WESTFIELD – City officials contacted the Department of Revenue Friday morning to determine if the City Council has the authority to cut the tax levy, action that the council took Thursday night to reduce the tax rate increase for all classes of property to under 1 percent.
Mayor Daniel M. Knapik said Friday morning that City Auditor Deborah Strycharz and Solicitor Susan Phillips spoke with DOR attorneys to determine of that action is legal.
“They asked the DOR to research the legality of the council’s action,” Knapik said. “We expect a confirmatory opinion from the DOR early next week.”
City Council President Brian Sullivan said that he is also awaiting that opinion.
“Depending on that opinion, I don’t think any votes will be needed because we did vote to approve a shift factor of 1.63 and we did vote to use $1.245,368 from the stabilization account to balance the budget based on the mayor’s recommendation for a 2 percent tax levy increase,” Sullivan said.
The council voted to use stabilization to cover a $940,000 shortfall in the budget and to use the remaining money to lower the tax increase which would be 3.4 percent if the DOR determines that the tax levy cut is illegal.
Sullivan said the budget was about $450,000 in the red when it was approved in June. That shortfall was further increased because excise tax revenue, projected at $800,000 based upon a 10-year average, fell below the projection. New growth revenue also came in below the current fiscal year budget.
Typically the budget is balanced by appropriation of either free cash, projected at $2.8 million this year, or by the use of stabilization funds, a practice opposed by the council’s Finance Committee. The city’s free cash account, money remaining in the previous fiscal year budget, has yet to be certified by the DOR and cannot be used until the state agency certified that the are no debts yet to be paid in the prior fiscal year.
Knapik, in his request to use the stabilization to balance the 2014 fiscal year budget, stated that he would use free cash after it is certified to replenish the stabilization account.
The city council cut the tax levy by an additional $1.7 million, money that would need to be taken out of the current budget. Members said the money could be returned to the budget after free cash is certified.
Several council members opposed that levy cut, which was approved by a 9-3 vote, because the entire free cash account would be committed to restoring the stabilization account and the 2014 budget, leaving no funds available for capital investment.
The Council on Aging is anticipating a $300,000 appropriation from free cash to complete the design and engineering effort for the new senior center on Noble Street. Construction of that project, expected to begin by the end of summer or early fall, could be impacted by the lack of free cash.
The present timeline is that the design will be completed this winter and the project advertised for construction bids in the spring. The City Council will have to then approve a $7 million bond for that work before a contract can be awarded. Any delay of the design and engineering work might throw that timetable out of whack.
Free cash is also used for one-time capital purchases and to initiate lease-to-own contracts for heavy equipment used at the Fire, Public Works and Health departments. Free cash is also used for infrastructure improvements not allow under Chapter 90 funding constraints.
At-large Councilor David A. Flaherty, a member of the Finance Committee, said in a written communication that the levy cut is intended to give tax relief to residential, commercial, industrial and personal property taxpayers.
“We decided to set the levy to $2,000,000 less than the state approved levy limit in order to reduce taxes,” Flaherty said. “The money will come from free cash once it’s certified. In the meantime, we may have to temporarily cut an expense line item in order to get the budget to balance.”
“Once the free cash is certified (in a few weeks), we can restore that line item,” Flaherty said. “(Ward 1) Councilor (Christopher) Keefe suggests that the insurance line item for the last couple months of the year may be an easy choice. It will be restored in plenty of time.”
