook presentation.

It’s two months away from February, which is when a new town administrator will present a proposed budget for the 2025 fiscal year. But as part of the budget process, Sky gave a presentation about the different factors that will affect Lakeville’s next budget.

In Massachusetts, the amount of revenue that towns can collect in taxes is limited by Proposition 2 ½.

If a town has “new growth” such as a new building, under Proposition 2 ½ the town has more flexibility to increase revenue collected through taxes. This is in part because new growth can result in increased costs such as the cost of providing infrastructure to a new building.

Towns without new growth, however, are more limited in how much they can increase the revenue they collect from taxes under Massachusetts law.

In Sky’s presentation, he explained that “new growth” has been trending downwards in Lakeville, which gives the town much less flexibility to increase revenue from taxes to respond to rising costs.

Data such as the number of homes sold, which is related to “new growth,” has been trending down due to factors like high interest rates, Sky explained.

“We’re not in a recession,” Sky explained. “It’s just a question of whether the revenue that we need to sustain operations is going to keep up with — forget enhancements — just the basic increased costs of doing business.”

As Lakeville becomes more constrained in how much it can collect through taxes, the town will likely have increased expenses for the 2025 fiscal year, according to Sky’s presentation. One example of many given in the presentation is that health insurance costs are estimated to increase by five percent.

One source of uncertainty is the Freetown-Lakeville school budget.

At the Dec. 4 meeting, the Lakeville Select Board asked Sky to communicate with the Freetown-Lakeville school committee about the upcoming budget. Sky said that he would ask the school committee to convene a joint committee meeting to discuss the budget.

In an email, Freetown Lakeville School Committee Member Steve Owen said that the school committee would work with both Freetown and Lakeville.

“The [Freetown-Lakeville Regional School District] Regional Finance Subcommittee will be convening shortly and we are in the process of coordinating a meeting date,” Owen said.

The district’s Regional Finance Subcommittee has representation from Lakeville and Freetown boards of selectmen and finance committees.

“As the budget process is underway within the district we will work with both towns, as we usually do every year, directly and through the Regional Finance Subcommittee,” Owen added.

The Freetown-Lakeville Superintendent, Alan Strauss, wrote in an email that “we understand the balance between the educational needs of our students and the fiscal responsibility we have to our towns and will find a comfortable common ground.”