The Five Year Forecast

May 2, 2011
By

One of the wonderful outcomes of receivership was a city charter that demanded the city manager to create a five year forecast and to deliver it to the city government.

There was a time before receivership when the city government couldn’t look ahead longer than a day.

That was a time when the city found it difficult to impossible to pay its bills, to meet its obligations or even to deposit the city’s money expeditiously.

In present day Chelsea all bills are paid in 30 days. All moneys coming into the treasury are deposited daily and clear almost as fast.

Bottom line, the city is running more like a bank than a municipality.

Sure, the city manager is still sweating outlays for employee health insurance and pension obligations that are unsustainable as they exist today.

However, with legislation recently passed in the state House of Representatives, municipal employee unions, including teachers, will now have to negotiate sustainable health insurance contracts which will save cities like Chelsea millions upon millions of dollars.

City Manager Jay Ash is predicting a decline in the city’s annual working deficit. He is also predicting adequate state and federal resources to keep the budget working within the confines he has set. This translates, according to Ash into a 2% budget growth from year to year for the next five years.

Because non-school aid is down 7% and retirement costs up 4.5%, deficit spending remains a problem.

However, an expected savings of something near to $3 million on health insurance costs for city employees would solve the city’s basic needs problem.

What Ash doesn’t directly say is that everything hinges on the national and state economies.

If the economic rebound is full blooded and hearty, there will be more than enough state and federal funding and even expanded city tax collections that would sufficiently fill the city treasury so the city would run effortlessly when it comes to money.

Recovery, creation of jobs, expansion of local industry, further development of commercial properties here would all contribute to insuring the future.

Right now, the battle for Ash is to keep the city ahead of the bill collectors by carefully making cuts here and there and supporting cost savings measures that need to be enforced with vigor or the whole ball of wax will melt away.

Chelsea’s financial struggle is just that – a struggle.

Keeping this city solvent and financially sound is an everyday task not easily achieved.

Ash’s five year plan is not bullet proof but it comes as close to a roadmap as there can be when trying to peg the needs of this city with the reality of what will actually be coming in.

It is all a guessing game but Ash comes very close to making the right guess every time.

That’s why he gets the big bucks.

That’s why the city’s financial condition is safe and sound.


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