Narkewicz to Fund Teacher Raises and Leave City Staff Positions Unfilled; Puts $26M DPW HQ Plans on Ice
One week from deadline, the mayor and his finance director are crunching numbers, identifying savings, and meeting with department heads in an effort to present a balanced budget to the City Council next Thursday.
NORTHAMPTON — It’s not going to be easy, but Mayor David Narkewicz says he’s confident he can find enough savings to plug a $563,000 budget shortfall before unveiling his proposed $93 million fiscal 2013 budget to the City Council on May 3.
The gap, which contains an extra $213,000 to cover contracted 1-percent raises for public school teachers, will be bridged mostly by eliminating four or five city staff positions, Narkewicz told Northampton Media this week.
“I’ll be looking at attrition, at some unfilled positions,” he said. “Obviously, there’s my reorganization of the Parking Division. But we’ll be looking at efficiencies in other departments, too.”
Former Parking Director Bill Letendre resigned under a cloud in February.
The mayor declined to be more specific, but four months into his first term, he’s made no move to appoint a new Director of Community and Economic Development. Teri Anderson, who held that position under former mayor Clare Higgins, left in December for a new job.
Last week, after new state budget budget numbers showed an unexpected boost in projected local aid, the mayor amended his draft budget, giving an extra $213,000 to the schools to cover 1 percent cost-of-living raises for teachers. Of that amount, $5,000 will go to the Smith Vocational and Agricultural High School.
The entire boost in the city’s projected Chapter 70 state school aid allocation ($116,000) will be added to the local school budget, instead of used to offset costs. Another $97,000 will come from the $268,8000 hike in unrestricted local aid to the city that was part of Gov. Deval Patrick’s recent supplemental budget package.
“I’ve chosen to prioritize education in my budget,” Narkewicz said. The infusion of school funding is the exact amount necessary to prevent laying off teachers, he added.
Mayor to Department Heads: Tighten Your Belts
The bottom line is that, while the city can expect $2.3 million in new revenues next year, it will be burdened with $2.65 million in new expenses, according to city Finance Director Susan Wright, and that’s before the additional school appropriation.
Narkewicz has asked all other city departments to submit level-funded budgets. One exception to the level-funding mandate is the Forbes Library, which requires a 1 percent increase in funding every year to maintain its state certification.
Narkewicz is enforcing the citywide spending and hiring freeze he instituted in late January, requiring mayoral approval for any expenditures over $250. That tactic is designed to shore up the city’s free cash reserves at the end of the fiscal year. Free cash won’t be certified by the state Department of Revenue until next January — making it off-limits for half of fiscal 2013, which begins this July 1. Still, building cash reserves must start now, said the mayor.
Narkewicz also told Northampton Media he has no intention of advancing the the Department of Public Works’ $26 million request for a new physical plant. Instead, he will assemble a broadly based committee or commission, not unlike the expert body convened to plan and execute the construction of the city’s new police station on Center Street, to assess the department’s needs and submit reconfigured plans.
What with shifting numbers in state aid, unpredictable employee healthcare costs, and ongoing union negotiations, it’s been difficult to hammer down budget projections.
“The numbers are changing every day,” said Narkewicz.
No Control Over Certain Budget Busters
The budget busters are the same as they’ve been for the past several years, with a few added twists.
One shock came in the form of a renewal quote from Health New England showing a 12.5-percent increase in employee insurance costs for next year. Narkewicz says he was able to knock that down to 8.25 percent through negotiations, but that the city will still be out another million dollars or so to cover that cost. In 2011, the city paid about $9.4 million in employee health benefits.
Big reductions in state aid over recent years have made the city more dependent upon local property taxes, but homes and businesses are already being taxed at the highest level allowed under state law. In 2003, state aid supported nearly a quarter of the city’s budget; now that number stands at about 13 percent. Net state aid in fiscal 2013 — after subtracting various assessments — will stand at about $11.9 million.
The pending closure of the city’s regional landfill means there will be no more cash transfers from landfill accounts to help replenish the city’s general fund. In its glory, landfill receipts provided about $800,000 to the city annually.
Meanwhile, fixed costs such as retirement system assessments and Medicare payments keep going up.
And fiscal 2013 will see a spike in the city’s debt service as it’s the first year taxpayers will start paying down the new $17.6 million police station. $10 million of that borrowing is supported by a debt exclusion passed by voters in 2010, which approved a temporary hike in property taxes, and the rest is being paid back with general fund monies under the city’s existing debt cap.
Total debt service on all capital projects — including the police station, JFK Middle School renovations, the Northampton High School addition, the senior center and the fire station — will be about $7.2 million in fiscal 2013.
Veterans benefits, snow removal, legal expenses and fire department overtime remain unknowable numbers. Last year, all of those accounts required additional transfers above and beyond what was budgeted.
And families who send their children to charter schools or or to other districts under “school of choice” are costing the city more money every year. In fiscal 2013 charter and sending tuition assessments will siphon more than $2.5 million from the city, a 13-percent increase over 2012.
A big problem lies in the city’s nearly non-existent cash reserves.
Free cash, stabilization, and capital stabilization funds have all been depleted to offset losses in state aid. “That’s going to be a challenge,” said the mayor.
On the plus side, local option hotel and meals tax revenues are expected to hit a million dollars next year, parking revenues are expected to rise, property tax collections are strong, and the city benefits from an excellent bond rating, which means money can be borrowed at favorable rates.
The city’s annual budget must be approved by July 1. With Narkewicz giving the City Council a two-month window, the nine-member body will have ample opportunity for discussion before taking its two required readings on the matter.
Narkewicz, whose campaign slogan was “Moving a Great City Forward,” has been touring the neighborhoods with his budget message. His final “town hall” meeting on the budget will be held at the Bridge Street Elementary School on Monday, April 30, at 7-9 p.m.
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Mary Serreze can be reached at firstname.lastname@example.org