MIDDLETON — The sky isn't falling, yet, but towns are worried about the dreary days ahead.

Even though town departments haven't begun to draft their budgets, last night Middleton Town Administrator Ira Singer began warning of tax overrides and layoffs. Boxford's finance director, Kathy Benevento, warned that the town would "be fortunate" if expected small increases in revenue would cover rising union contract and health insurance costs.

House Minority Leader Brad Jones told Middleton selectmen last night that cuts in aid from the state could reach 20 percent.

"The Grinches have stolen Christmas," he summarized.

Singer said Middleton may have to level-fund its budget, cutting back on any discretionary spending and big-ticket capital purchases. In all, though capital expenditures would drop about $400,000, the budget would still have a $500,000 hole, he said.

Singer said last night it's too early to say what sort of capital purchases could be delayed, but it's not too early for him to caution selectmen in front of several town employees.

"Let's face it," Singer said. "Eighty percent of the budget is personnel, and there's only so many things we can do before we start to downsize."

Boxford's Finance Committee has told departments not to seek any budget increases unless they're required by contracts. Boxford also warned that service cuts and capital expenditure delays would be prioritized, so they could be added back into the budget if more money is found.

Ironically, both Middleton and Boxford could be in relatively good shape because they've missed some good sources of revenue. Because Boxford has few businesses, a slowdown there won't hurt the tax base much. Middleton has gotten as little as one-fifth of a police grant as some similarly sized towns, so deep cuts in that program may make the budget easier to bear.

Jones, Rep. Brad Hill and Sen. Bruce Tarr said towns can't expect much help from the state or federal governments, which have their own struggles. They said the state's budget picture, which would affect how much local aid is given to towns, should become more clear in mid-January.