Mayor Carlo DeMaria and his Financial team presented the official City Budget proposal to the City Council in a meeting on Thursday, Sept. 3 – a budget that restores the difficult and painful cutbacks to staffing made earlier in the summer.
The City’s budget season typically is in April and May, with the proposal typically approved by the City Council before June 30. The new fiscal year starts for municipalities like Everett on July 1. This year, with COVID-19 raging, Mayor DeMaria and CFO Eric Demas took a conservative approach in cutting back on staffing and implementing a month-by-month “continuing appropriation” plan. That is allowed for three months, and now the City has to begin the process of putting a traditional budget in place by Oct. 1.
With recent assurances from the state, Demas said they have been able to restore most all of the cutbacks made in June.
“Nearly everything was restored to Fiscal Year 2020 levels, obviously with the exception of the library, the Connolly Center, and the Wellness Center,” said Demas. “We’re still looking at a Jan. 1 opening for those…The mayor was very pleased to be able to bring back those people whose hours were curtailed or who had been laid off during the continuing appropriation process.”
Demas said the biggest game-changer for the City in its budget process was when Gov. Charlie Baker and the State Legislature announced assurances that they would level-fund municipalities. That, he said, allowed the mayor to go forward with certainty about restoring the cuts.
Demas said the administration is glad to have proceeded the way they did, though it was cautious, it provided stability on the other end.
“It did pay off,” he said. “It’s bittersweet. I wish I had another month so I could see where the first quarter of the fiscal year is at. I’m glad we took the approach we did…I’m very glad to start the traditional budget process, but I am glad we took the steps we did instead of cutting services residents want.”
He said some communities went ahead with City Budgets that anticipated 20 percent cuts to State Aid – which was level funded with cost of living adjustments – and large local revenue cuts. That led to jobs being cut, and for the entire budget year rather than for a few months.
“There could have been services cut and jobs lost for the entire fiscal year,” he said. “That’s something the mayor wanted to avoid at any and all costs. One community cut their budget for the entire fiscal year using a traditional budget process that made cuts of more than 20 percent. Services were severely impacted and jobs were lost.”
In total, the City Departments Budget comes in at $58.442 million and the School Department Budget is at $88.299 million. Total Fixed Costs for the City were reported at $55.52 million.
Right now, Demas said they are carefully monitoring the numbers, and believe they will be able to say there will be no tax increase to residents and taxpayers. That is a big priority for Mayor DeMaria, who said he does not want to raise taxes on homeowners during the pandemic.
“We’re eagerly awaiting where revenue numbers are going to come in regard to what we think they will be,” Demas said. “Additional adjustments might need to be made before we set the tax rate…We anticipate setting the tax rate right on time in November. We’re still waiting to see where New Growth numbers are going to land. We’re confident with what we’ve reported that there will be no tax increase this year.”
Already, Demas said revenues from the fourth quarter of Fiscal Year 2020 have come in fully, and have resulted in no deficits for last year – which is quite an accomplishment for municipalities in what was the worst quarter for revenues in probably a generation.
This year, Demas reported they will likely leave quite a bit of money on the table for the levy limit. They have capacity of $149.75 million, but will only request to use $91.97 million – leaving more than $57.78 million of tax levy capacity on the table.
The approach is conservative, and Demas said he still believes there is a disconnect between the markets and what’s going on at the ground level.
“There’s a much different world right now between the markets and Main Street,” he said.
He added they also don’t expect budget issues for the City to fully recover for several years.
“We did receive a commitment from the state, but we’re not taking anything for granted,” he said. “Both the mayor and I feel the economic concerns are not behind us. We’re not just looking at Fiscal Year 2021, but this will be impacting all municipalities for at least the next five years.”
The City Budget was submitted to the Council for hearings. Council President Rosa DiFlorio will likely schedule hearings to review the various parts of the City Budget proposal in the coming weeks.