Mayor Clare Higgins has just released her May email update. You may download the details of the FY2011 budget proposal from Councilor Angela Plassmann’s website.
May 2010
Dear Neighbors,
I wanted to take this opportunity to share with you the budget message I presented to the City Council last week, and to encourage you to view the entire proposed Fiscal Year 2011 budget which is available on the city website at this address: www.northamptonma.gov/mayor. There is relatively good news this year. For the first time in my administration, the cost of providing our employees with health insurance is actually decreasing, and city employees will save a small amount on their annual contributions. At the end of this message, you can read my entire submittal letter detailing my FY2011 proposal. You can read departmental details on the website page cited above.
But first, let me share some other good news happening in the City of Northampton.
Northampton Cited as 1 of 35 Green Communities in Massachusetts
Earlier this week, Governor Patrick designated 35 communities as the first officially designated Green Communities. The designation recognizes the work that the city has done already toward sustainable practices and energy conservation. The designation will make Northampton eligible to apply for some of the $8.1 million in grants which will be made available through the Deparment of Energy Resources to further support our vision moving forward. From the Governor’s press release:
“The signature program of the landmark Green Communities Act of 2008, the Department of Energy Resources’ (DOER) Green Communities Grant Program uses funding from auctions of carbon emissions permits under the Regional Greenhouse Gas Initiative to reward communities that win Green Communities designation by meeting five clean energy benchmarks:
- Adopting local zoning bylaw or ordinance that allows “as-of-right-siting” of renewable energy projects;
- Adopting an expedited permitting process related to the as-of-right facilities;
- Establishing a municipal energy use baseline and a program designed to reduce use by 20 percent within five years;
- Purchasing only fuel-efficient vehicles for municipal use, whenever such vehicles are commercially available and practicable; and
- Requiring all new residential construction over 3,000 square feet and all new commercial and industrial real estate construction to reduce lifecycle energy costs (i.e., adoption of an energy-saving building “stretch code”).
This is a great distinction for Northampton and I want to thank in particular our Energy Resource Officer, the Director of Central Services and the members of the Northampton Energy and Sustainability Committee for their hard work in preparing the Green Communities application. (If you would like to see the full text of Governor Patrick’s press release, visit this webpage: http://www.mass.gov/governor, and look for the title “Commonwealth’s First Official Green Communities Designated” under the heading “Press Releases” in the sidebar on the right hand side of the page.)
Northampton DPW wins Trail Neighbor Award
The Friends of Northampton Trails and Greenways recently recognized the good work of Northampton’s Department of Public Works at the annual Bike Breakfast during Bike To Work Week. The grass roots organization of bicyclists and other rail trail enthusiasts gave the DPW the Trail Neighbor Award “for their continued and tireless work on behalf of the Northampton Rail Trail Network. Whether it’s snow removal in the winter, leaf removal in the fall, mowing in the spring or summer, or general maintenance and cleanup year-round, the trails are kept in good shaape and usable by walkers, bikers, strollers and wheelchairs. Given all the budget constraints that they face, these efforts to maintain the growing network of trails is greatly appreciated.” Many thanks to the FNTG for recognizing the DPW’s efforts and well-deserved congratulations to our Public Works’ staff who get the job done.
City Collector Expands Online Payments
The City Collector of Taxes this spring expanded the online payments the city can receive. Now, in addition to property taxes and motor vehicle excise taxes, you can make water/sewer payments online. Many residents find this to be a great convenience and timesaver. The link to online payments is on the city’s homepage, www.northamptonma.gov
Jackson Street School One of 40 Green Schools Worldwide
In April, as part of the 40th Anniversary celebration of Earth Day, the Green Schools Team at Earth Day 2010 featured 40 schools around the world which are actively working to make their schools more sustainable. View the waste reduction and composting initiative at Jackson Street School at www.earthday.net/forty-green-schools. Truth be told, all of our city’s schools as well as the Smith Vocational and Agricultural High School have embraced a vision of sustainability and environmental responsibility that deserves all of our attention and respect. Special thanks to the teachers, students, staff and families at Jackson Street for representing our community on the global stage.
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Fiscal Year 2011 Budget Submittal Message
(To see a graphic overview of where the city’s funding comes from (revenue sources) and where it goes (expenditures by category) please click here: http://www.northamptonma.gov/mayor/Revenue_and_Expenditure_Summaries/
To read proposals for each department, please click here: http://www.northamptonma.gov/mayor/FY06_Departmental_Budget_Requests/
The Mayor’s Budget Message appears below. Thank you for taking the time to read this Mayor’s Email Update. As always, if you have any questions or concerns, please feel free to contact the Mayor’s office at 413.587.1249 or by email – ma***@no***********.gov. You may also visit the Mayor during her Open Office Hours on Wednesdays from 4:00 – 6:00 p.m.)
To the Northampton City Council:
I respectfully submit my Fiscal Year 2011 budget proposal to the honorable members of the City Council for your consideration and approval in accordance with Chapter 44 Section 32 of the Massachusetts General Laws. The Fiscal Year Budget totals to $87,005,485; the General Fund total is $74,595,484; the Water Enterprise Fund total is $6,646,065; the Sewer Enterprise Fund total is $4,980,391 and the Solid Waste Enterprise Fund total is $3,314,106.
Last year at this time, we were grappling with the effects of mid-year state aid reductions and drops in other revenues that created a revenue deficit of over $1.8 million. In addition, we were faced with expenditure growth that exceeded $4 million. This $6 million budget gap was closed by reducing the increase in fixed costs by $2 million; job cuts, wage cuts, program cuts, and furloughs that saved $2 million; and the passage of a $2 million override.
This year, we are facing some of the same issues; however, the order of magnitude is much smaller.
Revenues
Our total general fund revenues will increase by $331,551. This includes the Property Tax, estimated to total $41.6 million in FY2011, including the allowable 2.5% increase ($978,917) under Proposition 2½. This includes the additional $50,000 increase to the levy this year from the 2009 override. Estimated new construction growth of $400,000 and the local share of debt service payments for bonds issued for the JFK Middle School, Fire Station Headquarters, and Northampton High School building projects approved by the voters as property tax debt exclusions have also been included to the levy. In FY2011, these debt exclusions total $1,104,423, a decrease of $116,226 (8.7%) from FY2010. As bonds financed by these overrides are paid off over their scheduled life, the annual amounts added to the tax levy as debt exclusions decreases. The Property tax will fund 61% of our city’s budget in Fiscal Year 2011.
Motor vehicle excise tax collections are estimated at $2,063,600, a decrease from FY2010 of $52,800 due to the anemic economy. In FY2010 the City adopted two new local option taxes, a 2% increase in the Hotel/Motel Excise tax and a 0.75% Meals tax. These two taxes went into effect in October 2009. Based upon the partial year collections to date, the City estimates that the 6% Hotel/Motel excise tax revenue for FY2011 will be $452,175 and that the 0.75% Meals tax revenue will be $377,125.
State Aid has continued to decline. Local Aid is projected to decrease 3.1% in FY2011. This includes a cut in Chapter 70 School aid of $476,964 and a cut in Unrestricted Aid of $154,901. In addition to the local aid reduction, FY2010 was the last year for the City to receive School Building Assistance funds for the Bridge Street and Leeds Schools projects resulting in a drop in this category of state aid of $895,654. This total reduction in state aid of $1.3 million drops the percentage state support of our General Fund budget to 20% of the City’s revenue base for FY2011. This is down from the high point of 30% back in 2002.
Federal revenues support less than 1% of the City’s operating budget. Medicaid reimbursements for school services provided to eligible children are estimated at $330,000, a decrease of $25,620 from FY2010. We estimate that revenues under the Medicare Part ‘D’ program will total only $75,000 in FY2011. This is a reduction from FY2010 due to plan design changes in the Retiree Health Insurance program offered by the City. It is estimated that this benefit will be phased out entirely under the new Health Care Reform law.
User fees and charges comprise 9% of operating revenues and are projected to increase by 4.6% over FY2010 to a total of $6.67 million. The vast majority of this user charge receipts (93%) comes from Smith Vocational out-of-district tuition receipts and Parking Meter Fund revenues. Tuition for regular and special education students is projected to total $4.8 million, an increase of $224,175. The Parking Meter Fund, whose revenues are generated from meter receipts from the City’s on and off-street parking lots and the E. John Gare Parking Garage, funds 100% of the operating and capital costs of the Parking Commission and Parking Enforcement divisions, DPW maintenance, six police officers, three police cruisers, Parking Clerk staff in the Collector’s Office, and a transfer of $35,000 in support of the Northampton Business Improvement District (NBID). Parking Meter Fund receipts in support of the General Fund and NBID are estimated to increase by $41,924 over FY2010.
Estimated revenues from licenses and permits are projected at $922,500, an increase of 1.2% from FY 2010. This modest increase ($84,482) is attributed to a projected uptick in building and iInspections due to the slowly recovering economy.
Fines and forfeits revenues are projected at $756,000, or 1% of total operating revenue, a decrease of $150,000 from FY2010. These include parking violations fines and motor vehicle citations. Parking violations revenues are estimated at $630,000 and Criminal motor vehicle infractions (CMVI) revenues are estimated at $100,000.
Interfund operating transfers are proposed at $4,634,480, an increase of $385,636 (9.1%) over FY 2010. The largest increase in this category is the Ambulance Fund. Beginning in August 2009, the City transitioned to full service, fee supported, advanced life support Emergency Medical services system. Water, Sewer, and Solid Waste Enterprise Funds reimburse the General Fund for support services and fringe benefits. This support is projected to decrease by $106,921 over FY2010 and is due primarily to the Solid Waste Fund’s Host Community Fee being reduced by half. This fee will be eliminated entirely in FY2012.
The transfer in the amount of $165,000 from the Comcast I-Net Reimbursement Reserve account to pay the ten-year debt service on the new Wide-area network and telephone systems. There is also an $80,000 transfer from the Capital Stabilization Fund in support of the Police Facility Bond Anticipation Notes.
Investment income is estimated at $110,150, a decrease of $118,600 (52%) over FY2010 due to historically low interest rates. Three years ago, investment income exceeded $600,000. This year’s budgeted amount is lower than the revenue the City received in interest in 1993. While low interest rates save on borrowing costs, they also constrain investment earnings on the City’s liquid assets.
Expenditures
Overall, General Fund departmental operating budgets increased about 2% from FY2010. When combined with employee fringe benefits and state assessment increases, the net increase of the General Fund is only 0.45%. While Health Insurance actually went down, pension and other fringe benefits increased. Debt service declined with the retirement of the Leeds and Bridge Street School renovations. This allows us to shift our operational priorities to meet increased cost demands.
There are no City staff reductions in this year’s budget. This is possible only because of the wage freeze agreed to last year by City employees. The freeze kept our cost basis down going into this year and allowed us to avoid the layoffs that would have been necessary to fund pay increases. Negotiations are ongoing with our labor unions for FY 11 contracts.
- As a part of the effort to streamline operations, the School and City HR departments were consolidated last year. This budget funds an additional position in HR which will be funded jointly by the City and School department budgets.
- I am proposing the addition of one inspector in the Building Department. This position will be funded entirely by fees.
- The Water Department and the Parking Division are also each adding one position. Those positions will be funded through the Water Enterprise Fund and the Parking Meter reserve Fund respectively.
- Central Services expands the centralized office supply purchasing in this budget. This program has saved money for all of the participating departments and will expand to serve some new departments this year.
- The School Department has been increased by $122,391 or .5%. In addition, Charter School and School Choice sending tuition increased $252,922 for FY 2011 and has been deducted from our state aid. The total cost for Charter and Choice students to the City is $2.3 million.
- There is a reduction in the cost of health insurance due to very modest plan design changes. We are currently in negotiations with our unions about these changes. Our original estimate of an increase of $700,000 or more will actually be a savings of $77,332, and result in a premium cut to our employees.
- The budget also includes an appropriation of $100,000 to the Stabilization Fund. The Fund has been depleted during these last couple of years and it is important to build it back up to hold onto our good bond rating and to have reserves for the next rainy day.
Capital
The City not only provides services to the community but also builds and maintains the infrastructure to support those services. Included in that infrastructure is 150 miles of paved streets, 15 miles of unpaved public ways, 70 miles of sidewalks and crosswalks, 20 bridges, traffic control signs and signals, 1,400 fire hydrants, 2,400 manholes, 3,000 catch basins, 60 miles of storm drain pipes, flood control dikes, 120 acres of recreational fields, 10 miles of bicycle paths, Musante Beach Recreational Facility, 4 City cemeteries and over 100 heavy-duty vehicles and construction equipment. In addition, there are 150 miles of water pipes, 1000 water valves, 8,000 water meters and 100 miles of sewer pipes. It also includes all of the fire trucks, ambulances and police vehicles. We have over one million square feet in 70 facilities and all of the systems necessary to support those structures.
This year we have budgeted $5,569,717 for Debt Service and cash funded capital projects in the General Fund and $3,604,179 in the various enterprise funds to support the capital needs of the City. It also includes the Senior Center debt funded by CDBG and the debt for the new phone system that is paid for by Comcast. The Parking system funds its debt costs in this line. The overrides totaling $962,960 for the Fire Station, JFK and the High School are included in this as well. The State match of $2,237,230 for the two school projects is also included in the Debt service line item.
These numbers are important because they tell us that 66% of our general fund debt is funded by sources other than the underlying tax levy. We have successfully paid for important city infrastructure with CDBG, Comcast payments, School Building assistance, Chapter 90 funds and federal grants to the Fire Department. The voters have supported the renovation of two schools and a fire station at the ballot box.
Next year, $1.7 million will be available to pay for all of the capital needs that we are not able to find other funding sources for. All of that capacity is spoken for to pay for projects such as Lilly and Forbes Library renovations, roofs and boilers at Smith Vocational High School and many of our other schools, fire trucks, paving and sidewalks. This is not an all inclusive list. This allocation represents 2.6% of the City’s General Fund. Each year we try to increase the amount available by .1 to .2%.
I know that you are all concerned about the state of our capital assets in the City. I am too. We will be bringing you the Capital Improvements Plan next month. That plan will lay out even more starkly than I can the need for investment. I thank you for your support of the Comprehensive Wastewater Plan and hope that you will support the Comprehensive Plans for the Water system and the Storm water system. Our Pavement management plan has already quantified the need for $25 million in our roadway system.
This year through the ESCO contract, we will invest $6.5 million in our facilities at no expense to our Capital Plan. In fact, this project will cover some energy improvements that we may otherwise have had to spend scarce capital dollars on.
The most pressing immediate building projects are the Police Station and the DPW facility. I will ask you tonight to fund architectural services for the construction and renovation of our DPW facilities; a project that has been in our Capital Plan. This project, phased over a number of years and partially funded by the enterprise funds, is needed to modernize and consolidate the operations of this important department.
This summer, I will also be asking you to support a debt exclusion override to partially fund the building of a new police station. The current station does not meet the needs of our 70 or more Police Department employees and it does not meet the needs of the community. During the investigations of the devastating arsons that occurred in December of last year, the Police staff was not able to work out of their own station because of space limitations and there is very limited room to store evidence. There is inadequate space to separate victims from suspects during investigation and there is no space large enough for trainings, meetings or shift change roll call. The HVAC system is failing and there are other issues with the building that will need investment if it is not replaced. The state of the station jeopardizes the ability of the department to be re-accredited by the Massachusetts Police Accreditation Commission.
Our goal was to fund this through the debt service budget without an override. The downturn in the economy with the accompanying cuts in state aid and loss of other revenues has made fully funding this $17 million project impossible. Unbelievably, this project was not eligible to be funded through the federal stimulus program. However, the incredibly low interest rates and the competitive bidding climate make this the most advantageous time to borrow and build the station.
In 2004, the total cost of all of the debt exclusions this community voted to support – for JFK, the High School and the Fire Station – was $2,475,806. This year, the cost of all of those debt exclusions will be down to $1,104,422. If an override were to be approved for $10 million of the cost of a new police station, the debt service would begin in FY2014, when the other debt exclusions will be down to a cost of $842,171. The Police Station would then add an additional $850,000 to the debt exclusions, bringing the total in that year to $1,692,171, still 1/3 less than the high point in 2004. It would add about $80 in the first year to the tax bill of the median value home. If the override was for $8.5 million, it would add $67 to the tax bill of a median value home. Because municipal debt is not financed the same way you or I would finance a mortgage, the cost to the homeowner would go down each year until the project is completely paid off.
I know that this is a difficult thing to ask our fellow citizens for. The economy has not turned around yet. However, the public also knows the value of the Police Department that we have here in Northampton and the need to have a station that meets the needs of the men and women who serve our City and the citizens who need their help. I look forward to a full and robust discussion of this issue with the Council and the community.
In Conclusion.
While this may be a less dismal budget than some previous years, we are not out of the woods yet. Our Undesignated Fund Balance was negative this year for the first time in recent years. We continue to be tested on the revenue side by anemic state aid and rock bottom interest rates. We are challenged by the need to improve City services with inadequate resources. Our best resource in the City of Northampton is the wonderful people of our city; always ready to give of their opinions, time, talent and treasure to support the community we all love.
I want to thank the staff in my office, Finance Director Chris Pile, Corinne Philippides and especially Karen Bellavance-Grace for the enormous effort they made to create this budget document. I would also like to thank the department heads, school leadership, union leaders and all of the employees for the passion and dedication that they bring to their work every day. It is my honor to work with them to serve you.
Respectfully submitted,
Mary Clare Higgins
Mayor
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