Mayor Richard Alcombright warned that the budget would be 'ugly' for fiscal 2015.
NORTH ADAMS, Mass. — The city is looking at an increase of $720,000 going into next year's budget and a gap of $500,000 that has to be closed this year.
Mayor Richard Alcombright hasn't sugarcoated the city's fiscal woes, a point he made again on Tuesday night to the City Council.
"I don't think it's any secret, we've been talking about this really since December," he said, adding later, "There are no more rabbits to pull out of the hat."
He asked for three sessions of the Finance Committee to review how his administration plans to address the budget gaps for this year and next.
Several major line items will have to be dealt with to close this year's budget, the biggest being some $290,000 in overtime costs for public safety personnel. There's another $150,000 overage for veterans services, some expenses for the transfer station and, so far, a relatively modest $30,000 to $40,000 deficit in the ice and snow account.
Last year, Administrative Officer Michale Canales and Treasurer David Fierro Jr., working with the police and fire director, had crunched data from the departments to better predict overtime costs. Based on past history, their model looked at a single extended leave for each department, but Alcombright said this year, more than one firefighter or officer has been out.
"That drives overtime costs as we try to staff a 24/7 operation," he said.
The mayor also said he completed "very, very modest settlements" with the police, fire and Department of Public Works unions that will be brought to the council once approved by those unions.
"In putting all reserves in, we should be able to close out the year," he said. "Right now, we're looking at our ability to close the year fully utilizing all of our reserves."
The projected budget increase of $720,000 in fiscal 2015, the mayor said, will be "very, very problematic" with no reserves to depend on.
Overall, the city's budget increases have been incremental, Alcombright said, with a total increase of 3.8 percent over the last five cycles. The fiscal 2011 budget was $35.9 million and fiscal 2015's is projected at $37.3.
However, state aid isn't keeping up with even that. Local officials across the state, including the mayor, have been lobbying the Legislature to increase local aid above the governor's budget.
"Unrestricted local aid is on par with what we received in 2001," said Alcombright, adding that total state aid has fallen from about 53 percent to about 45 to 46 percent.
While his goal has been to wean the city off a dependence on state funding, the reductions have come at time when costs have risen and other revenues aren't keeping pace.
Minimum school spending is up $240,000 but state education aid is only expected to be up about $30,000; 10 or 11 tuitioned students will also be leaving at the end of the year — and taking about $100,000 in tuition revenue with them.
The city's also looking at increase in pension costs of about $120,000 and insurance premiums that could jump between 5 to 8 percent.
"We've lost $13.4 million in state aid," Alcombright said, since 2009. "We've raised property taxes $10.3 million, we've raised locally receipts of $100,000, for a net loss in revenue of $3 million."
The mayor warned that the city could no longer rely on reserves that have run out, a situation he had predicted when voters rejected a Proposition 2 1/2 override in 2011 to balance the budget by raising the levy limit.
"It just begs the question of where would we be right now if the override proposal had passed three years ago," said the mayor. "We would be in much much better shape."
In response to a question from Councilor Wayne Wilkinson, the mayor said a second attempt at an override would "not be out of line," as the city looks at solutions.
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I am not interested in "creative financing" of the city - because we'll pay for it later, at a higher cost.
Obviously the "slush fund" is not an option, since the article states that the reserves will be drained for FY2014. So they'll be gone.
I think the mayor has a pretty good clue, but it's a problem that's not going to go away, and there aren't any magic solutions.
I don't understand why the state is being so stingy. I realize Massachusetts is trying to be conservative financially, and that's paid off for us (since we've never been one of the states "on the edge" during the recession). But if Mass is going to be overly tight with funds, that will ultimately lead to the same problem - cities collapsing financially.
I don't want my taxes raised any more than anyone else, and I voted against prop 2 1/2 too, but I've got no pitchfork for the mayor. He foresaw it, he's told us about this again and again, and I feel he has indeed trimmed all the fat from the budget several years ago. So here we are.
All I know is that I want to stop digging deeper. It's going to hurt to get out of the hole, but digging deeper is only going to make it worse. So, "hell no" to "creative financing."