The board’s decision in July to effectively double the city’s annual contribution to the pension fund for city employees, along with a steep rise in health insurance premiums and workers compensation costs, has led to a more than 10 percent increase in the budget for the next fiscal year, according to Louras.
In July the board passed a resolution requesting that the city budget pension funding at $1.35 million annually for the next 45 or more years to make up for a projected shortfall.
“Since they prioritized that expenditure, I’ll let them prioritize what to cut,” the mayor said in an interview.
But board President William Notte said the pension deficit committee had to address not only the projected deficit but also the fact that new city employees are now plugged into the state municipal pension system and therefore not contributing to the fund.
“It really was a double-edged sword,” Notte said. The city currently has 151 full-time employees.
Notte said the board reasoned that the city could gain leverage in talks with unions by making the first overture and upping its contribution to the fund. Last year the city’s contribution to the fund was $645,000. Notte said he was pleased the mayor had included the pension increase.
“The pension deficit committee really looked at every possible funding source idea before approval of the resolution,” he said. “I don’t think anyone was in a celebratory mood about it, but sound fiscal policy is something that needed to be done.”
The mayor’s logic regarding the pension fund was the mirror opposite, and he argued that there be no requirement for increased contributions. According to the mayor, the notion that unions would follow the city’s lead and contribute more themselves is misguided and irresponsible. “It took the most effective tool that we have out of the toolbox in negotiating pensions,” the mayor said.
Next year’s proposed budget is just under $21.37 million. For this year it was approved at $19.65 million, and the municipal tax rate was $1.517 per $100 of assessed property value.
Health care premiums have gone up more than 12 percent and workers compensation by $187,277, which Louras said is due in part to the increased pension expenditures. Over the last three years the city budget has remained relatively flat, and municipal tax rates have declined slightly.
The July resolution from the pension deficit committee said the pension fund was significantly short and would not meet agreed-upon retirement benefits for city employees. “The city has an obligation to adequately fund the pension,” the resolution stated.
The mayor has also earmarked $99,251 in the budget for an assistant city attorney. According to Louras, the city has traditionally had two attorneys on staff but when he was elected in 2007 that was cut back to one. Over the last several years the city has had to deal with increasingly complex legal issues, and the city attorney is struggling to keep up, the mayor said.
In addition his budget calls for a small increase in funding for stormwater improvements, recreational administration and maintenance, and traffic and streetlights — priorities the mayor outlined in his letter.
The mayor asked the board to maintain budgeted staffing levels at the Police Department — an increase of $610,196 — and to continue to make improvements to city infrastructure including streets, sidewalks and recreation facilities.
The mayor said Project Vision, the city’s community policing initiative that has been credited with a reduction in drug-related crime, has helped revitalize the city, as have improved roads, walkways and parks.
“We cannot allow ourselves to slide backward and return to the days of crumbling roads and bridges, nor to the days of chaos and dysfunction in our neighborhoods,” the mayor wrote.
He is required to submit a budget to the board no later than Nov. 1. The board, which meets Monday, has to finalize and approve a budget proposal by the end of the year.
It is then put to a citywide vote on Town Meeting Day in March. That practice is the result of a petition process a few years ago that changed the city charter. Previously the budget was submitted by the mayor and approved or rejected by the board. The first citywide vote was in 2010, and voters have routinely approved the budgets.
“This year is the single largest increase I’ve submitted for any budget,” Louras said. “It could very well get voted down on Town Meeting Day.”
Dave Allaire, who headed the pension deficit committee, said the board would be looking at every piece of the budget to try to save taxpayers money. “Who knows where we’ll find savings,” he said, “whether in capital or in personnel. Right now everything’s on the table.”
