WESTFIELD – The state Department of Revenue has issued an opinion that the City Council acted outside its authority last week when it cut $1.7 from the tax levy to lower the tax rate increase. The DOR decision could result in a tax increase of 3.4 percent to all classes of property.
The council members took that action to avoid a 3.4 percent increase in property taxes for both residential and commercial tax payers, with the idea of using free cash to later return the $1.7 million to the municipal budget.
The opinion, sent by Kathleen Colleary, chief of the Bureau of Municipal Finance Law, Division of Local Services of the Department of Revenue, to City Solicitor Susan C. Phillips, states that the City Council “cannot initiate any such budgetary action or substitute a different financing source for the one proposed by the mayor.
“It can only approve, reject or reduce particular line items proposed by the mayor during the budget process,” Colleary said, citing two earlier DOR decisions, one in the case of Leominster where the council attempted to compel the mayor to use free cash and the other in the case of Newton pertaining to the council discretion over funding sources.
The Leominster ruling states that after the budget review process is completed, “we do not think the council has any means to force such a funding allocation upon the mayor” and that in the Newton case that the “mayor’s recommendation of a funding source be binding on the City Council or Board of Alderman.”
City Council President Brian Sullivan has called a meeting this afternoon with the city’s financial officers and Finance Committee chairman, Richard E. Onofrey Jr., of Ward 5 to discuss the opinion.
“I feel it isn’t fair not to allow the City Council to do something for the taxpayers,” Sullivan said this morning. “We could have made this cut in June (when the budget was approved), but not in December.
“The problem is that when we’re building the budget in June, we do so with estimates and projections,” Sullivan said. “This year those numbers were off, but we have no mechanism to go back now and address that revenue shortfall. We should be able to adjust the levy.”
Sullivan said the estimate of new growth and excise tax revenue both came in substantially below five and 10-year averages used to estimate those revenue sources. New growth, based upon newly constructed property that will be included in the city’s total property value in the future, came in $300,000 below projected revenue.
“There were several major property projects that would have added to the tax rolls that are late,” Sullivan said, “and the excise tax is in the same boat, woefully low.
“It was worth putting the levy cut out there even though several council members questioned if it would fly,” Sullivan said. “So now we’re back to the 2 percent levy increase, with the 1.63 shift factor and $1.25 in stabilization which were all yes votes needed to put the budget in balance. The only vote that is null and void is the levy cut.”
Sullivan is meeting at 4 p.m. today with City Auditor Deborah Strycharz, Treasurer Meghan Miller, Collector Michael McMahon, Community Development Director Peter J. Miller Jr., Phillips and Onofrey to “see what we do going forward.”
