City Budget Time Reveals New Challenges with Growth, Encore Money

With millions of dollars in new revenues from the Encore Boston Harbor casino mitigation, and a tremendous amount of growth around the city accompanying that development, this year’s City Budget is shaping up to be a challenge – albeit the kind of challenge every other City would relish.

Mayor Carlo DeMaria, City Finance Director Eric Demas and the various City departments are currently putting together budget needs and proposals within City Hall, but it’s a much different budget than ever before. As they craft their City Budget proposal, it is one that for the first time contains nearly $30 million in new revenues from the Encore host community agreement. It also contains a tremendous amount of “new growth” from developments around the city – as well as much-increased hotel and meal tax numbers.

All of it shapes out to be a pretty good problem, but one that also comes with challenges for those crafting the proposal, which should be presented to Council in the coming months.

“Knowing we have more revenues always helps the Budget process,” said Demas. “Just as last year was the most challenging year for our budget, this year we’ll have new challenges too. One of them is knowing what the numbers will be. At least this year we’ll have six to eight months of data to work with. Any time I have data, it makes my job easier and it will be easier every year after as we go along. Every year after will grow much more easy to predict. Next year, we’ll have a year’s worth of numbers to help us know what revenues will be like. These are additional challenges, but I wouldn’t say they are negative challenges…It’s like working with a normal City Budget, but magnified by 10. Honestly, the growth here has probably really just begun.”

With such growth in the City, as Demas said, comes quite a bit of new revenues from “New Growth” numbers on the City’s financial sheets, to increased meal’s taxes and hotel excise taxes at its varying establishments. Add the millions generated from Encore, and it means there is significantly more money to work with this year than in any year before.

That has also caused some issues to pop up as well.

At the state level, much of the state funding sent to Cities and Towns is based on a formula that measures how well off a municipality is financially. Historically, Everett has been one of the more needy communities come budget time, but that has changed.

One of the first changes seen in this City Budget is the fact that School Funding (known as Chapter 70) from the state has changed. This year, Everett will be required to pay around $6 million more to fund the schools than it has in past years. While the City has voluntarily given about that much to the schools over the past three years, now that funding will be required by the state because the City now has the ability to pay more due to its prosperity.

That’s a fact that Mayor DeMaria, Demas and some School Committee members have been talking about for quite some time. And now that day seemingly has come. 

“Everett has experienced phenomenal growth over the past couple of years,” said Mayor DeMaria. “With that growth comes responsibility to not only reduce taxes for our residents, but to invest in our schools, police, fire and infrastructure. Because of our growth, the state is reviewing our minimum investment requirement in our schools and we are anticipating that requirement to grow. I want to thank Senator Sal DiDomenico and Representative Joe McGonagle for their work in last year’s education bill that substantiality increased the state’s commitment to the Everett Public Schools. Along with our increasing investment in the schools, we will continue to lead the Commonwealth in providing one of the best education systems in the Commonwealth.”

State Sen. Sal DiDomenico said he had been warning about the requirement increase for the schools, and said it appears the City is prepared for it. It is, he said, one of the prices of progress.

“The New Growth numbers and the other revenues from the casino and such increase the City’s ability to pay in the state formula,” he said. “Anyone working this in the state and the City weren’t surprised by this. We knew it was coming.”

He said the City would likely continue to be required to pay the extra $6 million, approximately, over the next several years. However, he said while that number will likely stay where it is, the Student Opportunity Act money coming down incrementally to the School Department over seven years would increase substantially.

Demas said from a budgeting perspective, the City is prepared for the increase in school spending – simply because they’ve been giving it voluntarily for the last several years already.

“What we do know right now is the mayor and City Council appropriated above net school spending in the past several years, and we expect this to be about the same, but it will be required,” he said. “We don’t estimate an additional burden on the taxpayer.”

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