Ward 2 Councilor Mayor Ralph J. Figy also serves as chair of the Finance subcommittee. (THE WESTFIELD NEWS FILE PHOTO)
WESTFIELD – Concerns raised during the City Council Finance subcommittee meeting June 1 changed the course of budget discussions in the coming weeks.
Mayor Donald F. Humason Jr. said he would take another look at revenue before presenting his budget to the City Council after Finance Chair Ralph J. Figy and other councilors asked whether Humason had considered all possible sources of revenue.
Figy began by asking how the mayor came up with the revenue forecast of an $8.1 million shortfall.
Humason said a simple review of revenue coming into the city, including meals and hotel taxes, excise taxes, and property taxes, was conducted. He said the property tax revenue isn’t available due to the June 1 extension, but he was expecting it to be between one to two million dollars lower.
However, later in the meeting, Treasurer Matthew Barnes gave a more up-to-date figure, saying collections were down by $571,000.
Humason said they also looked at the state, which hasn’t begun its budget process yet, and won’t until August. He said since state revenue is down by approximately 10 percent, they figured on a 10 percent cut in state aid, which amounts to $4.6 million.
“We added it all up, and it came to $8.1 million,” Humason said, adding that some of that could be collected later as people go back to work, barring another outbreak, and he is hoping it will get better later in the year. “The accountants say, if the economy gets going, the money will start flowing back in,” he added.
“Are there any ways that we can bump up our revenue side?” asked Figy.
“If we bump up our revenues now, put in a spreadsheet, if the DOR (Department of Revenue) thinks it’s unrealistic, we won’t be able to set the tax rate,” said Auditor Chris Caputo, with Figy acknowledging that making adjustments mid-year cost more.
Humason said mid-year cuts are always harder, but he thinks it is relatively easy to put money back in supplemental budgets, if revenue is coming in harder than anticipated.
“I’ve never experienced that. My concern is if we cut now and get money later, what happens to the people who get laid off. There is a significant number on the school side, and I haven’t heard the number on the city side. As a department head, it is hard to make plans for my department, not knowing the money I’ll have and people I’ll have,” Figy said.
Finance committee member Richard K. Sullivan Jr. asked how much certified Free Cash is left. Humason said after paying snow and ice removal and supplies, which were less costly this year, and 1 million to pharmaceutical costs for retirees which is going before the City Council this week, that about $2 million would be left.
“I don’t want to spend all of that, but I wouldn’t mind contributing some of it to the cause to prevent the cuts we’re talking about,” Humason said.
“Every little bit will help. I would strongly encourage that,” said Figy.
At large Councilor Richard K. Sullivan, Jr.
“I will go on the record right now, the revenue assumptions in the budget are historically low and conservative. You have the right to do that. These revenue assumptions are catastrophic, wildly pessimistic. I know the state is not being helpful. I don’t think these revenue assumptions are even close to holding Chapter 70 harmless, which they’re talking about,” Sullivan said.
“I think they’re conservative, I wouldn’t call them pessimistic,” Humason said.
“I look at Northampton; they didn’t even take the two and a half percent override. West Springfield is saying no deficits – Agawam, Chicopee, the same thing. They’re dealing with the same collections. I just want to be clear, I just think the revenue projections are wildly low,” Sullivan said.
Humason said he hadn’t heard about the state holding Chapter 70 harmless. He said Congressman Richard E. Neal did talk about the federal money coming to cities and towns. “If it actually comes, that would be great. Any revenue that we get, I’m willing to put towards the city departments and the schools,” the mayor said.
Sullivan said the mayor would have the support of the council on Free Cash. He also asked about the $3.6 million that Westfield will receive from the CARES Act.
Humason said he can’t spend it on anything non-COVID related, or on any deficit that is non-COVID related.
Figy said that that limits the amount they can ask for to only about $100,000
Sullilvan asked about overtime for the FIre Department, but Caputo said that has already been budgeted, so it wouldn’t be eligible.
“They’re not helping us with the regulations on how to use the money,” Figy said..
Humason said emergency management expenses are reimbursable through FEMA.
Sullivan said there is also anticipated revenue with regards to marijuana, now that the Cannabis Connection has opened and another shop is expected to open this summer, although he acknowledged that cannot be forecast in the budget according to DOR regulations.
Sullivan also said there is nothing in the budget from the stabilization fund.
Humason said they just had a review by Standard & Poors, which liked the levels where the city is now. “If we dip into that fund, it will look poorly on Westfield, and they would consider reducing our bond rating,” he said.
Figy asked whether a repayment plan to stabilization could be worked out.
“If we’re tight now, what kind of a plan would we have to put it back. The question specifically came up, have we used stabilization, and did we pay it back,” Caputo said.
“That’s one of the things they look at. Quite honestly, that number is higher than I ever had as Mayor, because I spend it on the School Department,” Sullivan said.
Figy asked whether the city is looking at any major bonds coming in before the new school, which he said the city won’t be bonding to that for 3 to 5 years.
School Chief Financial Officer Ronald R. Rix said the bond would be going to the council at the end of the feasibility study for $2 million.
“So we could borrow $1.5 million and repay it within two years, if we have a repayment plan that we stick to,” Figy said, adding, “That would be my proposal.”
“I’m still going with conversations I’ve had with our Board of Health director.. There is a good chance COVID will be back next year. I’d just be a little cautious about committing too much now, in case,” Humason said.
“With all due respect, I think it’s the doomsday projection you picked. Any loss of meals tax will be balanced by marijuana sales. I understand auditors and treasurers have jobs to do. I think everyone must be a little more optimistic about this. I’m not crazy, I know there will be cuts. Westfield has historically had good property tax collection. You can count it for whatever risk you’re finally willing to take on revenue projections,” Sullivan said.
Caputo said the trustees have already voted on a health insurance holiday, which will save the city $1.2 million this year.
School Superintendent Stefan Czaporowski asked whether that savings is reflected in the budget, and was told it was not. Czaporowski also asked whether savings in health insurance on the city side from laid employees have been counted, plus additional revenue of $160,000 in Chapter 74 funds from students attending Westfield Technical Academy.
Rix said he estimated insurance savings of the employees that may be furloughed is at $484,000.
“Just between all of what we just talked about, your $8 million is now down to $5 million,” Sullivan said.
“Every little bit helps. That was my hope in having this meeting,” Figy said..
“In my thinking, you’re at $5 (million), and if you use $2 million (in Free Cash), you’re down to $3 (million). And that’s not even using your stabilization account,” Sullilvan added.
“That way we wouldn’t really need to have to do that,” said Figy.
“If we do some of those things, we need time, we would not be ready to have the budget to the City Council on Thursday night,” Humason said.
“I am more than willing to do that if it’s going to save some jobs,” Figy said.
“We’re scheduled to take a vote at the School Committee at 7 p.m. Sounds like the game is changing a little bit,” Rix said, and asked if they should postpone the vote.
“That would be my decision,” Humason, who serves as de facto chair of the School Committee said.
Czaporowski said he agreed, but it means scheduling a special meeting, and there is a June 15 deadline for furlough letters to go out. He also said that 113 people wrote in to the School Committee to make their voices heard.
“I’m glad the mayor and his team are looking at all possibilities to beef up the revenue side of the budget to lessen the impact the budget will have,” Figy said after the meeting, adding, “I’ve got to give (CIty Council President) Brent Bean some credit as well. He and I have been working with the mayor and the superintendent for the last five weeks on this.”
“All I know is that Councilor Figy and I called a meeting of the finance committee to discuss with the administration on how he came up with the total amount in cuts and where we were with projected revenues for the upcoming fiscal year. After that meeting the number changed from $8.1 Million to $5.0 million in cuts,” Bean said on Tuesday.
“I am very disappointed in the lack of communication, it has been very frustrating. Municipal finance is not like balancing your checkbook. There are many moving parts and projections. It is a terrible process we are saddled with and it’s unfair to cities and towns across the Commonwealth. That’s why communication is extremely important,” Bean added.
