Every month, many in our city sit at the kitchen table, figure out how to make ends meet and pay the bills that allow them to remain in their homes. That is why my fundamental goal, with every city budget plan, is to meet the city’s own financial obligations in a way that respects those efforts.
With that in mind, I adopted a very tough-minded approach to the city budget for the coming 2016 fiscal year. After three consecutive years of no-frills, “level-funding” plans that kept departmental operating expenses essentially flat, this year I directed the financial team, led by CFO Ari Sky, to implement outright reductions across most departments.
We did so in order to generate savings that could be put toward other areas of the budget over which the city has little or no control.
For example, a $3 million increase was required to replace federal SAFER funding of the Fire Department (Staffing for Adequate Fire & Emergency Response) that will end mid-way through the fiscal year, as well as meet the cost of a labor arbitration ruling.
Of equal concern were the non-discretionary, so-called “fixed-cost” line items. These were forecast to jump 5.7 percent, an increase of $4.2 million. Fixed costs, such as pension contributions, health insurance and debt service, now account for $96 million, or one-third, of all General Fund spending.
Unfunded state mandates were another challenge, with our required payment for charter schools growing by $1.5 million.
The fiscal crunch also meant rejecting a number of requests from departments for more funds, including an initial $8 million increase request from the School Department and $2 million in new funding needs identified by other departments.
To deal with these pressures, my budget plan cuts spending at non-public safety agencies by 1.2 percent. It calls for several new cost-cutting measures, including the elimination of vacant positions, $2.5 million in new line-item reductions and a one-year deferral of scheduled “step” increases for managers. It also continues the hiring freeze I put in place earlier this year.
These measures are tough medicine, for sure, but it is the right approach, because it keeps the city’s financial house in order. We have come too far in stabilizing our fiscal affairs, and now is no time for backsliding.
My budget approach safeguards the major financial strides my administration has made over the past three years. The city has been upgraded by Wall Street to the highest bond rating in its modern history. We have steadily increased our rainy day fund while shrinking our unfunded retiree health care liability by 25 percent, a reduction of nearly $140 million. Our nation-leading solar power initiative and our conversion of 10,000 streetlights will cut $1 million off city government’s utility bills next year.
And our long-term capital plan — a plan that didn’t exist when I took office — is retiring old debt responsibly while allowing us to finance long-ignored, deferred maintenance projects that only cost us more money when neglected further.
In short, the city’s strong financial management and our efforts to modernize and professionalize municipal operations would be jeopardized by the kind of “smoke and mirrors” budget gimmicks that often tempt cities when times get tough.
I won’t let that happen here in New Bedford.
Instead, we are facing our fiscal threats head on, even if it means not investing as much as we would like in some areas, like our schools, where there is an obvious need.
Fellow members of the School Committee were disappointed when I parted ways last month and voted against the school budget they preferred. In a different set of fiscal circumstances, I would have no reservation supporting the spending level that was sought.
But the stark fiscal reality we are facing cannot be ignored.
That is why my budget proposes a lower, though still healthy, 2.1 percent increase for the School Department next year, plus an additional $1.6 million in surplus funds from this year’s school budget. This follows a $7 million budgetary increase last year. Since taking office in 2012, I have secured $15 million in new school funding, so allegations that schools are being shortchanged do not hold water.
To school advocates who would have preferred a larger increase this year, I can only offer this: The decline and the under-investment in our school system unfolded over many years. It did not happen overnight. It has been clear from the start that any serious turnaround effort would take a sustained commitment over time.
And let’s not lose sight of how far we’ve come: Our schools were at rock bottom when I began as mayor, with the system on the verge of a state takeover. For three years, we have committed resources and pursued aggressive reforms that are slowly beginning to bear fruit — like a high school graduation rate back at its highest mark in 15 years.
My budget proposal strikes the right balance by providing a modest schools increase that will keep the turnaround on track despite the many financial headwinds facing the city.
All the budgetary belt-tightening has prompted some to question this year’s austere spending approach and wonder why reductions are necessary when local economic conditions are improving.
It is true that the city is turning the corner economically. We continue to experience significant job growth. The unemployment rate as of March was 2.4 percent lower than the same month last year, and construction permit revenues are 18 percent higher. A variety of indicators reflect broad-based growth.
However, the ongoing jobs expansion has not yet translated into elevated property values and revenue growth, a situation that is not unusual during early stages of a recovery. This leaves city government still greatly constrained until the dynamic changes.
New Bedford faces a challenging fiscal reality in the coming year, chiefly triggered by mandatory increases in non-discretionary areas and unfunded mandates that are driving up costs.
What residents can count on is that I will continue to do whatever it takes to navigate city government safely through these complex and challenging financial waters