Pittsfield Officials See Budget Overview
Finance Director Matthew Kerwood provides a snapshot of the city's finances on Tuesday.
"I am going to give a quick snapshot overview of where we are in fiscal year 2020 then move into a conversation about the financial forecast on the revenue side for fiscal year 2021," Director of Finance Matthew Kerwood said.
Kerwoood outlined the budget process that will kick off in May and went over some metrics that will inform the fiscal 2021 budget. He said the governor has put forth a 2.9 million increase in Chapter 70 school funding and that the city is estimating a total of $169,745,984 in estimated revenues.
This is an increase of $4,111,874 over this year and breaks down to $61,869,547 in state aid, $12,545,725 in local receipts, $750,000 from free cash, other amounts adding up to $621,217, and a tax levy of $93,959,495.
Kerwood said a more conservative 2 percent increase in total valuation is being used for this tax levy. He said although valuations are growing, to the tune of 2.9 percent over fiscal 2019, the city will still be hindered by its levy ceiling for the foreseeable future.
"We have seen steady growth over the last four years but it does not get us out from under the levy ceiling," he said. "I would like to say that it does but I don't see us coming out from under the levy ceiling in the near future."
He said currently the total valuation is $3,684,686,062
The council did ask about the $750,000 in free cash Kerwood plans to use in the budget, which he said he still wants to use sparingly to allow the city to divert more free cash into the stabilization account. He said he would rather see two or three more years of solid growth in stabilization before tapping more free cash.
Councilor at Large Earl Persip III agreed.
"I am on the same side as you are ... it is still not where I think we should be," he said. "I think we should be higher, god forbid a doomsday situation ... Things are good now and this is the time to save."
Kerwood went over some of the budgetary items the city has to grapple with including the more than 2,000 employees and health insurance costs. He said although he expects insurance increases to be closer to 3.7 percent, he is building the budget with a more conservative 5 percent.
He said the city also must consider pension obligations, collective bargaining with union groups, debt payment, as well as typical operational costs
All departmental budgets should be in by Feb 15 and a five-year capital improvement plan will be submitted to the council in April. Mayor Linda Tyer will transmit her budget to the city May 12.
From there, the council will hold budget hearings that should conclude in the passing of a budget in June.
As for fiscal 2020, Kerwood gave a second quarter update and said the city has expended $83,914,840.07 of its $170.6 million budget as of the end of December. He said this is $707,786.60 more than last fiscal year.
On the revenue side, he said the city has collected $76,306,526.67. This is $1,359,419.06 more than last year.
The fiscal 2020 total project revenue is $158,953,452.60.
On the school side, $76,306,526.67 of the $158,953,452.60 budget has been spent, which is $1,359,419.06 more than what it was this time last year.
Auditor Thomas Scanlon said the city's finances are in a good place. He said there were no difficulties performing the audit or disagreements with management. He said the city's financial reporting is also solid and the city has good controls over key and significant accounts.
"So the audit began in November and we had no difficulties performing the audit," he said. "We had access to all accounts, anything we asked for we had access too."
He said the city's stabilization and free cash in total is around $10.1 million. This is about 6.7 percent of the city's budget and although he recommends that this amount be between 6 and 10 percent of the total budget, the city is heading in the right direction.
Scanlon was happy that the city decided to deposit 50 percent of its marijuana revenue into stabilization.
"You have a plan in place with your stabilization fund especially with the marijuana revenue," he said. "You are starting to creep up to that 7 or 8 percent."
He said the higher this percentage, the better position the city will be in to use free cash to reduce the tax rate if need be.
Thomas Scanlon of Scanlon & Associates, the city's auditor, tells the council that the city's financial reporting is solid.
Scanlon said many communities tap free cash and that although the city is in a good place with free cash and stabilization, he will always advocate for communities to budget more conservatively.
"It is common across the commonwealth," he said. "I am an auditor so I am conservative ... I am just trying to steer you in the right direction."
He added that other communities use more free cash and some when they probably should not.
Some more highlights: Scanlon said the city's tax collection rate is 97 percent, certified free cash has increased by $765,000 and the city is working toward funding its pension and OPEB obligations.
Persip asked if Scanlon thought the city should undergo a more detailed audit but he said a forensic audit really is not the right application.
"I am not sure what a more detailed audit is," he said. "If you are referring to a forensic audit that is probably the most overused term in accounting today. From a technical standpoint, there is no such thing."
Scanlon said a forensic audit would take a closer look at very specific areas and focus more on details. He said the audit the city underwent and a forensic audit have different objectives.
Tags: audit, municipal finances, pittsfield_budget,
