Mayor Joseph Solomon is looking to change the budget process so the City Council has a clearer understanding of department needs when it gets his spending proposal for the fiscal year beginning July 1.
Solomon recalled as a member of the City Council his first in-depth exposure to the mayor’s budget came during public budget hearings. At the hearings department directors joined the mayor at a table in front of the council to step though the budget for that department and respond to questions from the council and the public.
That won’t change, but Solomon expects the council will have greater insight to his budget proposal and the financial challenges before public budget hearings.
Solomon said he is inviting council members to join him in talks with department directors starting later this month. This would be limited to only one or two council members so as to avoid “rolling hearings” that could be construed as council meetings without proper notification or public access. Solomon thought Ed Ladouceur, council finance committee chair, would be the likely candidate.
The mayor has already given a glimpse of the challenge lying ahead, which simply put is the increasing cost of government and the resources necessary to meet those costs. He has identified a $7.4 million shortfall in the current budget ending June 30 and the potential of an $18 million structural deficit going into the next fiscal year.
Solomon feels a “zero-based” budgeting approach where department directors look at every expense rather than merely applying a percentage increase to their budgets will identify new ways of delivering services and trimming costs. Directors have been asked to prepare two budgets, one using current operations and the second applying a 5 percent cut to expenditures other than salaries.
But can those cuts give the city enough without digging deeper into reserves and/or seeking a waiver of the 4 percent cap on the tax levy? Solomon has said he will not seek a waiver to the levy that would require City Council and General Assembly approval.
So, how much of a hole is the city in?
City Finance Director Brian Silvia said Friday the biggest quandary he faces is the “unknowns.”
The school budget for the current year remains unsolved, although the administration and the schools continue to meet in mediation. Whatever agreement is reached will serve as the starting point for next year’s budget. In addition, nothing is budgeted in the current year for increases in the firefighter’s contract that expired on June 30, 2018. That contract is in interest arbitration.
Asked where city reserves stand, Silvia pointed out that in round figures the city had $22 million in reserves as of June 30, 2017. The 2018 budget drew down $4.2 million and the current budget tapped it for another $3.8 million, which means reserves stand at about $14 million. But this doesn’t take into consideration whatever is needed to reach an agreement for schools this year.
As for what the city could raise in added taxes, Silvia observed that the 4 percent cap is based on what the city taxes, not total revenues flowing into city coffers. With the state phase-out of the motor vehicle tax – those lost revenues are made up by the state – the city levy continues to drop. In the current year it is $238 million, meaning Silvia said that the levy cap for the 2020 budget would be about $8 million.
Revaluation of 41,000 properties as of Dec. 31, 2018 will not affect the levy although, depending on the tax rate, property owners could see their taxes well exceed a 4 percent increase.
Generally, Silvia said in a revaluation a third of the properties see an increase in assessment, a third of the values remain unchanged and a third go down.
As there has been a strong sellers’ market since the prior revaluation three years ago, the overall value of properties has increased. This will result in lower residential and commercial tax rates, but again depending on how the budget plays out and how much an individual’s property assessment has changed will determine their tax bite.