I have attached my budget presentation below, along with my budget message to the Methuen City Council. Liberated some of the ideas from the slide show from Manager Lynch in Lowell. City Council meets in budget session tonight.
Dear Chairman Cronin:
Attached please find a copy of the FY 2012 budget. I have attached a Power Point presentation on the budget that highlights the six year budgetary trends that continue to present challenges to Methuen, as well as information on the FY2012 budget. Please allow me to highlight some of these trends.
Six Year Trends.
State Aid down over $900,000
The City Contribution to net school spending is up by over $4,300,000
Health Care Spending is up by over $5,400,000.
Pension Costs are up by over $2,400,000.
Vocational School Spending is up over $1,000,000.
Those budget drivers are instructive, for when you look at our utilization of levy during the six year period the problems inherent in municipal finance become apparent. Over the six year period our use of levy has grown by some $12,300,000. During that period we have had new growth of $5,600,000. That means that our levy utilization is $6,700,000. ($12 million less the new growth of $5.6 million.) When you then deduct health care, pension, and school spending you actually arrive at a negative number for levy growth. We have managed, through the years, to maintain services in light of that by utilization of one time revenues and by keeping a close lid on municipal spending. How close of a lid? Since 2009 municipal side spending has declined by over $6 million dollars.
As we arrive at the FY12 Budget we continue to hold the line on City side municipal spending. But the challenges to us are great. Before we begin the fiscal cycle our excess levy capacity balloons to approximately $6.2 million dollars. We have made a decision to utilize this capacity as a “reserve”, which has allowed us to lighten the tax load on residential taxpayers. But as the six year trend shows it is not possible to continue without some utilization of the levy. In this cycle we are faced with mandatory increases in the following areas. Methuen Public Schools net school spending will rise by about $500,000, while the Vocational School will also rise by $500,000. Employees are contractually entitled to a return of their givebacks of the last two years, which totals about $1.5 million dollars. Even with that the City has benefitted by virtue of using attrition and early retirement to reduce the city side head count, which reduced our giveback obligation by some $400,000.
As I have pointed out in my Power Point presentation the city side work force has been reduced by 10% over the last six years. In reducing headcount in this fashion we have avoided having to fund unemployment benefits, while maintaining core services. A couple of figures of note: Our Fire Department is down by ten firefighters, our Police force is down by two patrolman, with two more out on long term disability. Our DPW has been cut by about a million dollars since 2006. In this budget I have restored the Police Patrol contingent to that recommended by the Chief. On the Fire side I have recommended the addition of five firefighters over the existing level, which has been reduced by attrition and by early retirement. The choice we face is between replacing the retired firefighters or increasing the allocation for overtime. My recommended staffing level will leave us short of the request from Chief Buote, but will allow us to maintain adequate fire services to the residents of Methuen.
As my presentation to you will show the area that is left for scrutiny is the so called “other expenses” portion of the municipal budget, which amounts to about $1 million. Please keep in mind that these so called “other expenses” contain vehicle maintenance, expenses for fuel and heat, turnout gear for our firefighters, ambulance supplies, bullet-proof vests for our police officers, as well as ammunition to conduct firearms training. It is important to note that despite severe cuts on the municipal side we have managed to fund a snow removal budget of over $1.1 million with a City Council budgetary allocation of less than half of that amount. During my six years as Mayor we have continually funded snow removal in this way, artificially lowering the bottom line of the budget and then squeezing enough savings out of the municipal budget to cover the entire snow removal budget.
I will submit a Capital Improvement book under separate cover. That will require substantial additional conversation, as we are faced with a very large expense relating to upgrading radio equipment, as well as required investment in police patrol cars, fire ambulances, and other public safety and DPW equipment.
The laws of mathematics have put most municipalities into a real budgetary dilemma. As our fixed costs continue to rise, we, not wanting to adversely impact taxpayers, continue to prune the areas where we have that ability, the City side of government. But we also do not wish to cut services to our constituents. We rightfully fight for full services to our senior center, for recreation programs for our children and to ensure that we deliver vital public safety services to our citizens. But the laws of math will require some difficult decisions. Methuen has been managed with the bottom line in mind, including the funding of the Methuen High School project WITHIN the confines of Prop 2.5. With this budget we still leave levy capacity of over $2 million dollars while funding the services that are wanted and needed by our residents. I look forward to discussing this budget, as well as the upcoming Capital Improvement budget, which I hope to submit tomorrow.