The city has filed a level funded $120 million budget proposal with the city council which contains no layoffs or program eliminations.
“This is not a final document. There could be layoffs or program eliminations or both. It depends on how the final budget document turns out,” said City Manager Jay Ash.
Ash said the present budget environment is volatile.
“There are so many unsettling influences out there, from the State budget and the general economy to changes in our spending requirements and reduced new building fees. It’s impossible to say that what I have presented today will be the final budget I recommend, but this is a very solid start, and should indicate that we are steadfast in our resolve to continue to offer adequate to better services at reasonable financial impacts to those who pay the bills.”
Steadfast is the title of Ash’s FY’11 budget proposal.
He says it describes a mindset at City Hall where the city council and his administration are deeply committed to overcoming the challenges of funding municipal government in what may be the most difficult period to do so since the Great Depression. He said that despite the bad budgeting times, the city was in economically sound by comparison to the conditions the city faced 20 years ago before it fell into receivership.
“The good news is that we are two decades removed from our worst of times and continue to apply the lessons we learned. The famous quote, those who cannot remember the past are doomed to relive it, applies here. We cannot afford to repeat the same awful mistakes that plunged us into near bankruptcy,” Ash added.
He repeated, again his mantra about the budget.
“We need to be steadfast in our approach, and that we will be.”
That approach includes a less than 1% increase in total spending, which Ash believes will be reduced to an actual cut in overall spending by the time the budget process is completed. General government, paying for City Hall employees and services is down 10%, public works is down 7% and public safety is down 3% in the spending plan. Although education costs are projected to rise by 2%, Ash says pending School Department cuts will drop that rise by a percent or two. Of all the major service areas, only human services is up significantly, at 9%, almost exclusively because of a 39% increase in anticipated benefits to be paid to veterans. That number continues to rise as more veterans return home after tours of service in Iraq and Afghanistan.
“We are going to do everything we can to do more with less. Our staff has been terrific in attempting and actually doing so already, however, at some point, reduced funding to support municipal services will carry a heavy toll. We’re right up against that point, so any further bad news will unfortunately cause us to make a major service reduction decision,” predicted Ash.
Although he declined to identify what a major service reduction might look like in Chelsea, Ash did say the options are similar to those that communities around the state and country are making. Those could include reduced fire and police services, reduced hours at or closing the senior center or library, and eliminating busing options for school children.
“We don’t want to go there,” Ash said, in responding to a list of possible negative outcomes, “but reduced state aid and higher employee costs for things like health insurance and retirement are pushing us dangerously close to that point.”
Ash has referred to state aid, employee costs, state assessments and debt service in the past as the City’s “budget busters.” Health premiums alone are up nearly 10% for FY’11, debt service is up 7% and state assessments are up 4%. Conversely, general government aid is down 18% from the budgeted amount this year and 35% down from its FY’01 highs, which was the first year that Ash became city manager.
“Yes, for 10 years now, I have had the pleasure, or should I say the challenge of trying to balance budgets with deepening reductions in state aid. Fortunately, in addition to the tremendous leadership of the City Council and the unparalleled work of a truly accomplished City staff, we’ve been able to rely on expanding economic development to help fill in some of the voids, while we’ve also had to draw on our reserves to completely balance our spending plans.”
Reserves are part of the budget balancing formula again for FY’11, with the City planning on drawing down $2m from Free Cash to avoid making deeper cuts. That drawdown is 33% less than the $2.9m the City used to balance the FY’10 budget, an indication, says Ash, that the Council and he remain serious about being fiscally responsible. Meanwhile, he hopes that economic development will bounce back.
“The general slide of the economy has temporarily halted a number of important development projects, which, in turn, cuts into our new building permit fees and overall growth in our tax base,” reported Ash. “We’ve seen some signs that things are loosening up, and we are hopeful that a new hotel and major renovations will take place at the Mystic Mall in FY’11. That, in turn, will mean new tax revenues and, equally as important, new local jobs.”
This past week, the City Council conducted budget meetings with department heads, reviewing both expense and revenue projections with Ash and considering making further cuts to the budget.
“We trust that the city manager is doing everything he can to promote the fiscal integrity of our budget and City, but we have a responsibility of digging deep into that budget and seeing if more should be done,” stressed Council President Leo Robinson, prior to the budget review meetings.
“That being said, we are all on the same page in wanting to make sure we can offer our residents and taxpayers the very best services and programs our reduced revenues can provide.”