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HI EVERYONE, A QUORUM BEING PRESENT.
IT'S 4:00 PM I WANTED TO CALL THIS AFTERNOON'S OCTOBER 26TH, 2026, JOINT ROUNDTABLE, WORKING MEETING WITH THE SCHOOL COMMITTEE TO ORDER.
THE CALL OF THE MEETING IS TO DISCUSS THE FY 28 BUDGET PLANNING PROCESS AND ONGOING MACROECONOMIC TRENDS IN CAMBRIDGE.
[ROLL CALL]
OF BUSINESS IS A ROLL CALL OF MEMBERS PRESENT.OH, COUNCILOR SIMMONS IS PRESENT.
WHO IS THAT? THAT WAS COUNCILOR ZE.
YOU HAVE NINE MEMBERS RECORDED AS PRESENT.
PRESENT, PRESENT MEMBER DEPALO SANTOS.
PLEASE JOIN ME IF YOU CAN, IN THE PLEASURE OF ALLEGIANCE AND THEN PAUSE FOR A MOMENT OF SILENCE.
THE PLEASURE ALLEGIANCE TO THE FLAG.
TO THE FLAG OF THE UNITED STATES OF AMERICA.
AND TO THE REPUBLIC FOR WHICH IT STANDS.
ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY JUSTICE GIRL, PER CHAPTER TWO OF THE ACTS OF 2025, ADOPTED BY THE MASSACHUSETTS GENERAL COURT AND APPROVED BY THE GOVERNOR.
THE CITY IS AUTHORIZED TO USE REMOTE PARTICIPATION AT MEETINGS OF THE CAMBRIDGE CITY COUNCIL.
YOU CAN VIEW THE MEETING VIA THE CITY'S OPEN MEETING PORTAL OR ON THE CITY'S CABLE.
PLEASE NOTE THAT THE CITY OF CAMBRIDGE AUDIO AND VIDEO RECORDS THIS MEETING AND MAKES IT AVAILABLE TO THE PUBLIC FOR FUTURE VIEWING.
IN ADDITION, THIRD PARTIES MAY ALSO BE AUDIO AND VIDEO RECORDING THIS MEETING.
WELCOME TO EVERYONE FOR OUR MEETING TODAY.
[COMMUNICATIONS FROM OTHER CITY OFFICERS]
FROM THE CITY, AND THEN WE'LL OPEN IT UP TO QUESTIONS FROM THE, UH, BOTH BODIES.AND SO WITHOUT FURTHER ADO, I'LL PASS IT TO THE CITY MANAGER.
THANK YOU SO MUCH, MAYOR SIDIKI.
UM, AND THANK YOU ALL FOR ATTENDING.
UH, I REALLY APPRECIATE, UM, THE PROCESS THAT WE GO THROUGH, UH, FOR BUDGET SETTING.
UH, AND SO, UH, WE DID TAX RATE, UH, A COUPLE OF WEEKS AGO, AND THIS IS, UH, A BIT OF A KICKOFF FOR THE FY 28 BUDGET PROCESS.
UH, WE'VE DONE THIS NOW, UM, FOR, AND I THINK WE'VE BEEN MATURING IT OVER THE LAST COUPLE OF BUDGET CYCLES, UH, BUT ENSURING THAT, UH, AS WE START THE PLANNING FOR FY 28, WE DO A REVIEW OF THE BROADER MACROECONOMIC ENVIRONMENT.
UH, WE LOOK AT OUR PROJECTIONS, UM, AND WE START DISCUSSING WITH BOTH THE SCHOOL COMMITTEE AND THE CITY COUNCIL, UH, SOME OF THE TARGETS THAT WE'RE BAKING IN.
UM, SO LOOKING FORWARD TO THIS DISCUSSION.
UM, THANK YOU ALL FOR, FOR BEING TOGETHER, UM, AND APPRECIATE THE COLLABORATION AS WELL WITH THE SCHOOLS, UH, AND WITH THE SCHOOL COMMITTEE, UH, ON THESE REALLY IMPORTANT DECISIONS THAT WE MAKE TOGETHER AS A COMMUNITY.
UM, SO WITH THAT, I'LL TURN IT OVER TO CLAIRE SPINNER, OUR ASSISTANT CITY MANAGER OF FINANCE, AND TAHA JENNINGS, OUR BUDGET DIRECTOR.
UH, AND JUST WANNA ALSO THANK, UM, SO MANY OF THE STAFF THAT, THAT PUT A LOT OF THE EFFORT INTO THIS, UM, INCLUDING THE ASSESSING DEPARTMENT, UH, GAIL WILLETT, UH, ANDREW JOHNSON, WHO, UM, WHO'VE DONE A LOT OF THE WORK BEHIND, UM, UNDERSTANDING WHAT THE VALUES ARE, WHAT OUR PROJECTIONS MAY LOOK LIKE, UM, AS, UH, AS WE LOOK FORWARD, UM, AND THE STRATEGY TEAM THAT ASSISTED IN MANY OF THESE PROJECTIONS.
UM, SO THANK YOU ALL AND LOOKING FORWARD TO, UH, TO TONIGHT.
UM, SO GOOD EVENING EVERYONE, AND THANK YOU FOR JOINING US AS WE LAUNCH OUR BUDGET PLANNING FOR FY 28.
UH, WE BEGAN THESE JOINT ROUND TABLES, UM, THREE YEARS AGO IN THE FALL OF 24, AS WE PREPARED THE FY 26 BUDGET.
AT THAT TIME, IT WAS BECOMING VERY CLEAR THAT WE WERE FACING SOME SIGNIFICANT, UM, ECONOMIC HEADWINDS IMPACTING OUR COMMERCIAL TAX BASE.
SUBSEQUENT ACTIONS AT THE FEDERAL LEVEL, UM, ADDED FURTHER PRESSURE, PRESSURE TO THE REGIONAL ECONOMY AND INCREASED THE UNCERTAINTY FOR LOCAL GOVERNMENTS.
SINCE THEN, THOSE CHALLENGES HAVE PERSISTED, UH, AND DEEPENED IN SOME WAYS.
UM, AND WE HAVE CONTINUED TO SEE AN EROSION IN OUR TAX BASE WITH DECLINES IN COMMERCIAL PROPERTY VALUES, NEW GROWTH AND EXCESS LEVY CAPACITY.
UH, WHILE ECONOMIC CONDITIONS HAVE EVOLVED, WE CONTINUE TO VIEW THIS AS A MULTI-YEAR MACRO ECONOMIC
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ENVIRONMENT THAT REQUIRES CAREFUL PLANNING AND A DISCIPLINED APPROACH TO BUDGETING, UH, FOR THE THIRD CONSECUTIVE YEAR.SO WE'RE HERE TOGETHER BEGINNING THE BUDGET DEVELOPMENT PROCESS WITH THIS JOINT MEETING.
UM, AND THIS IS REALLY AS, UH, THE CITY MANAGER SAID TO PROVIDE AN UPDATE ON BROADER ECONOMIC OUTLOOK AND OUR BUDGET PROJECTIONS, AND TO REALLY ENGAGE IN AN EARLY DISCUSSION WITH ALL OF YOU, UM, ABOUT OUR BUDGET AND TAX LEVY GROWTH TARGETS FOR FY 28.
UH, REALLY APPRECIATE THE PARTNERSHIP WITH THE CITY COUNCIL, UH, WHO WE WORK WITH THROUGHOUT THE YEAR, UH, BOTH IN PLANNING A BUDGET AND, AND MANAGING THAT BUDGET.
UM, BECAUSE AS WE SAY, REALLY BUDGET DEVELOPMENT IS A YEAR ROUND, A YEAR ROUND PROCESS.
UM, AND THE SCHOOL COMMITTEE AS WELL AS WE WORK TOGETHER TO NAVIGATE THE CHALLENGES AND OF COURSE, MAINTAIN THE HIGH QUALITY, UM, SERVICE THAT OUR COMMUNITY EXPECTS.
I ALSO WANT TO, AS, AS, UH, THE CITY MANAGER DID ACKNOWLEDGE THE WORK OF THE BUDGET TEAM TAHA AND HIS TEAM, UH, THE ASSESSING TEAM, GAIL WILLETTE AND, UH, UH, ANDREW JOHNSON, AS WELL AS, UH, BILL DOLA, OUR COMMERCIAL, UH, SENIOR COMMERCIAL APPRAISER.
UM, AND THE STRATEGY TEAM, UH, PARTICULARLY LEO CAMUS, WHO HAS HELPED US A GREAT DEAL IN BOTH DOING PROJECTIONS AS WELL AS PUTTING TOGETHER THIS PROJECT, THIS, UH, PRESENTATION.
SO NEXT SLIDE, AND MAYBE WE'LL SKIP THE EXECUTIVE SUMMARY, MAYBE NEXT SLIDE, NEXT SLIDE, NEXT SLIDE.
SO WE CAN JUST GET STARTED RIGHT HERE.
SO AS WE, AS I SAID, OUR, YOU KNOW, OUR, OUR COUNTRY, OUR STATE, OUR CITY, WE REMEM WE REMAIN UNDER SIGNIFICANT ECONOMIC HEADWINDS.
AND WHAT I FIND INTERESTING ABOUT THIS, I'VE GONE BACK AND LOOKED AT OUR OTHER TWO YEARS, YOU KNOW, JUST LOOKING AS, UH, WE, WE LIKE TO TAKE THESE SNAPSHOTS FROM THE NEWS.
UM, AND I'D SAY A YEAR AGO, OF COURSE, NONE OF US EXPECTED THAT WE WERE GONNA BE AT WAR, RIGHT? AND, AND SOME OF THE THINGS THAT, UM, HAVE CONTINUED TO REALLY PUT UNEXPECTED PRESSURE ON OUR OVERALL ECONOMY, UM, AS WELL AS THE CONTINUED, UM, PRESSURES THAT OUR COMMERCIAL SECTOR ARE FACING, AS WELL AS SOME OF OUR LOCAL, UM, LO SURROUNDING LOCAL, LOCAL GOVERNMENTS.
SO DURING ECONOMIC DOWNTURNS, YOU KNOW, WE SEE REVENUES, PROPERTY VALUES, AND NEW GROWTH DECLINE.
UM, AND DURING THOSE PERIODS OF ECONOMIC GROWTH, WHICH, YOU KNOW, UP UNTIL ABOUT 22 FY 22 AND 23, WE WERE IN A PERIOD OF, OF, OF AT LEAST A DECADE OF ROBUST EXPANSION.
AND AT THAT TIME, UH, YOU KNOW, WE HAD AN INCREASE IN OUR NON-PROPERTY TAX REVENUES.
WE HAD ENORMOUS NEW GROWTH, AND OUR PROPERTY VALUES, BOTH RESIDENTIAL AND COMMERCIAL WERE RISING.
SO HERE WE CONTINUE NOW TO EXPERIENCE THE NEGATIVE IMPACTS OF A, UM, AN ECONOMIC DOWNTURN.
AND THE THINGS THAT WE ARE PARTICULARLY LOOKING AT AS IMPACTFUL FOR THE CITY'S FINANCES ARE OUR COMMERCIAL REAL ESTATE PROPERTY VALUES, WHICH HAVE FALLEN BY 23% BETWEEN FY 25 AND FY 27.
THE NEW GROWTH, UM, THE ANNUAL NEW GROWTH THAT IS ADDED TO OUR TAX BASE HAS DECLINED BY ALMOST 40 OR A LITTLE BIT MORE THAN 47% BETWEEN FY 25 AND FY 27.
AND SO OUR, AND OUR EXCESS LEVY CAPACITY HAS DECREASED BY 15% OVER THAT SAME TIME PERIOD.
SO THIS ONGOING EROSION REALLY DOES HAVE, HAVE SERIOUS IMPLICATIONS FOR THE CITY'S FINANCIAL HEALTH.
I THINK WE'VE TALKED ABOUT THIS, UM, OVER THE LAST THREE YEARS.
THE THREE SPECIFIC AREAS THAT WE'RE CONCERNED WITH, UM, AT THIS TIME IS REALLY THIS GREATER DEPENDENCE ON OUR PROPERTY TAXES TO FUND OUR BUDGET, UM, AND EROSION OF OUR EXCESS PROPERTY TAX, UH, OUR EXCESS, UH, TAX LEVY CAPACITY.
AND I THINK MOST PARTICULARLY THIS YEAR, I THINK WE'RE GONNA FOCUS ON THAT LIKELY SHIFT OF TAX BURDEN FROM THE COMMERCIAL PROPERTIES TO RESIDENTIAL PROPERTIES.
WE ANTICIPATE THAT THIS IS GOING TO BE THE CASE AS WE'RE SETTING THE TAX RATE NEXT YEAR IN FY 28 AND IN SEVERAL SUBSEQUENT FUTURE YEARS.
SO HERE YOU CAN SEE, UM, SINCE FY 22, UM, HOW ARE WE HAVE A GROWING DEPENDENCE ON PROPERTY TAXES TO FUND OUR BUDGET.
AND REALLY THIS IS REFLECTIVE OF BOTH THAT STAGNATING, UM, OR DECLINING NON-PROPERTY TAX REVENUE, WHICH MEANS THAT ALL OF OUR BUDGET GROWTH
[00:10:01]
IS BEING FUNDED BY TAXES.AND AS THAT HAPPENS OVER THE COURSE OF A NUMBER OF YEARS, SLOWLY, THE PERCENTAGE OF OUR BUDGET THAT IS FUNDED BY PROPERTY TAXES ARE CREEPING UP.
THAT IMPACTS US, YOU KNOW, IN, IN TERMS OF HOW, YOU KNOW, HOW FAST OUR TAX LEVIES NEED TO GROW.
ULTIMATELY, YOU KNOW, ALSO AS WE'RE IN THE, THE, THE ECONOMIC DOWNTURN WHEN WE HAVE LESS NON-PROPERTY TAX GROWTH AND WE ARE NEEDING TO USE OUR, UH, PROPERTY, UH, INCREASE OUR PROPERTY TAX LEVIES MORE TO PAY FOR ALL OF THE INCREASE, THAT IS WHAT IS CAUSING SOME OF THE EROSION OF OUR, OF OUR EXCESS LEVEE CAPACITY, THAT IN COMBINATION WITH, UH, FAR LESS NEW GROWTH HAPPENING.
SO HERE IS THAT, UH, YOU KNOW, JUST A, A GRAPHIC, UM, OF HOW OUR EXCESS PROPERTY TAX LEVY IS TRENDING DOWNWARD.
I DON'T THINK ANY OF US CAN SAY WE DON'T HAVE, UH, YOU KNOW, ACTUALLY A VERY ROBUST AMOUNT OF EXCESS, UH, PROPERTY TAX LEVY.
WE HAVE, YOU KNOW, AT THE, UH, AS OF FY 27, OUR EXCESS LEVY CAPACITY IS AT 160 MILLION.
I THINK THIS IS REALLY JUST A, A, A GRAPHIC OF HOW OVER HOUSED STEEPLY IT HAS, YOU KNOW, BEGUN TO DECLINE.
AND THAT IS BECAUSE IN THIS PERIOD OF ECONOMIC, UH, DOWNTURN, WHEN WE ARE BOTH RECEIVING LESS NEW GROWTH AND WE ARE USING MORE TAXES TO FUND OUR BUDGET, WE ARE EATING INTO OUR EXCESS LEVY CAPACITY.
AND IN SOME WAYS, THAT'S WHAT IT'S FOR, RIGHT? THAT ALLOWS US TO KEEP A STABLE BUDGET WITHOUT HAVING TO, TO DO BIG CUTS, UM, BECAUSE WE DON'T HAVE ANY EXCESS LEVEE CAPACITY TO USE.
SO HERE IS AN EXAMPLE OF HOW WE USE SOME OF OUR EXCESS LEVY CAPACITY FOR THE FY 27 BUDGET.
IF WE HAD BEEN AT OUR FY AT OUR PROP TWO AND A HALF LEVY LIMIT, OUR BUDGET COULD HAVE ONLY GROWN BY $30 MILLION LAST YEAR.
OR OUR, OUR, OUR, ACTUALLY OUR TAX LEVY COULD HAVE ONLY GROWN BY $30 MILLION.
HOWEVER, WE NEEDED OUR TAX LEVY TO GROW BY $47 MILLION.
AND SO YOU CAN SEE HERE THAT WE WERE ABLE TO USE SOME EXCESS LEVY CAPACITY, ALMOST 17 MILLION TO FUND OUR BUDGET SO THAT WE DID NOT HAVE TO DO WHAT MANY CITIES AND TOWNS SURROUNDING COMMUNITIES HAVE TO DO EACH YEAR, WHICH IS MAKE SOME SIGNIFICANT REDUCTIONS IN THEIR BUDGETS, OFTEN IMPACTING SERVICES, SCHOOL DEPARTMENT, BUDGETS, ET CETERA.
SO THE THIRD, UH, YOU KNOW, CONCERN OF COURSE IS THE SHIFT OF OUR TAX BURDEN FROM COMMERCIAL PROPERTIES TO RESIDENTIAL PROPERTIES IN FUTURE YEARS AS EARLY AS FY 28.
AS I SAID, I THINK WE FEEL THAT IT IS PRETTY LIKELY THAT NEXT YEAR AS WE'RE SETTING THE TAX RATE IN FY 28, THAT WE WILL SEE A SHIFT, UM, OF OUR PROPERTY, UH, TAX LEVY TOWARDS THE RESIDENTIAL, UM, TAXPAYERS.
AND SO, UH, ASSESSING DEPARTMENT WORKING WITH US, UM, HAVE MODELED TWO POTENTIAL SCENARIOS.
UH, SCENARIO ONE, WHICH WE CALL OUR BASE VALUE CASE, I THINK IS THE ONE THAT WE THINK IS MORE LIKELY.
UM, AND THAT IS THAT IN FY 28, UM, WE ARE ANTICIPATING A 5.5% INCREASE TO OUR OVERALL LEVY, BUT THAT WILL BE EXPERIENCED DIFFERENTLY BY THE COMMERCIAL, UH, TAXPAYERS AND THE RESIDENTIAL TAXPAYERS.
SO IN THIS SCENARIO, IN FY 28, THE COMMERCIAL LEVY WOULD INCREASE BY 3.1% WHILE THE RESIDENTIAL, UH, LEVY WOULD INCREASE BY 10.3%.
AND AS YOU CAN SEE IN SUBSEQUENT YEARS, UM, AS WE'RE PROJECTING OUT, UM, THROUGH FY 31, UH, WE SEE A CONTINUED DISPROPORTIONATE IMPACT ON THE RESIDENTIAL TAXPAYERS DURING, CERTAINLY DURING FY 29 FY 30 PARTICULARLY, AND CONTINUING INTO FY 31.
AND THIS SLIDE REALLY SHOWS A, A POTENTIAL SCENARIO, UM, WHERE, UM, THE IMPACT IS EVEN MORE SIGNIFICANT.
AND THE DIFFERENCE REALLY BETWEEN THESE TWO SCENARIOS IS, UM, WHAT IS GONNA HAPPEN IN THE COMMERCIAL MARKET AND THE, UM, THE CHANGE IN VALUE.
SO THE FIRST SCENARIO REALLY WAS ASSUMING THAT VALUES WILL DECLINE SIMILARLY TO HOW THEY DECLINED FOR, UM, IN, IN CALENDAR 25, WHICH IMPACTED THE FY 27 TAX RATE, THAT, THAT WE WOULD SEE A SIMILAR DECLINE IN VALUES
[00:15:01]
THAT ARE PART OF OUR TAX RATE SETTING FOR NEXT YEAR.THIS MORE PESSIMISTIC, UM, SCENARIO, UH, IS ONE IN WHICH THE VALUES WILL FALL MORE PRECIPITOUSLY, UM, IN THE COMMERCIAL, IN THE COMMERCIAL SECTOR.
SO OVER THE PAST DECADE, THE CITY'S OPERATING BUDGET GREW BY 80%, UH, INCLUDING IN THIS CURRENT YEAR, NEARLY 300 MILLION FOR THE CAMBRIDGE PUBLIC SCHOOLS.
UM, AND AS WE, YOU KNOW, HAVE, HAVE, YOU KNOW, TALKED ABOUT THAT OVER THE LAST SEVERAL YEARS, WE'VE, WE'VE BEEN SEEING THESE TRENDS ANTICIPATING THAT THEY WOULD CONTINUE.
AND SO IN FY 24, GIVEN THESE ECONOMIC HEADWINDS, UM, WE, UH, BROUGHT TO THE CITY COUNCIL AND SCHOOL COMMITTEE THIS CONCEPT OF SETTING, UH, PROPERTY TAX LEVY GROWTH TARGETS, AS WELL AS OPERATING BUDGET TARGETS.
AND LOOKING BEYOND JUST THE YEAR WE WERE PLANNING FOR LOOKING, UH, OUT FOUR AND FIVE YEARS BEYOND.
AND SO IN FY UH, FOR THE FY 26 BUDGET, WE SET A PROPERTY TAX LEVY GROWTH OF LESS THAN 8% AND AN OPERATING BUDGET TARGET OF LESS THAN 4%.
UH, AND THEN LAST YEAR WHEN WE WERE HERE TOGETHER, WE SET A, A TARGET AGAIN, OF, OF FFY FOR FY 27 OF A LESS THAN 7% PROPERTY TAX INCREASE AND A LESS THAN 5% BUDGET INCREASE.
AND AS YOU CAN SEE HERE, THROUGH A LOT OF WORK WITH OUR, OUR DEPARTMENT, SO CITYWIDE COLLABORATION, AND WITH OUR CITY COUNCIL AND WITH THE SCHOOL COMMITTEE, THE CITY WAS ABLE TO MEET ITS TARGETS IN BOTH YEARS.
UH, FY 27, THE YEAR THAT WE'RE IN, MARKED THE SECOND YEAR OF OUR MODERATED BUDGET GROWTH AND LEVY GROWTH.
AND YOU CAN SEE THAT IN 26, OUR BUDGET GREW BY ONLY 3.8%.
IN FY 27, OUR BUDGET GREW BY ONLY 4.1%.
BUT INTERESTINGLY, OF COURSE, OUR, OUR TAX LEVIES WERE ACTUALLY STILL FAIRLY SIGNIFICANT.
AND THAT REALLY REFLECTED THAT DURING THOSE TWO YEARS, WE WERE ACTUALLY ALSO ABSORBING, UM, THE DECLINE IN OTHER NON-PROPERTY TAX REVENUES.
AND SO AS THOSE REVENUES DECREASED, WE WERE HAVING TO MAKE UP THAT REVENUE WITH PROPERTY TAX REVENUE AS WELL AS FUNDING ANY INCREASES IN THE BUDGET.
SO MOVING FORWARD, NEXT SLIDE.
OH, UH, BUT WE LIKE TO PUT THIS SLIDE IN DESPITE OUR BUDGET MODERATION.
UM, THE CITY CONTINUES TO BE ABLE TO INVEST IN OUR CITY COUNCIL PRIORITIES WITH OVER 290 MILLION IN FY 27.
AND THIS IS JUST A, A REAL SNAPSHOT OF WHAT IS IN OUR FY 27 BUDGET, UM, OUR BUDGETED EXPENDITURES IN THESE AREAS.
SO, SINCE, UH, YOU KNOW, OUR, THESE ECONOMIC CHALLENGES CONTINUE AND WE UNDERSTAND THAT OUR MAIN TOOL TO PROTECT THE CITY'S FISCAL HEALTH AND TO REDUCE THE TAXPAYER IMPACT IS BUDGET MODERATION.
AND SO FOR THE FY 28 BUDGET, UH, WE ARE, UH, SETTING A, RECOMMENDING A PROPERTY TAX LEVY GROWTH OF FIVE AND A 5% OR LESS, AND AN OPERATING BUDGET INCREASE OF FIVE AND A HALF PERCENT OR LESS.
AND THEN WE'VE ALSO, YOU KNOW, AS WE SAY, WE LIKE TO CONTINUE TO BE LOOKING OUT ANOTHER THREE TO FIVE YEARS.
AND SO OUR PRELIMINARY TARGETS FOR THE OUT YEARS IS A 6% OR LESS PROPERTY TAX LEVY GROWTH, UH, AND A 5% OR LESS INCREASE IN THE OPERATING BUDGET.
BUT THOSE, UH, ARE PRELIMINARY TARGETS.
AND AS WE, UH, YOU KNOW, ARE HERE AGAIN NEXT YEAR DISCUSSING THIS AND KNOW MORE ABOUT WHAT HAPPENED TO COMMERCIAL VALUES, WHAT HAPPENED TO OUR, OUR COMMERCIAL, UH, TAX BASE, WE WILL BE REEVALUATING THESE TARGETS.
SO HERE WE HAVE OUR, OUR CURRENT PROJECTIONS.
UM, AND WHAT WE FIND AGAIN, THAT ACHIEVING OUR TARGET IS, IS, IS, IS NOT THAT EASY.
AND SO ACHIEVING THIS UNDER FIVE AND A HALF PERCENT BUDGET TARGET IS GOING TO BE CHALLENGING.
AGAIN, AS SALARIES, HEALTH BENEFITS, CONTRACT COSTS AND OUR DEBT SERVICE CONTINUE TO RISE.
SO OUR INITIAL PROJECTIONS, JUST IF WE, UM, JUST LET EVERYTHING GROW WITHOUT ANY, UH, LOOKING MODERATION OR EFFICIENCIES OR BUDGET REDUCTIONS, UH, WE WOULD NEED MORE THAN 6% TO, TO FUND OUR SERVICES AS IS.
[00:20:01]
WE ARE COMMITTED TO, UM, TRYING TO ACHIEVE OUR BUDGET TARGET OF LESS THAN FIVE POINT A HALF PERCENT SO THAT WE CAN KEEP THE TAX LEVY AT ABOUT FIVE POINT A HALF PERCENT.AND SO WE WILL BE, UH, WORKING WITH THE BUDGET OFFICE.
IN FACT, TAHA WILL BE LEADING THE CHARGE HERE IN FINDING AT LEAST $7 MILLION IN SAVINGS SO THAT WE CAN, UM, UH, HAVE A BUDGET THAT DOES NOT GROW BY MORE THAN 5.5% THIS YEAR.
SO THIS IS JUST, UH, YOU KNOW, ANOTHER, UH, THE, UH, THE OVERALL 12 MONTH PROCESS THAT WE GO THROUGH.
WE'LL BE WORKING VERY CLOSELY WITH THE CITY COUNCIL AND OBVIOUSLY THE SCHOOL DISTRICT, UM, IN DURING THE FY 28 BUDGET CYCLE SO THAT WE CAN ENSURE THAT WE HAVE VERY EFFECTIVE PLANNING AND REALLY TRANSPARENCY IN THE WORK THAT WE'RE DOING, UH, TO DEVELOP THE FY 28 BUDGET.
SO THIS IS SORT OF WHAT WE CONSIDER TO BE THE BEGINNING OF OUR BUDGET PLANNING FOR THE FISCAL YEAR.
UM, WE'RE HERE TODAY WITH THE JOINT ROUND TABLE, UM, AND WE WILL BE, UM, ACTUALLY THIS WEEK, UH, ON WEDNESDAY, WE WILL HAVE BE HAVING A MEETING WITH OUR DEPARTMENT HEADS TO BRING MUCH OF THIS SAME INFORMATION TO THEM AND START THE PLANNING FOR HOW THE CITY DEPARTMENTS WILL BE, UM, WORKING THROUGH THEIR BUDGET.
UH, FOR FY 28, UH, THROUGHOUT THE FALL AND INTO THE EARLY WINTER, WE'LL BE HAVING, UM, FINANCE COMMITTEE MEETINGS, UM, AND SETTING THE CITY COUNCIL BUDGET PRIORITIES, UH, IN COLLABORATION WITH THE FINANCE CO-CHAIRS, UM, AS WELL AS GOING THROUGH THE WORK WITH OUR DEPARTMENTS IN, UM, AND ACTUALLY CRAFTING THE OPERATING AND CAPITAL BUDGETS.
AND THEN IN THE SPRING THERE WILL BE THIS COUNCIL BUDGET HEARINGS AND BUDGET ADOPTION.
AND THEN AGAIN, YOU KNOW, WE DON'T SET THE TAX RATE FOR THE BUDGET THAT GETS ADOPTED IN JUNE INTO THE FALL.
SO REALLY OUR KEY TAKEAWAYS IS THAT WE ARE CONTINUING TO EXPERIENCE THIS MULTI-YEAR ECONOMIC SLOWDOWN.
UM, AND, UM, YOU KNOW, OUR MOST CRITICAL ACTION, OR THE MOST CRITICAL ACTION THAT WE CAN TAKE REALLY IS FOR US TO, UH, WORK TOWARDS MODERATING OUR BUDGET GROWTH.
UM, AND SO THAT IS OUR, OUR TASK BEFORE US FOR THE UPCOMING BUDGET YEAR.
AND WITH THAT, I WILL HAND IT BACK TO YOU MAYOR.
ASSISTANT SENIOR MANAGER, SPINNER.
SO THANK YOU FOR THE EFFICIENT PRESENTATION.
I KNOW A LOT OF THE STUFF THAT WE'VE ALREADY SEEN.
AND SO, UM, WE WILL GO AHEAD AND OPEN IT UP TO EVERYONE FOR QUESTIONS.
I ASK, UH, THAT YOU START WITH TWO QUESTIONS EACH.
UM, IF YOU DON'T HAVE A QUESTION, NO PROBLEM, UH, BUT WE'LL, UH, OPEN IT UP TO MEMBERS TO EVERYONE.
SO PLEASURE OF THE COUNCIL AND THE SCHOOL COMMITTEE.
IF YOU WANNA JUST RAISE YOUR HANDS, I CAN CALL ON YOU.
COUNSELOR NOLAN, TWO QUESTIONS.
THROUGH YOU MAYOR SIDIKI, AND THANKS TO THE TEAM FOR PUTTING THIS TOGETHER.
IT'S REALLY IMPORTANT WE DO THIS NOW SO THAT WE SET EXPECTATIONS FOR OURSELVES AND FOR THE CITY SINCE THIS IS NOT A STORY THAT WE WOULD LIKE TO HAVE, WHICH IS MORE CONSTRAINTS.
IT SAYS THAT WE, THE ASSUMPTION IS ABOUT A 5.5% OPERATING BUDGET AND THE TAX LEVY AT 5.5% THIS YEAR.
THE OPERATING BUDGET ONLY GREW BY 4%, AND THE TAX LEVY WENT UP BY 7%, AND I JUST GOT MY TAX BILL AND IT WENT UP 7%.
AND THERE ARE THOUSANDS OF PEOPLE ACROSS THE CITY WHOSE BILLS WENT UP A THOUSAND DOLLARS OR MORE.
AND IT'S SOMETHING, PARTICULARLY IF YOU'RE ON FIXED INCOME, THAT THERE'S SO MANY THAT MIDDLE INCOME WE KEEP TALKING ABOUT AND SAY WE CARE ABOUT, WHICH IS NOT THE SUPER WEALTHY OR THOSE IN SUBSIDIZED HOUSING WHO HAVE, UM, WHO, WHO DON'T EXPERIENCE THIS, AND A LOT OF CONDO OWNERS BECAUSE THE RESIDENTIAL EXEMPTION HELPS THEM, BUT IT'S ALL THOSE PEOPLE IN THE MIDDLE THAT WE KNOW ARE THE MOST CRUNCHED.
SO I'M CONCERNED ABOUT HOW SURE ARE WE, THAT THAT 5% OPERATING BUDGET INCREASE WOULD NOT TRANSLATE INTO MORE LIKE THE 10%, UH, INCREASE FOR RESIDENTIAL TAXES, IF THAT MAKES SENSE.
BECAUSE THIS YEAR THERE WAS A DIFFERENT NUMBER, AND I DON'T KNOW IF IT'S BECAUSE OF THE MIX OF RESIDENTIAL VERSUS COMMERCIAL, AND IF THAT'S THE CASE, WE BETTER BE EXCEEDINGLY CLEAR THAT WE EXPECT A VERY HIGH JUMP FOR RESIDENTIAL RATES OR OVERALL TAXES.
YEAH, THANK YOU FOR THAT QUESTION.
UM, A COUPLE OF THINGS COLLIDING HERE IN THIS QUESTION.
SO, UM, GREAT POINT IN NOTICING THAT FOR SEVERAL YEARS, RIGHT, OUR BUDGET GROWTH WAS MUCH LOWER THAN OUR, OUR TAX LEVY INCREASE.
[00:25:01]
PIECES TO THAT FOR FY 28, AS WE DID THE PROJECTIONS FOR OUR BUDGET GROWTH AND WHAT WOULD THAT MEAN FOR OUR TAX LEVY? SO WE REALLY KIND OF STARTED WITH THE TAX LEVY INCREASE, RIGHT? SO WE SAID, OKAY, WE WOULD LIKE TO ACTUALLY LOWER OUR TAX LEVY INCREASE AGAIN, WE, WE HAD A TAX OVERALL TAX LEVY INCREASE OF 8% IN FY 26, AN OVERALL TAX LEVY INCREASE OF JUST BELOW 7%, 6.9.CAN WE PUSH IT DOWN TO 5.5? AND WHAT WOULD THAT MEAN FOR BUDGET GROWTH? UM, SO PART OF OUR PROJECTIONS HERE, UM, WHAT WE KNOW IS THAT ALMOST 1% OF THE, UM, OVERALL INCREASE IS ACTUALLY RELATED TO DEBT SERVICE ON THE SEWER SIDE, WHICH WILL BE COVERED BY SEWER REVENUE.
AND SO WE DON'T NEED TO RAISE THAT THROUGH THE TAX LEVY.
SO THAT JUST HAPPENS TO BE WHAT IS HAPPENING FOR FY 28.
WE KNOW THAT WE ARE GOING TO NEED TO BOND A CERTAIN AMOUNT THAT WILL CAUSE AN INCREASE IN THE SEWER DEBT SERVICE.
UM, ADDITIONALLY, UM, A VERY INTERESTING THING IS HAPPENING IN FY 28 ON THE CITY SIDE, NOT ON THE SCHOOL SIDE, BUT BECAUSE WE, UH, PAY OUR EMPLOYEES ON A WEEKLY BASIS, UM, AS OPPOSED TO THE CITY, THE SCHOOL DISTRICT THAT PAY SEMI, SEMI-MONTHLY FOR THE MAJORITY OF THEIR EMPLOYEES, THERE WILL BE A 53RD PAY WEEK, UH, IN PAYDAY, NOT A 53RD WEEK OF PAY, BUT A 53RD PAYDAY IN, IN THE, UM, DURING FY 28 4 CITY EMPLOYEES.
THAT IN OF ITSELF IS, UH, $5 MILLION OR ABOUT HALF A PERCENT OF THAT.
AND BECAUSE IT IS REALLY A SORT OF ONETIME, NOT REALLY ONE TIME, BUT AS IT TURNED OUT, SOMEBODY DID A LITTLE AI SEARCH ON THIS, I THINK IT WAS DANIEL, AND THE LAST TIME THIS HAPPENED WAS 23 YEARS AGO.
OKAY? SO IT'S NOT SOMETHING THAT HAPPENS ON A REGULAR BASIS, AND WE WOULDN'T, WE WOULD, SO WE HAVE, UM, ASCERTAINED THAT IT WOULD MAKE SENSE FOR US TO USE A FREE CASH REVENUE ALLOCATION FOR THIS EXPENSE THAT DOESN'T REALLY GET BAKED INTO THE OPERATING BUDGET IN SUBSEQUENT YEARS.
AND SO IF YOU TAKE OUT SOME OF THAT, IT, IT THEN MEANS THAT WHAT IS, UM, ABOUT FOUR AND A HALF PERCENT INCREASE IN THE OPERATING BUDGET IS TRANSLATING INTO A 5.5% TAX LEVY INCREASE.
SO IF THAT MAKES SENSE, UM, TO THE QUESTION ABOUT THE IMBALANCE BETWEEN THE, UM, COMMERCIAL AND RESIDENTIAL WHERE THERE'S A POTENTIAL THAT THE RESIDENTIAL LEVY WILL GO UP 10%, THAT IS A PROJECTION USING AN OVERALL LEVY INCREASE OF 5.5%.
THAT IS REALLY THE PROJECTION ABOUT THE SHIFT, RIGHT? THAT WE WILL, AND I WILL ALLOW, I I THINK I WILL ASK BOTH, UM, GAIL AND ANDREW PERHAPS TO EXPLAIN THE, THE TECHNICAL MATTER THERE.
BUT WHAT WE KNOW IS THAT WHEREAS IN THIS CURRENT YEAR, AS IN MANY, MANY OF THE PAST YEARS, THE COMMERCIAL SECTOR HAS BASICALLY FUNDED 66% OF THE TAX LEVY AND THE RESIDENTIAL 34%, IF YOU LOOK AT THAT SLIDE THAT, UM, SHOWS THE, UH, THE SHIFT, UH, I THINK IT'S 11.
AND IF YOU LOOK IN THE, THE LITTLE YELLOW BOX THERE, 35%.
SO THE, THE RESIDENTIAL, UH, TAX PAYERS WILL NOW BE FUNDING 35% OF THE OVERALL TAX LEVY.
AND THE COMMERCIAL SECTOR WILL BE FUNDING 65% IN THIS SCENARIO.
AND BECAUSE OF THAT, THE RESIDENTIAL TAXPAYERS WILL EXPERIENCE AN OVERALL HIGHER INCREASE, BUT OUR OVERALL LEVY WILL STILL JUST BE GOING UP 5.5%.
MY SECOND QUE I I THINK THAT'S HELPFUL AND I THINK WE HAVE TO REMEMBER ALL THAT.
THAT'S PRETTY, UH, DAUNTING NUMBERS OF A PERCENT INCREASE.
UM, MY SECOND QUESTION IS, YOU MENTIONED, AND ON THE, UH, WATERFALL CHART, IT TALKS ABOUT A CERTAIN PERCENTAGE INCREASE IN INTEREST IN LOANS.
SO WHAT DO WE, HOW DO WE SEE THAT AS BEING EITHER A STABLE MESSAGE OR NOT? IT'S SOMETHING LIKE 10% OF OUR BUDGET NOW, I BELIEVE CLOSE TO A HUNDRED MILLION DOLLARS OF THE BILLION FOR JUST INTEREST ON LOANS.
IF YOU COULD JUST CONFIRM THAT OVERALL NUMBER AND HOW DOES OPE FIT INTO THAT? IS THAT, YOU KNOW, PENSIONS AND EMPLOYEE BENEFITS, IS THAT A SEPARATE THING OR IS THAT PART OF THIS WHOLE MIX THAT WE'RE TALKING ABOUT? GOOD QUESTION.
PARDON ME THROUGH YOU MAYOR, UH, THROUGH COUNCILOR NOLAN.
UM, SO OUR, OUR DEBT SERVICE NUMBER
[00:30:01]
IS PRINCIPLE AND INTEREST, RIGHT? IT'S NOT ONLY INTEREST, IT IS PRINCIPLE AND INTEREST.IT'S EVERYTHING WE OWE TO PAY, YOU KNOW, AND SO, AND, AND OUR PROJECTIONS ARE TAKING INTO ACCOUNT, WHICH ARE JUST PROJECTIONS RIGHT NOW AS WE GO THROUGH OUR WORK OF DETERMINING HOW MUCH WE REALLY NEED TO BORROW FOR THOSE ONGOING PROJECTS.
UM, BUT TO YOUR POINT ABOUT PENSION, AND WE CURRENTLY, UH, ALLOCATE $2 MILLION INTO OPEP AT, AT THIS POINT.
SO THE, THE INTEREST EARNINGS ON OPEP ARE NOT, NOT PART OF OUR OPERATING BUDGET, BUT BOTH OF THOSE THINGS ARE IN OUR SALARY, WAGES AND BENEFITS, RIGHT? OUR ONGOING PENSION LIABILITY, WHICH I BELIEVE IS ABOUT PROBABLY I THINK AROUND 55 MILLION, UM, FOR NEXT YEAR, 55, SOMEWHERE BETWEEN 55 AND 60 MILLION.
UM, AND WE ARE SLOWLY, YOU KNOW, PUTTING FUNDING INTO OUR O TO OFFSET OUR OEP LIABILITY, BUT THOSE THAT IS ALL IN THE SALARY AND WAGES AND BENEFITS.
COUNCILOR NOLAN YIELDS, WE THANK YOU.
UH, WHO WOULD LIKE TO GO NEXT? COUNCILLOR, SABRINA WHEELER.
YOU, I JUST HAD, UM, ONE QUESTION.
I THINK I UNDERSTOOD MOST OF THE PRESENTATION SHALL UNDERSTAND THE, THE QUESTION THAT COUNCILOR NOLAN SORT OF ALLUDED TO ON, UM, PROPERTY TAX AMOUNTS AND HOW THEY TRANSLATE TO THE BUDGET.
THIS MIGHT BE A QUESTION FOR DIRECTOR WILLETT, UM, OF, YOU KNOW, IF YOU GET A PROPERTY TAX INCREASE AS A HOMEOWNER AND THAT INCREASE COULD BE DUE IN PART TO CITY BUDGET, THE RESIDENTIAL COMMERCIAL SPLIT, IF COMMERCIAL VALUATIONS DECREASE RESIDENTIAL, UH, TAXES INCREASE TO MAKE UP FOR THAT.
PART OF IT ALSO IS THE VALUATION OF THE PROPERTY.
AND THAT PROPERTY TAXES ARE A WEALTH TAX.
IF THE VALUE OF, YOU KNOW, YOUR HOUSE GOES UP 20%, YOU PAY MORE TAXES ON THE WEALTH YOU HAVE.
I WAS JUST TRYING TO UNDERSTAND WHAT THAT, WHAT THE RELATIONSHIP LOOKS LIKE.
IF YOUR, IF YOUR HOME VALUE GOES UP 20%, DO YOUR TAXES ALSO GO UP 20% OR HOW STRONGLY IS THAT CORRELATION? IS IT ONE TO ONE? IS IT, YOU KNOW, THEY GO UP 50% FOR THE 20, A HUNDRED PERCENT.
IF YOUR HOUSE DOUBLES, YOU GO UP X AMOUNT.
JUST WONDERING, I DON'T KNOW IF THERE'S A CLEAR ANSWER FOR THAT, BUT I THINK THAT'S PART OF WHY WE SEE SINGLE FAMILY HOME TAXES HAVE GONE UP FASTER THAN CONDOS.
'CAUSE SINGLE FAMILY HOMES HAVE GOTTEN A LOT MORE VALUABLE RELATIVE TO CONDOS IN CAMBRIDGE.
BUT JUST WONDERING IF YOU COULD TALK ABOUT THAT RELATIONSHIP BETWEEN THE VALUE OF PROPERTY AND, AND TAXES AND WHAT THAT RELATIONSHIP LOOKS LIKE.
THROUGH YOU MADAM MAYOR, UH, YOU'RE RIGHT.
UM, AND THEY ARE NOT A ONE-TO-ONE.
UM, SO WE HAVE SHIFTS IN THE RESIDENTIAL SIDE.
WE HAVE SHIFTS WITHIN THE CLASS.
AND SO IT DEPENDS ON WHO'S GOING UP MORE IS SOMEBODY GOING DOWN, AND THAT IS WHERE WE'VE SEEN THAT THE SINGLE FAMILIES ARE GOING UP MORE BECAUSE THEY HAVE SEEN A GREATER INCREASE IN THAT CLASS THAN IN THE OTHER CLASSES.
YOU KNOW, BESIDES WHAT, UM, COUNCILOR NOLAN TALKED ABOUT WITH THE IMPACT OF THE RESIDENTIAL EXEMPTION ON THE CONDOS, WHAT WE'VE ALSO SEEN IS VERY FLAT RATES ON THE CONDOS THAT THEY'RE NOT APPRECIATION, APPRECIATING LIKE THE OTHER CLASSES ARE.
AND SO THEY'RE GETTING LESS OF THAT SHIFT WITHIN THE CLASS OF WHAT IS HAPPENING.
BUT, UM, YOU'RE ALSO RIGHT IN THAT WE HAVE A LITTLE BIT MORE TO SHIFT TO THE COMMERCIAL, BUT ONCE WE HIT THAT 175% MAX, WE WILL NOT BE ABLE TO SHIFT ANYMORE TO THE, UH, COMMERCIAL.
SO ANY ADDITIONAL INCREASES WILL GO TO THE RESIDENTIAL TAXPAYERS.
AND THAT'S WHY WE SEE IN THAT SLIDE THAT THE, UH, SHARE OF THE COMMERCIAL IS COMING DOWN AND THE SHARE OF THE RESIDENTIAL IS GOING UP.
ALL IT TO SAY THERE'S NOT, THANK YOU.
THERE'S NOT LIKE A STRAIGHT ANSWER OF IF THE VALUE OF MY HOME DOUBLED IN THE PAST 10 YEARS, MY PROPERTY TAXES MAY NOT HAVE DOUBLED.
THERE'S JUST A LOT OF INPUTS THAT GO INTO IT.
AND THEN WHEN YOU ALSO LOOK AT WHAT'S BEEN HAPPENING WITH THE TAX RATE THAT AS THE COMMERCIAL VALUES WERE GOING UP, THE TAX RATES ARE COMING DOWN.
SO YOU HAVE THAT GOING ON ALSO OF, UH, IF THE VALUES ARE GOING UP, THE RATES ARE COMING DOWN, IF THE VALUES ARE GOING DOWN, THE RATES ARE COMING UP.
AND SO YOU HAVE THIS OTHER INVERSE RELATIONSHIP THAT'S HAPPENING.
SO I'D SAY THERE'S, THERE'S JUST TOO MANY INPUTS AND TOO MANY DIFFERENT, UM, UH, THINGS THAT ARE HAPPENING TO BE ABLE TO SAY IT'S, IT'S ALL ONE THING OR IT'S THIS PARTICULAR THING, OR THIS IS THIS VERY, UM, FIXED PERCENT CHANGE.
UM, I THINK COUNCILOR SABINA WHEELER, I WOULD SAY TO THE TWO ROOT, THE OTHER ROOT QUESTIONS YOU'RE ASKING, UM, I THINK PROPERTY TAXES IN THE WAY THAT WE'VE STRUCTURED THEM ARE FUNDAMENTALLY PROGRESSIVE IN THE SENSE THAT, UM, IF YOU HAVE PROPERTY, RESIDENTIAL PROPERTY THAT IS WORTH MORE, YOU ARE PAYING A GREATER SHARE OF TAXES THAN SOMEBODY WHO HAS PROPERTY VALUE THAT IS WORTH LESS.
THE RESIDENTIAL EXEMPTION, UH, MAKES THAT EVEN MORE TRUE BECAUSE IF YOU OWN PROPERTY THAT YOU KNOW, A LARGE PERCENTAGE OF THAT VALUE IS COVERED BY THE EXEMPTION, THEN YOU'RE NOT BEING TAXED ON THE FULL VALUE, LIKE A SMALLER PERCENTAGE OF YOUR PROPERTY VALUE IS BEING TAXED.
UM, I THINK TO YOUR QUESTION ABOUT HOW THINGS CHANGE,
[00:35:01]
IT'S MORE A DISTRIBUTIONAL QUESTION BECAUSE IF EVERYBODY'S PROPERTY VALUE GOES UP BY THE SAME AMOUNT, THEN THERE'S NOT REALLY A SUBSTANTIVE CHANGE.UM, I THINK IT'S MORE ABOUT IF THERE ARE SHIFTS ACROSS THE CLASSES.
AND SO WE HAVE SEEN THAT OVER THE LAST COUPLE OF CYCLES WHERE SINGLE FAMILIES, SINGLES, TWOS AND THREES, THOSE PROPERTY VALUES HAVE BEEN GOING UP VERY QUICKLY, WHEREAS CONDO VALUES HAVE BEEN RELATIVELY MORE CONSTANT, AND THEREFORE CONDOS IS A SHARE OF THE OVERALL PROPERTY TAX BURDEN.
UM, THEIR TAXES HAVE GONE UP A LITTLE MORE SLOWLY.
UM, BUT THAT'S MORE, IT'S MORE A DISTRIBUTIONAL THING WITHIN THE DIFFERENT CLASSES OF PROPERTIES.
IS THAT RIGHT? UH, DIRECTOR, I GO BACK, I THINK I GOT THAT RIGHT.
DIRECTOR WILLETT, UH, I JUST, I JUST WANNA CLARIFY, THE RESIDENTIAL EXEMPTION IS EVERYONE GETS THE SAME VALUE, UH, THAT IT IS MORE IMPACTFUL ON A LOW VALUE PROPERTY THAN ON A HIGH VALUE PROPERTY.
ARE THERE QUESTIONS ON ANY OF THIS COUNCILOR FLAHERTY? YEAH, WE'LL USE THE MIC.
AND I GUESS THIS IS FOR, UM, ASSISTANT CITY MANAGER SPINNER.
YOU, YOU MENTIONED THAT THE EXCESS LEVY CAPACITY IS, UH, TIGHTENING BECAUSE OF THE DECREASE IN OUR NON-PROPERTY TAX REVENUE.
IS THAT RIGHT? UH, THROUGH YOU MAYOR, UH, TO YOU COUNCILOR FLAHERTY? I THINK IT'S A COMBINATION OF THINGS.
I, I THINK, AGAIN, AS, AS, AS, UH, DIRECTOR WILLETTE SAID, MANY THINGS INTERSECT TOGETHER TO, TO, UH, TO IMPACT THESE THINGS.
SO IN OUR CURRENT, I, I THINK, UM, I THINK THE SLIDE THAT SAID, YOU KNOW, LIKE WHAT HAPPENS IN A DOWNTURN, NON-PROPERTY TAX REVENUES DECLINE MM-HMM
UM, WE ARE OUR NEW GROWTH DECLINES, SO WE'RE NO LONGER BEING, UH, WE'RE, OUR, OUR, OUR OVERALL TAX LEVY LIMIT IS NOT INCREASING, AND WE'RE GROWING MORE DEPENDENT ON PROPERTY TAXES TO FUND OUR BUDGET.
SO WE'RE ACTUALLY EATING INTO OUR EXCESS LEVY CAPACITY SO THAT WE CAN FUND OUR BUDGET THROUGH TAXES.
WE'RE, WE ARE LUCKY IN THAT WE DO HAVE THAT EXCESS LEVY CAPACITY.
AND SO I, YOU KNOW, I THINK TIGHTENING IT IS DECLINING AND WE CAN RUN SCENARIOS THAT COULD SAY THAT OVER A CERTAIN AMOUNT OF TIME, IF, IF, IF NEW GROWTH STAYED SORT OF WHERE IT IS TODAY AT A FAIRLY LOW CLIP, AND WE CONTINUE TO INCREASE OUR, OUR LEVEES BY SEVEN AND 8% A YEAR, THERE'S SCENARIOS THAT WOULD SHOW US IN SEVEN OR EIGHT YEARS BEING NEARLY HAVE, HAVING NEARLY EATEN THROUGH OUR EXCESS LEVEE CAPACITY.
I THINK WHAT WE'RE, WE'RE TRYING TO, TO STRIKE THAT BALANCE THAT IS WE'RE WE'RE BEING THOUGHTFUL ABOUT, UM, OUR BUDGET GROWTH.
WE'RE BEING THOUGHTFUL ABOUT OUR LEVY INCREASES, BOTH IN SOME WAYS TO PROTECT THAT EXCESS LEVY CAPACITY, BUT WE PROBABLY, YOU KNOW, WE HAVE ENOUGH THAT WE DON'T NEED TO BE CRAZY ABOUT THAT AT THIS MOMENT, BUT WE'RE ALSO THINKING ABOUT THE IMPACT ON TAXPAYERS.
AND WITH THIS SHIFT HAPPENING THAT SEEMS TO BE BUBBLING UP FOR FY 28 TO BE A LITTLE BIT MORE OF AN ISSUE, I THINK, THAN OUR CONCERNS ABOUT THE EXCESS LEVEE CAPACITY, THOUGH IT IS, IT IS PART OF THE WHOLE PACKAGE OF WHAT WE'RE LOOKING AT.
AND, AND I GUESS THE FOLLOW UP THEN IS THE EASY ANSWER IS TO MODERATE BUDGET GROWTH EASY AND MOST DIFFICULT ANSWER, BUT YES, AND IT'S ALSO OUR SINGLE LEVER THAT WE CAN CONTROL, RIGHT? WE CAN'T REALLY CONTROL WHAT'S HAPPENING IN THE MACROECONOMIC ENVIRONMENT, UM, AND WE DON'T HAVE A CRYSTAL BALL OF KNOWING, YOU KNOW, WHEN THIS ECONOMIC DOWNTURN IS GOING TO END.
AND, YOU KNOW, I THINK THE FIRST WILL BE A MOMENT WHERE PERHAPS IT PLATEAUS AND WE DON'T REALLY HAVE THE INSIGHT TO KNOW WHEN WILL WE START, YOU KNOW, SEEING SOME OF THAT ROBUST GROWTH THAT HAS FUELED BOTH THE ECONOMY AS WELL AS, YOU KNOW, THE CITY'S, YOU KNOW, FINANCIAL STABILITY, YOU KNOW, COUNCIL AND FOR NEW MADAM MAN, IF, IF I'M CORRECT, WITHIN THE OPERATING BUDGET, THERE ARE SECTIONS WITHIN THE BUDGET THAT CAN'T BE TAMPERED WITH, FOR INSTANCE, COLA DEBT SERVICE, ET CETERA, THAT THOSE ARE FIXED COSTS THAT AREN'T GONNA CHANGE.
AND SO THE ONLY THING THAT THE LEVER THAT WE REALLY CAN CONTROL, THE REAL ACTUAL CONTROL THAT THIS GROUP CAN HAVE IS ON NEW GROWTH, NEW PROJECTS, NEW SPENDING.
THAT'S WHAT'S ATTRIBUTED TO THE INCREASE IN OUR BUDGET
[00:40:01]
YEARLY, WHICH I THINK OVER THE LAST 10 YEARS HAS BEEN 80% OR SOMETHING LIKE THAT ACCORDING TO THIS S SUSAN, THANK YOU, UH, TO THE EXTENT THAT WHEN WE SAY NEW GROWTH, WE'RE REALLY NOT TALKING ABOUT NEW GROWTH ON THE COMMERCIAL DEVELOPMENT SIDE, BUT IN BUDGET, NEW, NEW, NEW PROGRAMMING BUDGET AND INITIATIVES.THAT IS, UH, THERE ARE, YOU ARE CORRECT IN THAT, UH, UH, UH, THIS PROJECTION IS, IS PREDOMINANTLY A FIXED COST PROJECTION THAT WE HAVE HERE, SO THAT IS CORRECT.
I, I WANTED TO ASK ABOUT SLIDE 14.
UM, AND I, I KNOW WE'VE, WE'VE HEARD ABOUT THIS BEFORE, BUT IT, I THINK IT WOULD BE GOOD TO HAVE A LITTLE REFRESHER ABOUT, SO IT LOOKS LIKE THE YEARS WHEN THE TAXES ARE REALLY GONNA BE HIGH WILL BE FISCAL YEAR 28, 29, AND 30.
AND I THINK THAT HAS TO DO IN PART WITH OUR NEEDING TO PAY BACK DEBT DURING THAT PERIOD.
BUT CAN YOU, UM, UH, ASSISTANT CITY MANAGER, SPINNER, CAN YOU AGAIN JUST GIVE US A QUICK REFRESHER ON WHY, UM, THE LEVY INCREASES WILL BE SO MUCH HIGHER BETWEEN 28 AND 30, AND THEN OUR PROJECTED TO GO DOWN IN LIKE 31? I THINK THAT'S SLIDE 12 MAYBE.
UH, YEAH, I, I, IT ON, ON THE CITY DECK, IT'S SLIDE 14, MAYBE IT'S RIGHT.
IT'S, IT'S ABOUT, UH, LEVY INCREASES.
IT IS THE, IS THE HEADING ON IT A POTENTIAL SHIFT OF TAX BURDEN? NO, THE HEADING IS, UH, FISCAL 26 31 LEVY INCREASES IN PERCENTAGES.
DO YOU WANNA ASK? OKAY, MAYOR, YOU CAN ASK HER IF IT, I, I SEE.
I, I THINK, I THINK THAT THIS IS THE, THE ONE SHE'S DOING.
IT'S EITHER BASE VALUE CASE OR SCENARIO.
SO THROUGH YOU MAYOR, TO, TO COUNCILOR, TO COUNCILLOR ZUI.
UH, I THINK THIS, UM, WE'RE STILL IN, IN THIS SCENARIO, IT IS NOT SO MUCH THAT THE BUDGET IS INCREASING BY THOSE HIGH PERCENTAGES.
UM, WE'RE ACTUALLY SHOWING OUR PROJECTION FOR THE LEVY INCREASE, UM, TO BE, UH, 6% IN FY 29 THROUGH 31.
I, I THINK THAT WHAT IS HAPPENING IN THOSE PARTICULAR YEARS, UH, IS THAT, UH, BECAUSE OF THE, THE DECLINE IN COMMERCIAL VALUES AND THE FACT THAT WE WILL BE AT THE MAXIMUM COMMERCIAL FACTOR, AND SO WE WILL NOT BE ABLE TO SHIFT ANY MORE OF THOSE INCREASES ONTO THE COMMERCIAL, UH, THE RESIDENTIAL TAXPAYERS, THE RESIDENTIAL LEVY WILL BE GOING UP AT A HIGHER RATE.
AND THEN IS YOUR THOUGHT THAT IN LIKE FISCAL YEAR 31, OF COURSE WE CAN'T TELL THE FUTURE, BUT THINGS, UM, FLATTEN SOME, UH, TO 7.2 AND 5.2.
SO ARE YOU THINKING, IS THAT WHAT YOU'RE ANTICIPATING IS THAT THINGS MAY STOP DECLINING AND PLATEAU BY 31? UH, THANK YOU COUNCILLOR ZUZI, I MAY ASK EITHER, UM, DEPUTY DIRECTOR JOHNSON, OR DIRECTOR, UH, WILLETTE TO, TO, UM, RESPOND TO THAT BECAUSE IT REALLY IS ABOUT COMMERCIAL VALUES AND, AND THEIR PROJECTIONS AROUND WHAT THEY THINK MAY BE HAPPENING, UH, WITH COMMERCIAL VALUES IN THOSE OUT YEARS.
IT'S, UH, WHAT IS HAPPENING IS THAT WE ARE PROJECTED TO USE UP THE LAST AMOUNT OF LEGAL SHIFT WE CAN DO, UH, IN 28, AND THEN ANY FURTHER DECLINES ON THE COMMERCIAL SIDE ARE GOING TO DIRECTLY AFFECT, UH, RESIDENTIAL PROPERTY OWNERS FROM THEN ON OUT.
OUR HOPE OR EXPECTATION IS THAT, YOU KNOW, BY FY 31, THINGS WILL START TO EVEN OUT, BUT THAT IS REALLY, YOU KNOW, A FAR OFF PROJECTION AND WHEN WE DON'T REALLY HAVE A, A CLEAR SENSE OF WHAT'S GONNA HAPPEN AT THAT TIME.
I JUST WANNA MAKE SURE, UM, AGAIN, WITH COUNSELOR, UM, FLAHERTY THAT, YOU KNOW, WE, WE DO HAVE THE OPTION OF, IT'S DIFFICULT, BUT LOWERING HOW MUCH WE SPEND ON PROGRAMS, AND THEY'RE ALWAYS UNINTENDED, UM, EXPENSES THAT WE'LL NEED TO PAY.
AND I JUST, I, I WORRY ABOUT THE IMPACT ON HIGHER RESIDENTIAL
[00:45:01]
AND COMMERCIAL TAXES ON OUR RESIDENCES AND ON OUR, ON, ON OUR RESIDENTS AND OUR BUSINESSES.AND SO I, I THINK, AGAIN, WE NEED TO BE AWARE THAT WE'VE GOT THIS LEVER THAT WE CAN LOWER OUR SPENDING.
THAT'S ANOTHER THING THAT WE CAN BE DOING IF WE HOPE TO, UM, KEEP, UH, RESIDENTIAL AND COMMERCIAL TAXES LOWER.
AND I, I THINK WE CAN DO THAT.
I THINK WE CAN CUT MORE THAN 7 MILLION.
I KNOW THERE WILL BE PUSHBACK.
I KNOW OUR RESIDENTS ARE, UM, ACCUSTOMED TO A CERTAIN LEVEL OF PROGRAMMING, UH, THE CITY IS EXTRAORDINARY, BUT IT, I THINK IT JUST MAKES SENSE GOING FORWARD.
COUNCILOR ZUBIE, THANK YOU FOR THE PRESENTATION.
CURIOUS ON THE REVENUE RESOURCES SIDE, WHERE ARE WE ON LIKE THE EXPLORATION OF WHAT THAT COULD DO TO HELP WITH THIS, UH, PROCESS? AND, YOU KNOW, THINKING OF THINGS LIKE PILOT UPDATES ON SITUATIONS LIKE THAT WHERE WE CAN THINK ABOUT HOW WE CAN ALSO, UM, SUPPORT, YOU KNOW, MAKING SURE THAT THAT BURDEN DOESN'T NECESSARILY SHIFT ENTIRELY ON THE RESIDENTS, BUT I UNDERSTAND THAT EVEN WITH THOSE REVENUE RESOURCES, I'M SURE THEY WOULD NOT BE SIGNIFICANT ENOUGH.
UM, SO I'D BE CURIOUS TO HEAR IF THERE ARE ANY UPDATES ON STUFF LIKE THAT.
UM, THANK YOU FOR THE QUESTION.
COUNCILLOR ZVI, UM, NO SUBSTANTIVE UPDATES ON PILOT.
UH, I THINK WE HAVE BEEN IN A PRETTY LONG NEGOTIATION WITH HARVARD, UH, OVER THE PILOT AGREEMENT.
UM, I THINK THERE ARE HOPES THAT WE CAN GET SOMETHING, UM, SIGNED AND, AND COMMUNICATED TO THE COUNCIL.
UM, I THINK FOLKS HAVE BEEN AWARE THAT THERE HAVE BEEN SOME RECENT PILOT AGREEMENTS THAT WERE PRETTY, UM, THAT WERE PRETTY, UH, STRONG, UH, SIGNED BY THE CITY OF BOSTON, AND SO WE'VE BEEN WORKING THROUGH CONVERSATIONS WITH, UH, WITH OUR LOCAL UNIVERSITY.
UM, I THINK OVERALL, WE OBVIOUSLY HAVE PRIORITIZED OTHER REVENUE SOURCES WHEREVER WE CAN.
UM, THE LARGEST SOURCE OF OTHER REVENUES HISTORICALLY, UM, ESPECIALLY ONES THAT, THAT WE CAN REALLY DRIVE ARE MORE RELATED TO COMMERCIAL GROWTH.
UM, AND SO I THINK THOSE ARE THE EXACT SOURCES OF REVENUES THAT I THINK WE ARE SEEING.
UM, MOSTLY STABILIZING A LITTLE BIT RIGHT NOW, UM, BUT THERE'S A LOT OF RISKS.
UM, IF YOU LOOK AT OFFICE AND LAB VACANCIES, THEY REMAIN VERY HIGH.
UH, AND SO THE PROSPECTS FOR NEW COMMERCIAL DEVELOPMENT ARE NOT FANTASTIC IN THE SHORT TERM.
UH, WE'VE SEEN THAT BOTH IN CITY OF BOSTON AND IN CAMBRIDGE.
UM, SO I WOULD SAY LIKE IN THE, IN THE SHORT TO MEDIUM TO LONG TERM, UH, THE WAY THAT MOST CITIES ARE THINKING ABOUT THIS, THE WAY THAT WE'VE BEEN HAVING CONVERSATIONS REGIONALLY WITH BOTH THE CITY OF BOSTON AND WITH THE STATE, UM, A LOT OF THE CONVERSATION IS AROUND HOW WE BOLSTER THE INNOVATION ECONOMY IN CAMBRIDGE.
UM, THAT'S REALLY CENTERED AROUND CAMBRIDGE, UM, HOW WE FILL SOME OF THOSE VACANT OFFICE AND LABS, UM, AND HOW WE CONTINUE TO SEE, UM, SOME OF THOSE ECONOMIC TRENDS THAT WILL GIVE US MORE OTHER REVENUE SOURCES, PROVIDE US WITH MORE OF THE RESOURCES THAT WE'VE ACTUALLY HAD OVER THE LAST 10 YEARS TO INVEST IN SO MANY DIFFERENT PRIORITIES.
UM, SO I THINK THERE'S, THERE'S BOTH A ROUND TABLE THAT WE'VE GOT IN DECEMBER.
UH, WE HAD THE ROUND TABLE OVER THE SUMMER.
UM, I THINK THERE ARE MORE CONVERSATIONS ABOUT WHAT IT MEANS FOR US TO BE ACTING AS A CITY, UM, TO DRIVE SOME OF THAT GROWTH COUNCILOR ZUBIE.
AND THEN LIKE A QUICK FOLLOW UP QUESTION TO THAT, IS THAT BAKED INTO THESE ASSUMPTIONS, LIKE POTENTIAL REVENUE RESOURCES FROM THINGS LIKE PILOT THROUGH YOU MAYOR, UH, TO COUNCIL ZUBIE? WE, WE DO HAVE A BAKED INTO OUR ASSUMPTIONS, BUT AT THIS POINT THEY'RE VERY CONSERVATIVE, RIGHT? UNTIL WE HAVE, SO WE'RE ESSENTIALLY IN OUR ASSUMPTIONS RIGHT NOW ARE ESSENTIALLY FAIRLY FLAT WITH WHAT WE, UH, RECEIVED AN FY 26 AND WHAT WE HAVE BUDGETED FOR FY 27 IS THE SAME.
I'LL USE THIS AS MY OPPORTUNITY TO PLUG IN AS THAT COULD BE A GREAT OPPORTUNITY FOR US TO, YOU KNOW, UH, FOR THAT 6.7 MILLION THAT I THINK IS ON SLIDE 19, UH, TO THINK THROUGH, LIKE WHAT ARE WAYS THAT WE CAN THINK ABOUT CREATIVELY, UM, BRINGING IN REVENUE RESOURCES THAT CAN HELP US BUFFER WHAT IS GONNA BE A, YOU KNOW, A, A HARDER TIME OVER THE NEXT FEW YEARS.
UM, I YIELD THANKS, COUNCILMAN ZU YIELDS QUESTIONS? YES.
UM, UH, THROUGH YOU TO THE PANEL.
UM, I'M, THIS MIGHT BE A SORT OF BASIC QUESTION, I APOLOGIZE, BUT I KNOW IT SAYS HERE IN THE GLOSSARY THAT THE
[00:50:01]
CERTIFIED FREE CASH, UM, IS AN AMOUNT OF UNRESTRICTED FUNDS THAT'S CERTIFIED BY THE MASSACHUSETTS DEPARTMENT OF REVENUES BOROUGH OF ACCOUNTS.I'M CURIOUS HOW OR WHAT THAT PROCESS OF SETTING THAT NUMBER IS, LIKE IF, UM, AND, AND HOW THAT WILL BE FOR THE, UH, UPCOMING FISCAL YEAR.
OH, THANK YOU FOR THAT QUESTION.
UM, ACTUALLY IN OUR APPENDIX, PERHAPS EARLIER IN THE APPENDIX, MAYBE THE FIRST PAGE OF THE APPENDIX, YOU CAN SEE WE ACTUALLY DO HAVE A CHART ON OUR CERTIFIED FREE CASH.
UM, AND SO FOR OUR CURRENT YEAR, FY 27, UM, OUR, WE WERE CERTIFIED AT 188 MILLION.
UM, BUT YOU CAN SEE HERE A CHART OVER TIME, RIGHT? THAT WE'VE, UM, OVERALL, UM, GOES UP AND DOWN, RIGHT? BUT, UM, KIND OF AS WE ALSO LOOK AT IT AS A PERCENTAGE OF OUR BUDGET, AND SO AS OUR, A PERCENTAGE OF OUR OPERATING BUDGET OR, UM, IT HAS ACTUALLY BEEN SORT OF DECLINING OVER THE, THE PAST SEVERAL YEARS, BUT THAT IS OUR, OUR, OUR, UH, CURRENT CERTIFIED AMOUNT.
AND WE WOULD ASSUME THAT OVER THE NEXT COUPLE OF YEARS, WE ARE HOPING TO SORT OF STAY GENERALLY IN THAT, BUT WE ALSO THINK THAT THERE MAY BE, AS WE ARE TIGHTENING OUR BUDGET ON THE CITY SIDE, UM, WE ARE TIGHTENING SOME OF THOSE, UM, PROJECTIONS, UM, AND TAKING SOME OF THINGS THAT USED TO PERHAPS, UH, ROLL INTO FREE CASH AT THE END OF THE YEAR, UNENDED BALANCES.
WE ARE ANTICIPATING THAT THERE WILL BE LESS OF THOSE BECAUSE WE HAVE DONE A LOT OF BUDGET TIGHTENING ON THE CITY SIDE WITH THIS PAST TWO BUDGETS, UH, IN DELIVERING THESE, UM, LOWER BUDGET GROWTHS SANCHEZ.
SO IS IT, UH, AGAIN, SORRY IF THIS IS COMMON KNOWLEDGE, BUT, UM, HOW, SO HOW DOES THAT NUMBER GET SET? UM, AND, UH, YEAH, HOW, HOW ARE THE, IS IT CITY COUNCIL THAT DECIDES HOW THOSE FUNDS ARE USED? HOW, I GUESS BOTH OF THOSE QUESTIONS.
SO THIS IS A, YOU KNOW, SORT OF AN UN-DESIGNATED FUND BALANCE, AND IN GENERAL, WE ARE TRYING TO, UM, MAINTAIN A CERTAIN LEVEL OF, OF FUND BALANCE BECAUSE IT IS ANOTHER PIECE OF OUR OVERALL FINANCIAL FLEXIBILITY, UM, ALONG WITH, YOU KNOW, TRYING TO KEEP OUR TAXES AT A LOW RATE, TRYING TO MAINTAIN A CERTAIN AMOUNT OF EXCESS LEVY CAPACITY SO THAT WE DON'T HAVE TO DO REALLY DEEP CUTS, YOU KNOW, DEPENDING ON WHAT HAPPENS WITH FREE, WITH, UH, NEW GROWTH FROM YEAR TO YEAR.
UH, BUT OUR CERTIFIED FREE CASH, WHICH GOES THROUGH A PROCESS WITH THE STATE EACH YEAR, RIGHT? WE SHARE ALL OF OUR FINANCIAL INFORMATION, UH, THAT OCCURRED THROUGH THE YEAR, THE REVENUES WE BROUGHT IN OUR EXPENDITURES, UM, WHERE WE STARTED THE YEAR WITH FREE CASH.
AND THE STATE ESSENTIALLY THEN CERTIFIES THIS NUMBER.
SO THIS IS OFFICIALLY HOW MUCH THE CITY HAS IN UN-DESIGNATED FUND BALANCE.
THEN WE DO USE FUND, WE DO ON OCCASION ALLOCATE FROM FREE CASH AND, AND ANY APPROPRIATION THAT HAPPENS FOR THE CITY OF CAMBRIDGE, UM, ALWAYS MUST GO THROUGH THE CITY COUNCIL.
AND SO ONE OF THE WAYS THAT WE USE FREE CASH IS THERE'S A SMALL AMOUNT THAT EACH YEAR IS USED AS A REVENUE SOURCE FOR THE OVERALL GENERAL FUND BUDGET OR OPERATING BUDGET, WHICH INCLUDES THE SCHOOL DISTRICTS OVER BUDGET.
UM, AND THAT IS SO THAT WE USE THAT REALLY TO SORT OF, UH, KEEP OUR TAX RATE FROM GOING UP TOO MUCH.
SO IT'S A LITTLE BIT OF A MITIGATING FACTOR ON, UM, HOW, HOW MUCH WE NEED TO INCREASE OUR LEVY.
UH, WE USE IT PRIMARILY THOUGH WHEN WE APPROPRIATE IT FOR ONE TIME COSTS.
SO, UM, A, A CAPITAL EXPENDITURE, I'M SURE FOLKS REMEMBER LAST SUMMER, UM, NOT THIS PAST SUMMER, BUT THE SUMMER BEFORE WHEN THE CITY HAD TO TAKE OVER, UM, A, UM, A FAILING BUS, UH, BUILDING, UH, ON MOUNT AUBURN STREET, THE CITY COUNCIL APPROPRIATED $20 MILLION SO THAT WE COULD HAVE THE, THE BUDGET TO DEMOLISH THE BUILDING.
AND WE DO EXPECT TO GET THOSE, THOSE, THOSE FUNDS BACK TO US THROUGH AN ASSESSMENT ON THOSE PROPERTY OWNERS.
BUT IT MAY TAKE US YEARS TO RECOUP THAT, THAT, THOSE FUNDS, BUT THAT WOULD BE A ONE TIME TYPE OF, UM, EXPENDITURE.
WE GENERALLY DON'T USE IT AS AN ONGOING REVENUE SOURCE FOR ONGOING OPERATING BUDGET COSTS BECAUSE IT IS REALLY A FINITE RESOURCE.
[00:55:01]
UH, THANK YOU MADAM MAYOR THROUGH YOU.AND JUST FOLLOWING UP ON THAT, UM, ASSISTANT MANAGER SPINNER.
UM, THE OTHER PART IS, I MEAN, NOT ONLY HAVE WE DIPPED INTO THE, UH, UNDESIGNATED FUND BALANCE, BUT IT'S NOT BEING REPLENISHED IN THE, IN, IN THE WAY IN WHICH IT WAS, RIGHT.
WE'VE, WE'VE OFTEN DIPPED INTO IT AS MUCH AS SOMETIMES $90 MILLION IN THE COURSE OF A YEAR IF THINGS HAPPEN.
BUT THEN BECAUSE THE COMMERCIAL TAX BASE IS SO STRONG, WE WERE ABLE TO REPLENISH THAT MONEY.
WE'RE SPENDING IT, AND IT'S NOT, WE'RE, WE'RE NOT REPLENISHING IT.
SO IT, IT IS SOMETHING WE HAVE TO BE REALLY CAREFUL OF.
UM, AND WHAT'S THE IMPACT ON ALL THIS, ON OUR BOND RATING? THANK YOU FOR THAT QUESTION.
I, I THINK THAT, YOU KNOW, IT IS ONE OF THE COMPONENTS I THINK THAT THE, THAT THE RATING AGENCIES LOOK AT, UH, WHEN THEY'RE, YOU KNOW, ASSESSING US ON A, ON AN ANNUAL BASIS, THE UNDESIGNATED, UH, FUND BALANCE OUR EXCESS LEVY CAPACITY.
I THINK, YOU KNOW, ONE OF THE OTHER THINGS THAT I THINK IS, IS, IS REALLY A SIGNIFICANT FACTOR WITH THE RATING AGENCIES IS ALSO JUST OUR APPROACH TO FINANCIAL MANAGEMENT.
THE SEASONED TEAM THAT WE HAVE, THEY, THEY HAVE AN UNDERSTANDING OF THE UNDERLYING ECONOMICS OF CAMBRIDGE, RIGHT? YOU KNOW, THAT HARVARD IS HERE, MIT IS HERE.
SO A LOT GOES INTO SETTING OUR, UH, OUR RATE.
NOT ONE SINGLE THING, BUT I THINK THAT, YOU KNOW, IF WE WERE, IF OUR UNDESIGNATED, UH, FUND BALANCE, YOU KNOW, DIP BELOW LET'S SAY 15% OF OUR OPERATING REVENUE, THAT WOULD BE A RED FLAG FOR, UM, FOR RATING AGENCIES.
AND AS YOU CAN SEE HERE, WE ARE TRACKING AT WHAT PERCENT IS OUR CERTIFIED FREE CASH AS A PERCENTAGE OF OUR OPERATING BUDGET.
AND AT THIS POINT IN FY 27, IT'S AT 18%.
IF YOU LOOK BACK IN, UH, THERE WERE YEARS WHEN IT WAS AT 36% OF OUR OPERATING BUDGET.
SO WE DO FEEL ACTUALLY THAT WE'RE GETTING DOWN TO SORT OF CLOSE TO, UM, THE MINIMUM AMOUNT OF UNDESIGNATED FREE CASH THAT IS ADVISABLE FOR US.
UH, LAST QUESTION THROUGH YOU MADAM MAYOR, AND JUST BECAUSE SOMETIMES THERE'S, IT, THERE'S A LOT OF CONFUSION AROUND THE AAA BOND RATING AND WHY IT'S IMPORTANT, AND SOMETIMES THERE'S EVEN FOLKS OUT THERE THAT SAY IT DOESN'T MATTER.
CAN YOU JUST EXPLAIN SORT OF WHY IT'S IMPORTANT? THANK YOU.
I MEAN, I THINK THE, THE BIGGEST THING IS THAT IT ALLOWS US TO BORROW MONEY, UM, AT VERY LOW INTEREST RATES.
AND IN FACT, THIS PAST FEBRUARY WHEN WE, UM, UH, BONDED, YOU KNOW, BORROWED FUNDS, UH, FOR A VARIETY OF CAPITAL PROJECTS, UH, WE HAD A AROUND 2% INTEREST ON, ON OUR BONDED FUNDS.
AND IF WE WERE NOT AT AAA, WE WOULD BE BORROWING AT A HIGHER EXPENSE, AND THAT WOULD JUST ACTUALLY EAT UP MORE OF OUR OPERATING BUDGET.
SO IT DOES LET US, UM, YOU KNOW, FUND OUR CAPITAL PROJECTS AT THE MOST ADVANTAGEOUS RATE THAT WE COULD THANK OTHER QUESTIONS FROM OTHER MEMBERS.
UM, CAN YOU SPEAK TO THE, YOU KNOW, YOU, YOU SPOKE TO PILOT AND TAKING SOME CONS OR MAKING SOME CONSERVATIVE ASSUMPTIONS.
CAN YOU SPEAK TO THE ASSUMPTIONS THAT WE'VE MADE AS TO THE, THE FLOATING VARIABLES IN HERE? YEAH, THINGS LIKE THE COST OF HEALTHCARE, HEALTHCARE, UH, YOU KNOW, THE COST OF FUEL FOR TRANSPORTATION, UH, ALL OF THOSE THINGS THAT MIGHT END UP WITH VARIANTS HIGHER THAN WE EXPECT.
THANK YOU FOR THAT QUESTION THROUGH YOU, MAYOR.
UM, AND I MAY ASK, UM, MR. JENNINGS TO HELP ME HERE AS WELL.
UM, BUT AT THIS MOMENT, I THINK WE HAVE A 10%, UM, INCREASE IN HEALTH BENEFITS IN OUR PROJECTIONS.
UM, WE HAVE JUST RECENTLY CHECKED IN WITH, UH, THE PUBLIC WORKS DEPARTMENT TO UNDERSTAND WHERE WE ARE IN OUR ENERGY CONTRACTS, AND I THINK WE'RE IN THE MIDDLE OF AN ENERGY CONTRACT, SO WE'RE OKAY FOR 28.
UM, I THINK WE'VE CHECKED IN WITH, UM, THE SCHOOL DISTRICT TO UNDERSTAND WHERE YOU ARE IN YOUR, UM, TRANSPORTATION CONTRACTS.
UM, AND SO SOME OF THIS IS ALL BAKED INTO, UM, OUR PROJECTIONS.
REMEMBER HUDSON, THEY'RE BAKED IN FOR THE TERMS OF THOSE CONTRACTS, OBVIOUSLY, BUT BEYOND THAT, RIGHT, YOU KNOW, IF WE, WE HAVE ONE, WE HAVE ONE BUS VENDOR, SO IF WE SAY WE'RE ONLY GONNA GIVE YOU, YOU KNOW, THIS MUCH OF AN INCREASE FOR FUEL AND THEY CAN'T BUY FUEL FOR THAT INCREASE, THEY'RE NOT GONNA LOSE MONEY JUST FOR OUR SAKE.
UM, YOU KNOW, MY, MY POINT BEING THAT, UH, UH, THESE MIGHT BE CONSERVATIVE ESTIMATES.
CAN YOU ALSO SPEAK TO, UH, IF WE WERE TO KIND OF GO BEYOND THE BOUNDS OF WHAT THE COUNCIL
[01:00:01]
FELT, YOU KNOW, COMFORTABLE, UH, RAISING IN TERMS OF NEW REVENUE, AND WE HAD TO MAKE CUTS, YOU KNOW, HOW MUCH FLEXIBILITY WE HAVE, AND THIS IS ALSO A QUESTION FOR THE SCHOOL, UH, HOW MUCH FLEXIBILITY WE HAVE TO DO THAT, YOU KNOW, WHAT ARE OUR ONGOING AND KIND OF LONGER RANGE COMMITMENTS, UH, AND, UH, A AND HOW DIFFICULT TO PROCESS THAT MIGHT BE.SUPERINTENDENT, UH, THANK YOU MAYOR, AND THROUGH YOU TO, UH, MEMBER HUDSON.
I THINK THAT ONE OF THE, UM, ONE OF THE FIRST PIECES OF INFORMATION THAT CFO WASHINGTON AND I TRY TO CONVEY ON AN ANNUAL BASIS WITH RESPECT TO THE BUDGET IS JUST WHAT A LARGE PORTION OF IT IS VERY MUCH FIXED BASED ON CONTRACTUAL OBLIGATIONS.
COUNCIL MCGOVERN, I THINK IT WAS COUNCIL MCGOVERN, UM, OR MAYBE IT WAS COUNCIL FLAHERTY SPOKE EARLIER ABOUT, UM, THE COSTS THAT ARE BAKED INTO THE BUDGET.
AND THEN THAT IS, THAT'S TRUE FOR THE CAMBRIDGE PUBLIC SCHOOLS AND FOR EVERY SCHOOL DEPARTMENT THAT BETWEEN, UH, COLLECTIVE BARGAINING AGREEMENTS AND VENDOR AGREEMENTS.
UM, AND PARTICULARLY WITH RESPECT TO THE COLLECTIVE BARGAINING AGREEMENTS THAT ROLL OVER YEAR OVER YEAR, THERE ARE ESTABLISHED COSTS IN THAT, THAT ARE SIGNIFICANT DRIVERS OF THE BUDGET.
AND SO THERE IS, THERE ARE AREAS THAT I THINK WE HAVE A RESPONSIBILITY TO LOOK AT AND TO BE VIGILANT ABOUT, TO MAKE SURE THAT, UM, IF THERE ARE EFFICIENCIES OR SAVINGS THAT CAN BE IDENTIFIED, THAT WE ARE BEST POSITIONED TO MAKE THE INVESTMENTS THAT THE SCHOOL COMMITTEE IS LOOKING TO MAKE ON BEHALF OF THE COMMUNITY, AND THAT WE ARE LOOKING TO MAKE IN RESPONSE TO THE SPECIFIC NEEDS OF STUDENTS AS THEY EVOLVE.
BUT THERE'S NO QUESTION THAT IN WHAT AMOUNTS TO THIS YEAR ABOUT TWO, A $294 MILLION OPERATING BUDGET, THE VAST MAJORITY OF THAT WAS DETERMINED LONG BEFORE THE FY 27 BUDGETING PROCESS, AND THAT WILL BE TRUE FOR THE FY 28 BUDGETING PROCESS AS WELL.
SO, UM, I THINK IT'S IMPORTANT THAT WHEN WE ARE TALKING ABOUT THOSE BUDGETARY, UM, TRAJECTORIES THAT WE ARE THINKING ABOUT ALL THE SORT OF CONSTITUENT PARTS OF THEM.
UM, BUT WE SHOULDN'T, WE SHOULD NEVER GO INTO A BUDGETING PROCESS THINKING THAT WE HAVE MORE FLEXIBILITY THAN WE DO, BECAUSE AS I SAID, MOST OF IT IS MADE UP OF, OF COMMITMENTS THAT HAVE BEEN MADE, UM, THROUGH, THROUGH VARIOUS TYPES OF CONTRACTS OR COSTS THAT WE HAVE NO CONTROL OVER, SOME OF WHICH HAVE BEEN MENTIONED HERE, ENERGY COSTS, HEALTHCARE COSTS, THINGS OF THAT NATURE.
MEMBER HUDSON, BEFORE I GO TO COUNCILLOR SIMMONS, UH, IF, IF I COULD JUST REDIRECT VERY QUICKLY, UH, YOU KNOW, AS, AS, UH, UH, COUNSELOR FLAHERTY MENTIONED, YOU KNOW, OUR, OUR MAIN TOOL IN COUNCILLOR NOLAN, UH, IS TO MODERATE THE BUDGET INCREASE AND BUDGET GROWTH.
UM, BUT I'M LOOKING FOR AN UNDERSTANDING, RIGHT, OF HOW DIFFICULT THAT BECOMES BECAUSE OF ALL OF OUR CONTRACTUAL COMMITMENTS, WE MIGHT NOT BE ABLE TO PICK AND CHOOSE.
IT'S MY UNDERSTANDING THAT WE WON'T, MIGHT NOT BE ABLE TO PICK AND CHOOSE EXACTLY WHERE WE'D LIKE TO MAKE CUTS.
WE MIGHT ONLY HAVE BAD OPTIONS ON THE TABLE BECAUSE OF LONG RANGE COMMITMENTS MADE TO FIVE, SEVEN YEARS BEFOREHAND.
HEY, UM, I MEAN, TO SOME EXTENT THAT'S TRUE, BUT I MEAN, MANY WAYS, IT'S NOT SO MUCH ABOUT LIKE, PARTICULAR INITIATIVES FROM THE TWO, FIVE OR SEVEN YEARS AGO.
AS MUCH AS IT IS THE NATURE OF A BUDGET THAT IS MADE UP, THE VAST MAJORITY OF WHICH BEING PERSONNEL COSTS, THAT, THAT, THAT PERSONNEL IS GOING TO BE THERE.
WE ARE GOING TO EMPLOY HUNDREDS AND HUNDREDS OF TEACHERS AND HUNDREDS AND HUNDREDS OF STAFF.
AND THAT ITSELF ADDS UP TO A LARGE, A PORTION OF THE BUDGET.
SO I THINK YOUR POINT IS, IS CORRECT THAT THERE IS, THERE IS, UH, RELATIVELY LIMITED FLEXIBILITY WITH RESPECT TO BRINGING IT DOWN.
AND CERTAINLY THERE ARE, THERE'S LIMITED FLEXIBILITY WITH RESPECT TO ATTRACTIVE OPTIONS.
UM, BECAUSE THE, EVERY PORTION OF OUR BUDGET, YOU KNOW, WE HAVE VERY LITTLE PORTIONS OF OUR BUDGET THAT ARE, ARE SORT OF RANDOM COSTS.
I MEAN, THOSE THINGS HAVE SORT OF BEEN IDENTIFIED, WHETHER IT'S GOOD TIMES OR BAD TIMES FINANCIALLY, WE HAVE TO BE, UM, ZEALOUS ABOUT LOOKING THROUGH THOSE AND MAKING SURE THAT WE'RE, WE'RE BEING SOUND STEWARDS.
UM, BUT YEAH, I THINK IF THE QUESTION IS JUST, UM, WHEN THERE'S A NEED TO MODERATE, ARE ALL OF THE CHOICES DIFFICULT TO ONE ORDER OF MAGNITUDE OR ANOTHER? I WOULD SAY YES, DEFINITELY.
COUNCILOR SIMMONS, UH, THANK YOU MADAM MAYOR THROUGH YOU TO CITY MANAGER.
A QUICK QUESTION, TWO QUESTIONS.
ONE IS, WITH THIS VERY BLEAK PICTURE, WHAT IS OUR INFORMATION PLAN TO THE CITIZENS? IN FACT, HOW DO WE GO OUT AND START TELLING THE STORY AND TELLING IT OVER AND OVER AND OVER AGAIN? UH, FOR AN EXAMPLE, UM, WHEN I WAS ON THE SCHOOL COMMITTEE, I KNOW, UH, CHIEF FINANCIAL OFFICER IVY WILLIAMS HAD AT LEAST ONE, MAYBE MORE, UM, INFORMATION SESSIONS WITH PARENTS JUST SO THAT THEY WOULD UNDERSTAND THE BUDGET AND HAVE A BETTER SENSE OF WHAT THE BUDGET, WHAT THE BUDGET CONSTRAINTS WERE.
I KNOW WE'VE DONE IT ON THE CITY SIDE MAYBE ONCE OR TWICE, BUT I THINK WE'RE IN A PLACE NOW WHERE THE STORY GETS BLEAK, MORE BLEAK AS WE GO OUT.
PERHAPS WE SHOULD HAVE MORE CONVERSATIONS ABOUT
[01:05:01]
WHAT OUR OVERALL BUDGET LOOKS LIKE AND HOW IT'S GOING TO LOOK NOT ONLY FOR FOR 20, THE 27 YEAR, 27, 28 YEAR, BUT OUT YEARS.WE ARE SAYING 2030, WE'RE GONNA, IF I HEARD MS. SPINNER CORRECTLY, ALMOST FLATLINE THE UNENDED FUND BALANCE.
SO, UH, TO YOU, MR. CITY MANAGER, I WOULD LIKE TO HEAR WHAT IS OUR OUTREACH AND EDUCATION, UH, PLAN? I THINK MS. HUDSON SAID SAID, IT NO MATTER BAD NEWS IS BAD NEWS.
IT'S BAD NEWS, IT'S NOT GONNA GET BETTER, BUT IF YOU DON'T TELL IT, IT DOESN'T MAKE FEEL, MAKES PEOPLE FEEL WORSE.
CITY MANAGER, UH, THROUGH YOU, MAYOR.
UM, I THINK THAT'S A GREAT QUESTION.
I THINK THAT IS A BIG PART OF, UM, BOTH TODAY AND I AGREE WITH YOU, COUNCILLOR SIMMONS, UH, MORE CONVERSATIONS WITH THE COMMUNITY, UH, ARE IMPORTANT.
UM, YOU KNOW, I THINK THAT'S, THAT'S A BIG REASON WHY WE DO GO THROUGH THIS EXERCISE.
UM, I KNOW IT'S A LOT OF DATA AND THERE'S A LOT OF MOVING PIECES.
UM, BUT FOR THE CITY COUNCIL AND THE SCHOOL COMMITTEE, UM, YOU KNOW, THIS IS BOTH A LOT OF TIME TO GET TOGETHER FOR TWO HOURS EVERY YEAR AND ALSO NOT NEARLY ENOUGH.
IF YOU THINK ABOUT THE COMPLEXITY OF WHAT GOES INTO THE BUDGET PROCESS, UM, I, I THINK COUNCILLOR SIMMONS, IT IS BOTH BAD NEWS IN A CERTAIN WAY, BUT I, I SUPPOSE IT'S ALL A RELATIVE COMPARISON.
WHEN WE LOOK AT THE FINANCIAL SITUATION WE'VE BEEN IN FOR THE LAST 10 YEARS, AND YOU CAN SEE IT IN SOME OF THESE CHARTS, UM, WE HAD A LOT OF FLEXIBILITY TO PUT INTO ALL KINDS OF NEW PROGRAMS, NEW SCHOOL BUILDINGS, UNIVERSAL PRE-K.
UM, I THINK YOU'RE RIGHT THAT SOME OF THE HARDER CONVERSATIONS WITH BOTH OURSELVES AND WITH THE COMMUNITY IS THAT WE DON'T HAVE THAT AMOUNT OF FLEXIBILITY GOING FORWARD.
UH, BUT WHAT WE'RE RECOMMENDING, THIS REALLY IS A MODERATED PATH.
UM, IF YOU THINK ABOUT WHAT WE'RE LOOKING AT IN TERMS OF FY 26, GROWING THE BUDGET AT 3.8%, FY 27 AT 4.1% AND FY 28 AT 5.5%.
THESE ARE VERY CONSTRAINED NUMBERS COMPARED TO OUR BUDGET OVER THE LAST 10 YEARS.
BUT COMPARED TO EVERY OTHER CITY IN THE STATE, WE'RE IN MUCH STRONGER FISCAL HEALTH.
UH, AND IF YOU THINK ABOUT EVEN OUR NEIGHBORS ACROSS THE RIVER AND FY 27, THE CITY OF BOSTON'S BUDGET GREW BY 0.6%, AND THE SCHOOL SYSTEM IN BOSTON CUT I THINK 400 POSITIONS.
UM, SO WE ARE BOTH, I THINK YOU'RE RIGHT, COUNCILOR SIMMONS IN A POSITION WHERE WE NEED TO EXPLAIN AND CONTINUE TO COMMUNICATE TO OUR COMMUNITY THAT WE AREN'T ABLE TO FUND EVERYTHING THAT WE WANT TO DO AND EVERYTHING THAT WE WANT TO IMPLEMENT RIGHT NOW.
I THINK THE IMPORTANT CONVERSATIONS THAT WE'RE HAVING ABOUT PRIORITIES AND WHAT WE WANNA FUND AND PROGRAMS THAT WE ULTIMATELY WANT TO BUILD ARE THINGS THAT WE WILL TRY TO WORK INTO THE BUDGET OVER TIME.
UM, AS WE BUILD OUT OUR IDEAS, THEY'RE GOING TO HAVE TO FIT INTO, UM, THE ECONOMIC PICTURE.
AND THAT'S, I THINK, WHAT WE'RE INTENDING TO COMMUNICATE.
AND I THINK THIS REALLY IS A MODERATED PATH.
WE'RE NOT RECOMMENDING FISCAL AUSTERITY, UH, IN, IN THIS, IN THIS PICTURE.
UM, AND WE DO HAVE MORE FLEXIBILITY THAN A LOT OF OUR NEIGHBORS, COUNCILLOR SIMMONS.
UH, JUST VERY BRIEFLY, THIS IS US.
I DON'T WANT TO, AND I DON'T THINK ANY OF MY COLLEAGUES WANNA GO OUT ON THE INFORMATION TRAIL AND SAY WE'RE NOT AS BAD AS OTHER CITIES AND TOWNS.
THAT'S, THAT PROBABLY WON'T RISE VERY HIGH WITH THEIR SENTIMENTS.
AND WHEN WE'RE ALREADY HEARING PEOPLE COMPLAIN ABOUT MY TAX BILL WAS HIGHER THAN IT WAS LAST YEAR BECAUSE OF THE WAY WE WERE ABLE TO BALANCE THE BUDGET BY USING A LITTLE BIT OF THE UNENDED FUND BALANCE THAT WAS BEING REPLENISHED, BUT NOW ISN'T.
I WOULD LOVE TO SEE ONE, WHAT IS OUR OUTREACH PLAN AND HOW DO YOU GIVE THE INFORMATION TO THE COUNCIL FOR THE COUNCIL TO GO OUT? 'CAUSE WE ARE THE ONES THAT DIRECTLY FACE THE CONSTITUENCIES TO SAY, THIS IS WHAT WE'RE HEADING TOWARD.
AND EVEN THOUGH THEY'RE NOT GONNA BE PLEASED BECAUSE THIS IS NOT WHAT THEY'RE ACCUSTOMED TO, IT WON'T BE THE FIRST TIME THEY'VE HEARD IT.
SO IT DOESN'T REQUIRE THE ANSWER.
YOU KNOW, I HEAR THAT IT'S A MODERATED PLAN, BUT PEOPLE DON'T WANNA PAY MORE IF THEY DON'T HAVE TO PAY MORE AND THEY WANNA KEEP THE SAME SERVICES.
MY OTHER QUESTION, UH, IS, YOU KNOW, WE TALKED ABOUT WHAT WE LOOKED LIKE FIVE TO SEVEN YEARS AGO.
I'M GONNA TALK ABOUT 27 YEARS AGO, UH, MAYBE A LITTLE LONGER WHEN I SAT ON THE SCHOOL COMMITTEE, AND I REMEMBER SERVING ON, SERVING WITH, UM, THE CITY.
THE SUPERINTENDENT AT THE TIME WAS MARY LOU MCGRATH.
AND WHAT SHE DID, AND I DON'T KNOW IF YOU EVER THOUGHT ABOUT THIS OR IF YOU HAVE THOUGHT ABOUT THIS AND IF IT MAKES, DOES IT MAKE AN IMPACT, WHICH IS GOING TO THOSE THAT AN EMPLOY THAT WE CURRENTLY EMPLOY THAT ARE LOOKING AT RETIREMENT, THEY'RE NOT THERE YET, BUT THEY'RE CLOSE.
MAYBE THEY COULD BE ENCOURAGED.
AND WHAT I MEAN BY THAT, I KNOW DURING MARY LOU MCGRATH'S TENURE, SHE FLOATED THIS IDEA, YOU'RE THINKING ABOUT RETIREMENT, WE
[01:10:01]
WILL GIVE YOU X IF YOU RETIRE EARLY.SO IT WAS ALMOST AN INCENTIVE TO GO OFF TO FIND THE FISCAL PAYROLL ROLES EARLIER THAN YOU MAY HAVE THOUGHT ABOUT DOING THAT.
BUT WE ARE GIVING YOU SOME INCENTIVE TO DO THAT.
IS THAT SOMETHING THAT WE'VE THOUGHT ABOUT SUPERINTENDENT OR CITY MANAGER OR ASSISTANT CITY MANAGER? UM, LET'S, I WAS THE CITY MANAGER BECAUSE, YOU KNOW, THE CITY MANAGER.
SO IT'S NOT JUST A SCHOOL DEPARTMENT ISSUE.
'CAUSE I WAS SITTING ON THE SCHOOL COMMITTEE AT THE TIME WE HAD THAT DISCUSS.
UM, THROUGH YOU, UH, MAYOR, UH, MAYOR SIDIKI.
UM, YOU KNOW, I THINK WE'VE HAD SOME CONVERSATIONS.
I WOULD SAY, YOU KNOW, AN EARLY RETIREMENT BUYOUT IS USUALLY CONSIDERED AS PART OF A REDUCTION.
UM, AND WE'RE NOT AT THAT POINT RIGHT NOW.
UM, SO, YOU KNOW, IF YOU THINK ABOUT IT, IF WE HAVE X NUMBER OF POSITIONS IN YOUR OFFERING AN EARLY RETIREMENT BUYOUT, BUT YOU'RE PLANNING TO REPLACE THOSE POSITIONS, IT'S NOT ACTUALLY A SAVINGS.
SO TYPICALLY RIGHT HERE, THIS IS, I'M, I'M COUNCILOR SIMMONS.
THE WAY I'M LOOKING AT IT IS YOU'RE NOT GONNA BACKFILL AS OPPOSED TO LAYING PEOPLE OFF.
YOU LOOK AT RETIREES OR POTENTIAL RETIREES WITH A VIEW TOWARD GETTING THEM OFF THE SALARY ROLLS AND NOT REPLACING THEM.
NOW THAT'S, I THINK THAT'S EASIER TO DO.
AND I'M NOT, YOU KNOW, THIS IS YOUR, YOUR JOB AND YOU'RE SUPPOSED TO DO IT.
BUT JUST TO THINK ABOUT IT, IS THERE SOME SAVINGS THERE? IF WE LOOKED AT PEOPLE THAT WANTED TO RETIRE IN POSITIONS THAT WE COULD AFFORD NOT TO REFILL, I'M NOT TALKING ABOUT, OH, LET'S RETIRE DENISE AND THEN GO HIRE DONALD TO DO DENISE'S JOB, MAYBE AT A LOWER SALARY.
I'M SAYING RETIRE DENISE, AND YOU DON'T BACKFILL HER POSITION.
CITY MANAGER THROUGH YOUR MAYOR.
I THINK WE WERE SAYING THE SAME THING, WHICH IS THAT AN EARLY RETIREMENT IS TYPICALLY SEEN AS PART OF A REDUCTION.
UM, IT'S A AND IT'S A, IT'S A LESS PAINFUL WAY OF DOING THAT BECAUSE YOU'RE BRINGING PEOPLE INTO SOMETHING THAT'S MORE VOLUNTARY.
YOU KNOW, I WOULD SAY WE'RE NOT AT THAT POINT.
AND WHEN WE THINK ABOUT THE MODERATED BUDGET GROWTH THAT WE'RE LOOKING AT, WE ARE STILL WORKING WITH OUR DEPARTMENTS TO LOOK FOR EFFICIENCIES IN SAVINGS, WAYS THAT WE CAN SAVE MONEY.
UM, I DON'T THINK THAT WE'VE RULED OUT, UM, YOU KNOW, RULED OUT WAYS OF REORGANIZING.
UM, BUT I DON'T THINK WE'RE GOING INTO THE FY 28 BUDGET SAYING WE'RE LOOKING AT A REDUCTION TARGET.
COUNCILOR SIMMONS, UH, THANK YOU MADAM MAYOR.
I GUESS THE LAST THING IS, I HOPE THAT WE'RE LOOKING AS KEENLY AS POSSIBLE AT, AND THIS IS TO USE, UH, SOME, UH, ONE OF SUPERINTENDENT MURPHY'S FAVORITE WORDS IS REDUNDANCIES.
UM, ARE WE LOOKING INWARD TO SAY, IS THERE SOMETHING THAT IS BEING DONE BY US THAT IS BEING DONE BY ANOTHER DEPARTMENT AND COULD BE TAKEN OVER? IN OTHER WORDS, LOOKING FOR MAYBE REDUNDANCIES IS NOT SO KIND WORD, LOOKING AT EFFICIENCIES IN SERVICE.
ARE WE ALSO LOOKING INTERNALLY SAYING, IS THERE ANOTHER WAY TO DO WHAT WE DO, BUT NOT AT THE WAY, AT NOT AT THE LEVEL OF SPENDING THAT WE'VE BEEN SPENDING? WE HAVE, UH, CHAIR WEINSTEIN NEXT.
UH, WELL, AND THANK YOU FOR, UM, TO THE PANELS FOR THE PRESENTATION.
UM, I MEAN, I'LL START BY JUST SAYING, I THINK TO THE CITY MANAGER'S POINT THAT THIS ROUND TABLE, IT'S IMPORTANT AND IT'S NOT ENOUGH TIME, YOU KNOW, BY ITSELF, UH, FOR US TO, UM, YOU KNOW, GRAPPLE WITH ALL OF THIS.
IT IS OF COURSE NOT THE ONLY TIME THAT THE CITY COUNCIL AND THE SCHOOL DEPARTMENT ARE WORKING ON BUDGET PROJECTIONS AND PLANNING TOGETHER.
YOU KNOW, I, IT'S, I KNOW IT'S NOT GONNA BE OUR LAST PUBLIC ROUND TABLE, BUT OF COURSE THERE'S A LOT OF WORK HAPPENING BEHIND THE SCENES.
UM, SO, YOU KNOW, ON THAT NOTE, UH, YOU KNOW, THROUGH, UH, MAYOR TO, THIS MAY BE A QUESTION FOR CFO WASHINGTON, BUT REALLY WHOEVER FEELS BEST POSITION TO RESPOND, IT WOULD BE HELPFUL, I THINK, FOR THOSE WATCHING AS WELL TO HAVE, UH, YOU KNOW, IF YOU COULD SPEAK TO, UH, HOW THESE PROJECTIONS, UH, IMPACT OUR SCHOOL DEPU OUR SCHOOL DEPARTMENT BUDGET, UH, PROJECTIONS AND PLANNING.
YOU KNOW, IS IT JUST, IT'S A RATIO AND, YOU KNOW, IF EVERYTHING GOES THIS WAY, IT GOES EXACTLY THAT.
BUT REALLY WHAT KIND OF THINKING IS GOING ON? AND I THINK THIS ACTUALLY BUILDS A LITTLE BIT ON WHAT COUNCILOR SIMMONS WAS JUST NOTING, WHICH IS THAT WE ARE AT ONE CITY, SO AT DIFFERENT DEPARTMENTS.
BUT, YOU KNOW, I WOULD HOPE THAT THERE, THAT WE'RE DOING THAT WORK, I KNOW THAT WE'RE DOING THAT WORK TO MAKE SURE THAT WHERE WE CAN, WE'RE SUPPORTING EACH OTHER FOR THE SAKE OF, UM, EFFICIENCY AND THE BEST POSSIBLE RESULTS, UH, WITHOUT, UM, KIND OF A PAINFUL, UH, POSSIBILITIES OF CUTS TO SERVICES OR, OR CUTS TO STAFFING THAT ARE NOT, UM, JUSTIFIED BY OUR PROGRAMMING GOALS.
SUPERINTENDENT MURPHY, AND THEN CFO SPINNER.
UM, THANK YOU AND THANK THROUGH YOU MAYOR TO CHAIR WEINSTEIN.
[01:15:01]
I WANT TO TAKE THIS OPPORTUNITY TO THANK THE CITY MANAGER AND THE ASSISTANT CITY MANAGER FOR THE ONGOING DIALOGUE THAT WE HAVE IN TERMS OF, UM, TALKING ABOUT HOW THESE MACROECONOMIC FACTORS WILL ULTIMATELY HAVE AN IMPACT IN ONE WAY OR ANOTHER ON THE SCHOOL DEPARTMENT.UM, WHAT I WOULD SAY IN TERMS OF THE DIRECT IMPACT IS THAT THAT'S, THAT'S AN ONGOING CONVERSATION AND I THINK IT'S IMPORTANT THAT THAT DIALOGUE, UH, CONTINUE BECAUSE AS THE, AS THE SCHOOL COMMITTEE IS WELL AWARE, UM, WE ARE ONE IN THE PROCESS OF A STRATEGIC PLANNING PROCESS.
WE ARE HAVE ONGOING COLLECTIVE BARGAINING NEGOTIATIONS.
SO THERE'S A VARIETY OF VARIABLES THAT, UM, WE HAVE A RESPONSIBILITY TO MAKE SURE THAT WE'RE, WE'RE, UH, CONTINUING TO COMMUNICATE ABOUT AND TO, AND TO STAY INFORMED ABOUT.
AND AT THE SAME TIME, WE HAVE A RESPONSIBILITY AS A SCHOOL SYSTEM, UH, TO BE COGNIZANT OF ALL OF THE VARIOUS, UH, ECONOMIC CONDITIONS THAT ARE WELL BEYOND NOT JUST THE SCHOOL DEPARTMENT'S CONTROL, BUT THE MUNICIPALITY'S CONTROL AS WELL.
UM, AND SO WHAT I WOULD SAY IS, UH, IN TERMS OF THE, HOW IT'S GOING TO AFFECT IT, IT'S GONNA AFFECT IT THAT WE'RE GONNA CONTINUE TO STAY INFORMED AND TO CONTINUE TO STAY IN DIALOGUE.
UM, AND WE'RE APPRECIATIVE OF THAT, OF THAT THE, THE OPENNESS OF THAT COMMUNICATION, UM, THAT OCCURS ON AN ANNUAL BASIS AND REALLY NOT JUST BOTH WITHIN AND, AND OUTSIDE OF THE, OF THE BUDGETARY PROCESS.
SO, UM, IF CFO OF WASHINGTON, IF YOU WANTED TO ADD ANYTHING TO THAT, BUT I JUST WANTED TO BE CLEAR, THAT'S CONGRESS.
YEAH, I'LL JUST SAY SOMETHING QUICKLY.
I MEAN, I THINK, YOU KNOW, LAST YEAR, THE CITY, HOW WE APPROACHED IT WITH OUR DEPARTMENTS, RIGHT, WAS TO ASK EACH OF OUR DEPARTMENTS BEFORE THEY STARTED THEIR BUDGET PREPARATION TO REDUCE 2%, 2.1% FROM THEIR BUDGET.
WE ARE, YOU KNOW, WE ARE STARTING OUR PROCESS ON WEDNESDAY WITH OUR DEPARTMENT HEADS, AGAIN, LETTING THEM KNOW THAT WE ARE LOOKING FOR BUDGET REDUCTIONS, UM, YOU KNOW, BEFORE WE START PLANNING FOR THE NEXT YEAR.
SO I THINK THAT LAST YEAR, YOU KNOW, WE DIDN'T, YOU KNOW, WE, WHEN WE TALKED ABOUT THOSE BUDGET CUTS, THOSE WERE BUDGET CUTS FOR CITY DEPARTMENTS, SCHOOL DISTRICT, YOU KNOW, THERE WAS A, THERE WAS A BUDGET ALLOCATION.
I THINK WHAT WE ARE LOOKING FOR TRULY IS COLLABORATION, REALLY, YOU KNOW, FOR BOTH SYSTEMS, BECAUSE WE ARE ALL ONE, RIGHT? AND WE ARE ALL, YOU KNOW, I THINK WORKING TOWARDS THAT BUDGET MODERATION TOWARDS OUR ABILITY TO MODERATE THOSE LEVY INCREASES.
UM, UM, AND SO I THINK THAT THAT IS, AND I THINK THAT'S ONE OF THE REASONS WHY WE'VE TRIED TO CONTINUE TO HAVE THESE CONVERSATIONS WITH THE SCHOOL COMMITTEE IN OCTOBER.
SO, SO YOU ALL ALSO KNOW THE, THE ECONOMIC, UM, CONSTRAINTS THAT WE'RE ALL LOOKING AT IN OUR PART OF THE, YOU KNOW, THE CONVERSATION AND KNOW THAT AS YOU'RE GOING TO DO YOUR PLANNING, AND I THINK AS THE, YOU KNOW, MAYOR, YOU KNOW, ALSO, UH, AS, AS COUNCILLOR SIMMONS, EXCUSE ME, UM, TALKED ABOUT JUST THOSE CONVERSATIONS.
I'VE BEEN ON THE SCHOOL SIDE AND I DO KNOW HOW CLOSE THESE CONVERSATIONS OFTEN ARE WITH PARENTS AND TEACHERS.
UM, AND SO I THINK THAT, YOU KNOW, WE'RE NOT, WE UNDERSTAND THAT.
AND YET WE ALSO NEED THE SCHOOL DISTRICT'S PARTNERSHIP IN OUR BEING ABLE TO DELIVER A BUDGET THAT ONLY GROWS BY 5.5%.
CHAIR WEINSTEIN, UH, THANK YOU, UH, THROUGH YOUR MAYOR.
I APPRECIATE THAT, UM, THAT ONGOING DIALOGUE, UH, POSITIONS US IN THE SCHOOL DEPARTMENT TO MAKE THE ADJUSTMENTS THAT WE HAVE TO DO IN THE, UM, BEST POSSIBLE WAY FOR CHILDREN, RIGHT? AND THAT'S ALWAYS THE GOAL.
AND THAT THE CITY CAN, YOU KNOW, OVERALL OF MY TIME ON THE SCHOOL COMMITTEE, BUT OF COURSE PREDATING THAT.
BUT I'VE SEEN DIRECTLY WHERE THE CITY, YOU KNOW, RECOGNIZES, UH, PARTICULAR NEEDS, SOMETIMES ONE TIME NEEDS THAT, YOU KNOW, REALLY HAVE TO BE ADDRESSED.
UM, AND, AND I MEAN, I SAY THE CITY, BUT AGAIN, AS YOU SAY, IT'S THE SAME ENTITY.
BUT HOW, UH, AS A WHOLE, WE MAKE SURE THOSE ARE ADDRESSED.
AND OF COURSE, WE REALLY BENEFIT FROM HAVING YOU, MS. SPINNER AS A FORMER, UH, SCHOOL DEPARTMENT, CFO, YOU KNOW, YOU UNDERSTAND IT, UH, AS WELL AS ANYBODY.
UM, SO AGAIN, I APPRECIATE THAT.
I THINK WE ARE FACING, AS, YOU KNOW, SCHOOL COMMITTEE MEMBERS, YOU KNOW, MAYOR, UH, SORRY, FORMER MAYOR SIMMONS, UH, COUNCILOR SIMMONS WAS NOTING THAT, YOU KNOW, WE'RE ALL, UM, UNDERSTANDABLY GET QUESTIONS ABOUT WHERE ARE THINGS GOING WITH SPENDING, WHERE ARE THINGS GOING WITH BUDGET? HOW ARE WE MEETING OUR NEEDS? AND I THINK THE MORE INFORMED WE ARE, UM, AND THE MORE WE DO TO MAKE SURE THAT THE, THE PUBLIC UNDERSTANDS WHAT THE, BOTH, WHAT THE CONSTRAINTS ARE, BUT THE WAYS THAT WE'RE, YOU KNOW, CREATIVELY AND, UM, WITH WHAT PRINCIPLES ARE WE, YOU KNOW, ADDRESSING THEM, THE BETTER POSITION WE ARE TO HAVE THE, THE REAL CONVERSATIONS WE NEED ABOUT THE DECISIONS THAT WE ALWAYS HAVE TO MAKE.
UH, AND I YIELD BEFORE WE GO BACK TO COUNSELOR SIM, UH, UM, COUNCILLOR NOLAN, ANYONE WHO HASN'T SPOKEN, WHO'D LIKE TO BE ASKED, LIKE TO ASK ANY QUESTIONS, WE'LL GO TO COUNCILLOR NOLAN.
UM, GLAD TO HEAR ALL THESE QUESTIONS AND COMMENTS.
I DID WANNA FOLLOW UP ON, SO MANY OF US ARE TALKING ABOUT WAYS THAT WE ENSURE THAT WE HAVE MODERATE BUDGET GROWTH, AND I'M GLAD TO HEAR THAT THERE WILL BE ANOTHER PUSH TO
[01:20:01]
SAY WE HAVE TO HAVE SOME SAVINGS.'CAUSE TO REMIND ALL OF US, THERE ARE SOME WAYS THAT WE DO WANT ADDITIONAL INVESTMENTS.
WE'VE TALKED, TALKED ABOUT THEM OPENLY ON THE COUNCIL.
THERE'S, THERE'S SEVERAL INITIATIVES GOING ON.
UH, SEVERAL OF US, COUNCILOR MCGOVERN AND I ARE CO-CHAIRING A CHILDCARE EXPANSION TASK FORCE.
WE WILL EVENTUALLY GET TO WHETHER THERE'S ANY, YOU KNOW, WHAT THE FINANCIAL IMPLICATIONS ARE.
WE'RE TALKING ABOUT SOCIAL HOUSING, YOU KNOW, THERE'S, THERE'S A RANGE OF THINGS.
AND, BUT WHAT I'M HEARING AND WHAT WE ALL UNDERSTAND IS TO DO THAT, WE HAVE TO FIND SOME FLEXIBILITY WITHIN THE EXISTING BUDGET.
AND THAT MAY TAKE, PARTICULARLY ON THE SCHOOL SIDE, HAVING BEEN ON THE SCHOOL SIDE, SOMETIMES YOU STILL HAVE THE PEOPLE, BUT YOU REALLOCATE THEM IN A WAY THAT IS LEADING TOWARDS MORE EFFECTIVE IMPACT ON KIDS, WHICH IS WHAT WE WOULD WANT, RIGHT? THAT THEY'RE, THEY'RE SOMETIMES JUST PROGRAMS THAT AREN'T DELIVERING.
AND THEN IT DOESN'T MEAN YOU HAVE THOSE STAFF GO NOWHERE, BUT YOU REALLOCATE THOSE STAFF INTO, IN, IN, IN ORDER TO PROVIDE WHAT YOU WANT.
I THINK IT'S THE SAME THING ON THE CITY SIDE, AND I REALLY HOPE WE'RE DOING THAT INTENSIVE PLANNING, NOT TO MENTION THE FACT THAT AT LEAST THOSE OF US ON THE COUNCIL SIDE, EVERY MEETING YOU GO TO, YOU HEAR ABOUT THERE, THERE'S WAYS THAT THE EFFECTIVENESS OF MUNICIPAL GOVERNMENT WILL BE AFFECTED BY SOME OF THE NEW TOOLS.
UH, WHETHER IT'S AI OR WHETHER IT'S, IT'S, IT, IT, IT'S ALSO JUST CERTAIN CIRCUMSTANCES, CERTAIN TASKS THAT WE'RE DOING CAN BE DONE BETTER BECAUSE THERE'S BEEN IMPROVEMENT IN EITHER TECHNOLOGY OR, YOU KNOW, I'M STILL LOOKING FOR THE DAY OF THE, OF THE ALL ELECTRIC TRASH TRUCK THAT'S GONNA BE ABLE TO GO ON AND GO TWICE AS FAST AS ANY OF THE ONES OUT THERE.
LITERALLY EVERY SINGLE DEPARTMENT.
THERE'S WAYS, SO, SO IT, I I THINK MY QUESTION TO THE STAFF IS, ARE WE TALKING ABOUT THAT KIND OF LEVEL OF UNDERSTANDING THAT WE'RE THINKING OF A, OF A FIVE-YEAR PLAN AS WE EVOLVE IN ORDER TO FREE UP FLEXIBILITY IN THE BUDGET FOR THOSE NEW INITIATIVES THAT WHEN WE PUSH THEM, IT'S BECAUSE WE THINK THIS IS THE WAY IT'S REALLY COMPELLING FOR THE CITY TO MOVE FORWARD IN A WAY THAT WILL ADDRESS SOME OF THOSE INTRACTABLE PROBLEMS. JUST LIKE WE FOUND ROOM IN THE BUDGET, WE WHAT TRIPLED THE BUD, THE AMOUNT SPENT ON AFFORDABLE HOUSING OVER THE YEARS? AND THEN WE'LL GO TO COUNCILORS,
THANK, UH, THROUGH YOU, MAYOR.
UH, THANK YOU FOR THE QUESTION.
AND I THINK IT'S A GOOD POINT.
I MEAN, I THINK, YOU KNOW, WE'VE, WE'VE BEEN HAVING THESE CONTINUOUS CONVERSATIONS INTERNALLY ABOUT, YOU KNOW, THIS FIR LAST YEAR IT WAS, YOU KNOW, FINE 2% SAVINGS AND SOME, A LOT OF THAT REALLY CAME FROM, YOU KNOW, SOME THINGS THAT THEY COULD, WE COULD JUST TIGHTEN UP ON, PERHAPS SOME EXCESS BALANCES IN, IN AREAS.
UM, WE KNOW THAT THIS YEAR WILL BE A LITTLE BIT HARDER FOR OUR DEPARTMENTS.
AND SO WE'VE ALREADY BEGUN TALKING ABOUT THAT.
EVENTUALLY WE, WE NOT EVEN, EVENTUALLY, IMMEDIATELY, WE NEED TO START DOING THAT KIND OF WORK THAT LOOKS OUT 2, 3, 4 YEARS, RIGHT? BECAUSE IT'S VERY HARD SOMETIMES IN THE SMALL BUDGET PLANNING CYCLE THAT WE MIGHT THINK OF FROM NOVEMBER TO, YOU KNOW, FEBRUARY OR MARCH WHEN DEPARTMENTS ARE TRYING TO SUBMIT BUDGETS TO DO THAT KIND OF DEEP PLANNING AND COORDINATION AND EFFICIENCY IS HARDER.
SO WE HAVE TO ACTUALLY DO THAT KIND OF PLANNING OVER THE LONG TERM AND LOOK AND, AND LOOK AT IT.
AND SO WE ARE HAVING THOSE CONVERSATIONS ON THE CITY SIDE.
HOW DO WE LOOK BEYOND ONE YEAR SO THAT WE CAN THINK ABOUT WHAT, WHAT SHOULD WE LOOK LIKE IN TWO AND THREE AND FOUR YEARS? COUNCILLOR SUZI, UH, THANK YOU.
WELL, WE STARTED OUT THIS CONVERSATION, WHICH HAS, WHICH HAS BEEN A GOOD ONE, TALKING ABOUT HOW COMMERCIAL REAL, UM, REAL ESTATE PROPERTY VALUES FELL 23% IN FISCAL YEAR 25.
THAT NEW GROWTH ADDED TO THE TAX BASE DROP DROPPED BY 47%, AND HOW OUR EXCESS LEVY CAPACITY DECREASED BY 15%.
BUT AT THE SAME TIME, AND, AND, UM, THIS IS REALLY A QUESTION FOR OUR CITY MANAGER.
YOU HAVE SPOKEN ABOUT, UH, YOU'RE OPEN TO EFFICIENCIES, YOU REALIZE THAT WE NEED TO CUT 7 MILLION.
UM, BUT EVEN THOUGH BOSTON HAS, UH, CUT ITS GROWTH TO ABOUT 0.6% AND ELIMINATED 400 SCHOOL POSITIONS, WE'RE NOT RECOMMENDING FISCAL, UM, AUSTERITY OR REDUCTIONS IN STAFFING EVEN IF PEOPLE ARE THINKING ABOUT RETIREMENT.
SO MY, MY QUESTION IS, I DON'T KNOW HOW WE ARE IN SUCH A BETTER POSITION THAN BOSTON IS, UM, BUT MY QUESTION IS, SO WHEN DO WE REDUCE OUR BUDGET FURTHER? WHEN WOULD IT BE FISCALLY RESPONSIBLE TO, UH, TO NOT JUST MODERATE, BUT REDUCE OUR BUDGET FURTHER AND TO CONSIDER, UH, RETIREMENT BUYOUTS AND, UH, NOT, NOT BACKFILLING, EMPTY STAFF POSITIONS? THANK YOU.
AND I JUST, BEFORE WE GET INTO THAT, I KNOW THAT, UM, WE'RE GONNA HAVE SOME UPCOMING MEETINGS AND SO WE CAN GET DEEPER INTO SOME OF THE, HOW WE DO THIS.
AND I THINK IN PREPARATION FOR THE NEXT MEETING, I THINK MAYBE BRINGING BACK SOME OF THOSE KIND OF WHAT DIDN'T WORK LAST YEAR AND
[01:25:01]
WHY WE'RE THINKING ABOUT THIS, THIS WAY THIS YEAR TO KIND OF FOLLOW UP ON SOME OF THE QUESTIONS HAVE BEEN ASKED.UM, 'CAUSE I KNOW WE WON'T GET TO EVERYTHING TODAY.
CITY MANAGER, UH, THROUGH YOU, MAYOR.
UM, YOU KNOW, I, I WOULD SAY THIS MODERATE PATH IS BOTH WHAT I THINK IS FISCALLY RESPONSIBLE, BUT ALSO MEETS, UM, I THINK THE DESIRES OF THE CITY COUNCIL AS WE'VE BEEN HAVING THIS CONVERSATION YEAR AFTER YEAR, UM, TO ALSO MAKE INVESTMENTS IN OUR COMMUNITY TO MAINTAIN PROGRAMS THAT WE'VE, UH, WE'VE INVESTED IN.
AND, AND FRANKLY I WOULD SAY, UM, WHILE WE COULD CERTAINLY SET MORE AGGRESSIVE TARGETS AND LOWER BUDGET GROWTH, UM, THOSE ARE NOT EASY CONVERSATIONS TO HAVE AS AN ORGANIZATION, AS A CITY COUNCIL, AS A COMMUNITY EITHER.
AND IF, IF YOU'RE PAYING ATTENTION TO THE CONVERSATIONS THAT WERE HAVING, UH, THAT WERE HAPPENING ACROSS THE RIVER, UM, THERE WERE A TON OF REALLY DIFFICULT CHOICES THAT WERE BEING MADE.
SO ACHIEVING, YOU KNOW, A 0.6% BUDGET GROWTH IN THE CITY OF BOSTON MEANT, UM, A LOT OF CUTS THAT WERE REALLY PAINFUL, A LOT OF TRADE-OFFS THAT HAD TO BE MADE.
UM, AND, AND I THINK THOSE WOULD BE REALLY DIFFICULT FOR US AS WELL.
UM, SO I WOULD SAY COMMUNITIES ARE NOT MAKING THOSE KINDS OF CHOICES UNLESS THEY, THEY REALLY HAVE TO.
UM, AND, AND I THINK THAT THE MODERATED PATH, AS FAR AS I CAN TELL, REFLECTS, UM, I THINK THERE ARE CITY COUNSELORS WHO WOULD LOOK AT, UM, THE BUDGET, WHO WOULD LOOK AT FREE CASH, WHO WOULD LOOK AT EXCESS LEVIT CAPACITY AND SAY, WE SHOULD BE SPENDING MORE.
THERE ARE NEEDS TODAY THAT WE SHOULD BE MEETING.
WE COULD FIND NEW PROGRAMS THAT, UM, THAT WE COULD SPEND THAT MONEY ON.
AND THERE ARE CERTAINLY CITY COUNSELORS WHO LOOK AND SAY, UM, WE SHOULD REALLY BE LOOKING AT OUR EXISTING PROGRAMS, RETOOLING THOSE, WE SHOULD NOT BE, UM, ADDING TO TAX BURDENS.
AND I THINK IN PARTICULAR THIS BALANCE IS, IS BOTH REFLECTING THE NEEDS THAT WE SEE, UM, BUT ALSO, UM, YOU KNOW, SOME OF THESE ECONOMIC CHALLENGES WHERE ANY ADDITIONAL, UM, YOU KNOW, ANY ADDITIONAL BUDGET GROWTH, TAX GROWTH IS GOING TO HIT, UH, RESIDENTS MUCH MORE IN THE COMING ONE TO THREE YEARS THAN IT DID IN THE PAST BECAUSE OF, UM, HITTING THAT, THAT SHIFT.
UM, SO I THINK, I THINK THIS IS NOT MEANT TO BE, I WOULD SAY THE END, BUT, UM, BUT I'D SAY, YOU KNOW, WE DID SPEND A LOT OF TIME WRESTLING WITH, YOU KNOW, WHAT THE TARGET SHOULD BE, UM, HOW WE HIT THAT MODERATE SPOT WHERE, UH, WE DO HAVE SOME SPACE IN FY 28 IN ORDER TO, UH, DO SOME THINGS THAT WE REALLY WANT TO BE ABLE TO DO.
UM, WE ARE GOING TO HAVE, UM, SOME SAVINGS TARGETS THAT WE'RE GONNA HAVE TO HIT, UM, ACROSS DEPARTMENTS.
UM, THERE'S WORK THAT WE DEFINITELY NEED TO PUT IN AND THAT WILL DRIVE SOME OF THE EFFICIENCIES, UM, THAT WE'VE HEARD TONIGHT COUNSELORS WANNA SEE.
UM, BUT ALSO, UM, I WOULD IMAGINE WE'RE ALSO DESIRING TO SEE, UH, NEW PROGRAMS AND SOME NEW INVESTMENTS WHERE WE CAN AFFORD TO DO THAT.
UM, AND I THINK THAT'S, THAT'S KIND OF, THAT'S KIND OF THE CONVERSATION WE'LL HAVE WITH THE COURSE OF, OF THIS YEAR AS WE MOVE INTO THE BUDGET PROCESS.
BUT MY REAL QUESTION WAS, YEAH, MY REAL QUESTION IS, SO AT WHAT POINT DO WE THINK ABOUT FISCAL AUSTERITY? I, I REALIZE FISCAL AUSTERITY IS TOUGH, BUT AT WHAT POINT, UH, WHEN ARE WE THERE? WHERE WOULD WE NEED TO BE TO, UH, NEED TO PAIR BACK OUR PROGRAMMING, UM, UH, THROUGH YOU COUNCILLOR EY? UM, I THINK OUR GOAL ULTIMATELY WITH THIS PROCESS IS TO NOT END UP IN THAT PLACE.
UM, SO A LOT OF WHAT WE ARE TRYING TO DO IS MAKE THESE MULTI-YEAR PROJECTIONS, UH, SO THAT WE DON'T END UP THERE.
AND, AND MAYBE TO ANSWER YOUR QUESTION MOST DIRECTLY, I WOULD SAY MOST COMMUNITIES GET THERE WHEN THEY HIT THE LEVEE LIMIT.
UM, SO MOST COMMUNITIES GET THERE WHEN, UH, WHEN THEY CAN'T ACTUALLY RAISE TAXES ANYMORE BECAUSE, UM, THEY'VE HIT PROP TWO POINT HALF PERCENT, THEY'RE NOT GETTING ENOUGH NEW GROWTH.
UM, AND THEN, YOU KNOW, WHEN YOU THINK ABOUT SALARIES AND WAGES, UNION CONTRACTS, UM, FUEL PRICES, THINGS THAT YOU CAN'T CONTROL THAT EXCEEDS 2.5%, YOU GET STUCK AND THEN YOU HAVE TO BE MORE FISCALLY AUSTERE.
UM, AND THAT'S WHERE YOU'RE SORT OF FORCED INTO THESE CHOICES.
UM, IF YOU, YOU KNOW, I THINK IF YOU LOOK AT SOME OF THE CHARTS IN TERMS OF WHERE WE ARE ON EXCESS LEVY CAPACITY, UM, YOU KNOW, WE'VE GONE FROM, IN THE LAST FIVE YEARS, UH, 28% OF OUR OPERATING BUDGET IN EXCESS LEVY CAPACITY, WHICH IS AN EXTRAORDINARY AMOUNT OF FLEXIBILITY, UM, BUT DOWN TO 10, DOWN TO 18%.
UM, SO WE ARE REALLY EATING INTO THAT.
UM, AND, AND I THINK THAT'S WHY WE'RE WORKING TOWARDS SOME OF THIS MODERATION TO SAY THAT WE WANT TO PRESERVE SOME PERCENTAGE OF EXCESS LEVIT CAPACITY.
WE DON'T WANT THAT NUMBER TO GET TO ZERO.
UM, AND, AND I THINK SLIDE, UM, SLIDE FIVE, UM, THE ONE THAT SHOWS LIKE THE THREE RED ARROWS GOING DOWN AND THE THREE GREEN ARROWS GOING UP, THAT'S WHAT WE'RE SORT OF MOST CONCERNED ABOUT, WHICH IS WHEN, WHEN YOU THINK ABOUT PERIODS OF ECONOMIC DOWNTURN, EVERYTHING IS WORKING AGAINST YOU.
[01:30:01]
ARE GOING DOWN, YOU HAVE LESS NEW GROWTH, PROPERTY VALUES ARE GOING DOWN, TAXES ARE GOING UP.AND, AND SO, UH, I I THINK, I THINK A LOT OF THE CONVERSATION AS WE GO INTO THE YEAR WILL ALSO BE ABOUT ECONOMIC GROWTH AND, AND HOW DO WE ACTUALLY MOVE BACK INTO THAT PERIOD WHERE IF YOU HAVE, UM, IF YOU HAVE NON-TAX REVENUES GOING UP, YOU HAVE NEW GROWTH, PROPERTY VALUES ARE GOING UP, ALL OF THAT GIVES YOU A LOT MORE FLEXIBILITY.
UM, AND, AND I THINK, I THINK WE ARE NOW IN YEAR THREE OF THIS DOWN CYCLE, YEAR THREE OR YEAR FOUR, DEPENDING ON WHEN YOU WANT TO COUNT IT.
UM, I THINK WE'RE NOW PRETTY CLEAR THAT WE'RE NOT COMING OUT OF IT IN THE NEXT ONE TO TWO YEARS, ONE TO THREE YEARS.
UM, SO THAT'S KIND OF WHERE, WHERE WE WANT TO TRY TO DO THAT MODERATION PLAN OUT, PLAN THIS OUT.
AND, AND IN SOME WAYS THIS IS A BIT OF A, LIKE ANDRE KIND OF TELLING THE SAME STORY YEAR AFTER YEAR, BUT ACTUALLY THERE ARE THESE SLIGHT CHANGES THAT ARE IMPORTANT TO UPDATE, UH, I THINK THE COUNCIL AND THE SCHOOL COMMITTEE AND THE COMMUNITY ON.
SO I THINK EVERYONE WHO WANTED TO ASK QUESTIONS, UH, RAISE THEIR HANDS AND THERE'S NO ONE IN THE ZOOM.
UM, SO IF THERE'S NOTHING FURTHER, UM, I KNOW WE'LL HAVE SOME ONGOING DISCUSSIONS THE NEXT MANY WEEKS AHEAD.
SO, UH, I'LL ENTERTAIN A MOTION TO ADJOURN.
SO MOVED BY COUNCIL MEMBER, GO TO ADJOURN.
COUNCILOR ZUBE, ABSENT VICE MAYOR ZI.
AND YOU HAVE EIGHT MEMBERS RECORDED THE FOR AFFIRMATIVE, AND ONE RECORDED IS ABSENT.
WELL, VICE CHAIR DUBBY
AND YOU HAVE SEVEN MEMBERS RECORDED IN THE A.