Mayor Joe Ganim on Monday submitted a $560 million budget to the City Council up nearly $28 million from the election-year budget approved last year that finance officials say still includes a budget deficit of more than $10 million that will be carried over to the spending plan that begins July 1 with the implementation of property reassessments. Officials say as a result some homeowners will experience a tax increase, others a cut while some will stay the same. Businesses may likely absorb the larger tax hit based on the revaluation.
The first budget of JG2 is a bit of déjà vu for Ganim. When he was elected mayor in 1991 he inherited a multi-million dollar budget deficit from then-Mayor Mary Moran that impacted his first budget as mayor. Taxes went up about six percent that also helped to finance additional police. After Ganim’s first budget, taxes did not rise for the next 10 years. Will history repeat itself?
Overall the gross difference between expenses and revenues this budget year and the proposed plan is roughly $15 million that will be raised through additional tax revenue. Officials project the city will receive an additional $13 million in new revenue from the state generated from payments in lieu of taxes on tax-exempt properties and a new municipal funding share from sales taxes. The implemented revaluation of taxable property to be reflected in upcoming tax bills produced a net grand list of about 15 percent lower.
Officials say there is good news in the budget: the average car tax will drop about 25 percent as a result of the state creating a statewide 32 mil rate on all motor vehicles. The city’s current budget year mil rate is 42. The state will reimburse the city the revenue difference between the current and new motor vehicle rates.
Education advocates may make some noise. Board of Education spending will receive a small increase from $241,565,836 to $242,052,502, based on the proposed budget.
City officials have not pegged a mil rate in the proposed budget declaring it moot because the final mil rate will be set by the City Council. But based on the spending plan, according to sources, the mil rate will likely be north of 50. It depends what the council does with the budget. Ganim told the council Monday night that the local budget picture could change depending on the outcome of the state budget. City spending relies heavily on state dollars.
The spending plan is now before the council’s Budget and Appropriations Committee chaired by Scott Burns and Denese Taylor-Moye. The committee will conduct meetings over the next four weeks including public hearings to review the budget and make changes.
Although city officials say they’ve cut into what they peg an inherited $20 million deficit, including millions in unbudgeted salaries and police pension obligations, from the mayoral administration of Bill Finch, budget builders are carrying over millions into the next budget cycle rather than reaching back for deeper cuts on top of layoffs, realignment of debt, and other cost-cutting measures for the current budget year ending June 30.
The budget projects $5 million in union concessions and attrition; more than $3 million is budgeted for additional police and fire recruits and millions more in pension fund increases.
The city also announced details of a severance package offer for city employees to save money in the long haul. If they accept employees with 25 years of service or 15 years of service at age 55 and above will receive a lump sum of $15,000 and health coverage for one year. The offer expires in May. It is not available for uniformed services or Board of Education employees.