PITTSFIELD, Mass. — The City Council has approved the creation of a Public Works Stabilization Fund in which 25 percent of marijuana tax revenue will be deposited.
Although the council ultimately approved the fund last Tuesday, there was some pushback from councilors who wanted a speedier accumulation and a larger percentage in the account.
Now with two marijuana facilities up in running and more in the queue, the city has begun collecting tax on product sold.
In fiscal 2019, this amount was $95,872 and in fiscal 2020, it was $206,327.87.
Director of Finance Matthew Kerwood explained said in fiscal 2019, 50 percent of the $95,872 collected went into the general stabilization fund and the remaining 50 percent went into the general fund.
With the creation of this new fund, 50 percent of the revenue stream would still go toward stabilization but the remaining percentage would be split: 25 percent to the general fund and 25 percent to the newly created Public Works Stabilization Fund.
Kerwood said there are two ways to populate a stabilization fund once it is established: allocate an amount of free cash by vote to the fund or designate a revenue stream, however, the latter option cannot be done until the fiscal year after the fund is created.
"What the Department [of Revenue] doesn't want you to do is to allocate the revenue source as you go in and set your tax rate then you take those funds and allocate them into a stabilization fund because now you are basically double-dipping," he said.
Kerwood said the 25 percent cannot be designated and diverted into this fund until fiscal 2021. Money coming in must now go to the general fund for the remainder of the fiscal year.
He said to avoid the delay the council would have had to create the fund prior to July 1 however they voted to place a six-month delay to gather data and to see how much revenue was actually coming in.
City Councilor Melissa Mazzeo said if she knew this six-month moratorium would cause this delay she would have voted against it. She added people are frustrated with the roads and other infrastructure issues and want relief now.
"I don't think the residents want to sit here and wait ... every bit that comes in we should be able to use," she said. "I don't want this to get bogged down because this is money that we have not had before."
Kerwood said once free cash is certified, potentially the council could vote to take the anticipated revenue amount out of free cash and place it into the newly created public works fund.
He added that it may be prudent to wait and let the fund grow because many of these projects are quite expensive. He said this provides the added benefit of really getting a better handle on how much money will be coming in.
Councilor Christopher Connell was less concerned about the delay and more concerned about the amount. Connell advocated for an even split: 50 percent in general stabilization and 50 percent in the public works stabilization.
"We have a system right now where we borrow for a period longer than what these roads are lasting," he said. "We are digging ourselves into a bigger hole and we keep borrowing and borrowing."
He said the city has borrowed an average $2.5 million a year in the past five years for road and infrastructure repair. He said he was growing more confident that with 10 more proposed marijuana operations in the wings, the city could pull in some serious cash to address its infrastructure problems.
Councilor John Krol was on the other side of the spectrum and felt the entire 50 percent should go right to the general fund. This way the City Council and future councils can be more flexible with the money.
"To lock it in 25 percent no matter what that revenue is simply for this purpose I think is not responsible leading into the future," Krol said. "To lock this into one fund does not give you the flexibility to put it where it needs to go."
He added that what the city does with this new revenue says a lot about the city and the city has more important concerns than roads.
"I have never heard anyone say I am leaving Pittsfield and moving to Lenox because the roads are better," he said. "We are saying the one thing we are locking this into is roads. Not schools, not crime issues, not quality-of-life issues. Roads are important but they are not that important."
Councilor Kevin Morandi disagreed and felt the 25 percent being placed in the general fund was enough to address other city concerns. He said personally he thought roads were a major concern of the public. He said people have told him they wish they did not have to drive through Pittsfield because of the roads.
Councilor Peter White found the middle ground and said he understood all his fellow councilors' points and agreed with them all to an extent. He said he felt the option on the table was a good compromise.
The only councilor to vote against the creation of the fund was Krol. The rest of the counselors who had concerns over the fund fell in line after Connell noted he rather see the fund in some form than not all.
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