Mayor presented to City Council and School Committee on city’s finances
By Brian Z. Zayatz
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On Thursday, January 28th, Northampton City Council held a joint meeting with the School Committee, as mandated by the city charter, for a presentation courtesy of Mayor Narkewicz on the state of the city’s finances.
The presentation began with a number of slides contextualizing Northampton among the region’s other cities and large towns: the city is in the lower third of residential tax rates for the region, and has the second lowest commercial tax rate, owing in large part to the city’s ongoing preference for a single, rather than split, tax rate. Conversely, it’s in the upper third of property values, and has the fourth highest single family tax bill.
One way in which the city stands out from most others in the region is that a relatively large portion of its revenue comes from ‘local receipts,’ like excise taxes on meals, hotels, and cannabis, and relatively little from state aid. While this sounds like it would make the city more vulnerable to the economic impacts of the pandemic, it has actually allowed the city to predict more specifically and with more frequent data inputs how the pandemic will impact city finances as the state delayed the release of its own budget for many months. When many of the city’s receipts came in lower than even their adjusted projections, the city was able to revise them and, as Finance Director Susan Wright reported at the following week’s City Council meeting, only parking revenues continue to lag behind the latest projections.
Mayor Narkewicz reported that the city increased its spending on health and technology last year, though the overall general fund budget shrank by 0.46% between FY20 and FY21. The city received $3 million in CARES Act funds, two-thirds of which went to the schools, which account for roughly 54% of the city’s general fund budget. Following the presentation, Superintendent Provost spoke briefly about the schools’ expenses looking towards next fiscal year in response to a question from School Committee Member Susan Voss (At-Large). Figuring out what level services would cost “was a little bit of a tricky problem this year, because there were so many Covid-related expenses and Covid-related staff that we added into the budget this year,” Provost said, which he estimated cost $1.5 million. He estimated that step raises and wage increases would cost about $1.3 million, but the most difficult to predict will be to what degree expanded spending on health staff and PPE will continue into FY22. The School Committee will be drafting their budget over the course of the next month.
Looking towards the whole city’s FY22 finances, Mayor Narkewicz gave a presentation on projected growth in revenue. The city predicts revenue from new growth (newly taxable property such as new buildings, additions, etc.) will amount to $750,000. Prop 2 ½ allows for a 2.5% increase in the municipal tax levy, the total dollar amount the city seeks to raise in property taxes, between years. A 2.5% increase amounts to roughly $1.7 million, and the Prop 2 ½ override, which voters passed in March 2020, shortly before the Covid began rapidly spreading in the US, allows for another $2.5 million to be levied.
In the governor’s draft budget, net state aid will decrease by about $64,000 out of $10.6 million from last year. (State aid has changed little over the last ten years, putting the onus of keeping up with inflation on municipalities). Local receipts are also down about 31%, or roughly $2 million.
Mayor Narkewicz predicts about $4.8 million in general fund spending increases, the largest of which including a placeholder $2.5 million for departmental increases (including schools), as well as increases to health insurance costs, debt payments, and replenishing the stability funds after dipping into them this year. Thus, assuming the maximum property tax increases allowable by law and a relatively conservative prediction of new growth, the city intends to pass a level services budget in the spring, meaning no cuts will be made and spending increases will only go towards step raises, inflation, and necessary maintenance. The Mayor did not indicate any specific intentions around the police department, which the Policing Review Commission may recommend to downsize. He also clarified, via email, that he hopes “to restore many of the services that were reduced in the FY2021 budget due to the COVID-19 pandemic, especially those in the Senior Services department.”
“I was really surprised how rosy of a picture—well, not rosy, but I’m surprised at how not-dire it was,” said School Committee Member Emily Serafy-Cox (Ward 3) in a phone interview. “My priorities for budget this year are going to be maintaining current levels of staffing so we’re not having major layoffs, and making sure that we have enough support staff in place to support students coming back, hopefully in person, in the fall. They’re gonna have significant educational and emotional needs, and we have to have staffing in place to address those needs.”
Serafy-Cox asked the Mayor following his presentation about new CDC recommendations advising that districts aiming to get students back to in-person learning should do so by closing restaurants and bars. “Does the budget assume we don’t close indoor dining?” she asked, and inquired what the financial impact would be for the city if they did. The Mayor did not answer directly, but said that the Health Department has kept restaurants closed or at a lower capacity than the state has allowed, and that some restaurants have chosen to close for the winter. The revenue projections are accordingly conservative, the Mayor said. He also said he hoped to see teachers and school staff moved up in vaccination priority, and that the MTA and many of the Valley’s superintendents are lobbying for this at the state level.
“I was somewhat disappointed in the answer,” Serafy-Cox told The Shoestring. “We’re under a huge amount of pressure to open schools completely in person… If we’re going to be pushing to open schools, we need to be really serious about what the rest of our community spread looks like.”
City Councilor Alex Jarrett (Ward 5) also asked about whether the city would consider delaying the Prop 2 ½ override again or doing a partial implementation. Mayor Narkewicz responded that the override was passed after months of debate and through a democratic election. “I don’t feel like I’m in a position to delay this any further,” he concluded, noting that delaying it last year meant cutting almost 25 city employees (17 full-time equivalents). “If we defer any longer then we’re basically gonna have to start draining the fiscal stability funds, and if we do that then fasten your seatbelts, because we’re gonna have to make cuts,” the Mayor said, adding that it would have to come from the schools, which he had previously protected from cuts, and put the city “right back to where we were pre-2013,” when the city began recovering from the Great Recession. “The state is not going to come to our rescue, despite the Governor’s rosy press releases.”
Councilor Jarrett also spoke to The Shoestring following the meeting. “One of the things I’m concerned about is, if we see a huge jump in residential prices but a decline in commercial prices because of the pandemic, we’re going to see more of the [tax] burden shift to the residential side of things,” he said. Following his question, he also praised the Mayor for his “proactive stance” on adding additional property tax exemptions as necessary of the 58 allowed at the state level.
I also asked Councilor Jarrett what he thought of the presentation as a member of the Policing Review Commission. “I definitely thought about it in terms of what is reasonable to expect to be enacted,” he said. “What I’m worried about is the Mayor will say, ‘you all made this cut to the police budget, and now that’s the new normal, and we’re not gonna do anything with the extra,’” he continued, noting that he hopes the Mayor will use the $880,000 cut from last year’s budget to start a new department of public safety.
“We’re just going to make recommendations, and the phasing of those would be dependent on [the budget process],” said Councilor Jarrett. “We’ll have priorities… [but] it kind of depends on the mayor’s commitment to alternatives to policing and rethinking public safety.”
Brian Zayatz is a regular contributor to The Shoestring.