state of the city & budget presentation 2010

8/9/2019 State of the City & Budget Presentation 2010

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State of the City andFY2011 Draft Budget

Review

WELCOM

E


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E State of the City and FY2011

Budget Review

TO DATE WE HAVE ACCOMPLISHED MUCH

Neighborhood watch program

Through utilization of a grant we have

hired two additional police officers We are working to establish aYouth

Commission

We have begun massive road paving

improvements in our corridors and in ourdowntown region.

Develop North Adams

We continue to partner with MCLA andMASS MoCA


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State of the City and FY2011Budget Review

Develop North Adams is currentlyworking on beautifying some of oursmall green spaces to create pocketparks in the downtown corridor.

Cleanup of the old tannery site Blackinton Mill Mohawk Theatre Project

Super Walmart Airport Reconstruction Community Cleanup Dayin

conjunction with MCLA


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Closure of the Medical InsuranceTrust Issues

Conversations with private investorsregarding growth

Dialogue regarding a solar cap on ourlandfill

Massachusetts Green Community

We have fully appointed manycommissions and boards


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We have been awarded a grant fromthe Berkshire Regional PlanningCommission that is allowing us to

study years of past planningdocuments.

We have enhanced our website

We have empowered our CityCouncil, School Committee, Boardsand Commissions


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I received the keys to this city on January4thand since that time, have struggled withthe many things that we will be discussinghere tonight. We have:

Established scheduled meetings with DepartmentHeads

Created a Finance Team

Created and Executive Team

Spent hours with our labor attorney Engaged with the Department of Revenue at a

very high level

The DOR is in the process of completing a FinancialManagement Review to guide us on bestpractices

Toured all ofour schools


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We have one of the lowest cashpositions in the Commonwealth

Our infrastructure is in deplorable

condition Three of our city dams and many old

walls need significant and very costlywork and repairs

This city owns way too muchproperty

A transfer station/landfill issue that

has been a nightmare for residents,employees, and most specifically the


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8 union contracts to settle

The threat of arbitration andpotential law suit due to theMedical Insurance Trust

Millions in recurring debt and

operating expenses being pulledfrom our budget and paid fromreserve accounts.

We have a city with significant needs

and not enough staffto take care


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Here are some of the fiscal factsas of12/31/2009:

Free Cash as a % of Tax LevyFree Cash plus

Stabilization funds

Adams 35.90% $

2,805,000 Williamstown 8.84% $

1,165,000

Clarksburg 40.56% $503,000

Florida 24.28% $467 000


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We have the lowest per capitaincome in Berkshire County at$16,381

We have the highest unemploymentrate at 11.2% New growth continues to erode State aid as a percentage of our overall

receipts continues to be problematic In the past 4 years, the average

single family tax bill hasincreased 19% from $1453.00 to$1729.00 4.75% annual average


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Our local receipts since FY2006have dropped 10% orapproximately $634,000

Alarmingly, our free cash onJuly 1,2001 was $3.3 million.today itis $307,000.

In the past three fiscal years, wehave used $3.4 million fromreserve accounts to pay recurringexpenses

Free cash is virtually gone, andmost of our reserve accounts


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So now we are in the perfectstormwe have seen:

Extensive state cuts over the past threeyears in excess of17%

The past fiscal practices of reducing thebudget and then utilizing reserves topay recurring long term debt and

operating expenses The past mantra that low taxes equals

good fiscal management

Past fiscal management that hascaused our house of cards tocollapse.


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So where was I during all of this?

I was on the Council Finance Committee for10 years

Many of those years, I asked for revenueinformation yet none was ever provided

Many years we were given budgets literallydays before they needed to be approved

I asked for an audit of the MIT yet was denied Could I have been a stronger

advocate.YES I concluded that the only way to a more

focused, more transparent, and moreefficient budget process was to run for


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I have spent hours with the citysFinance Team and have been inconstant contact with the

Department of Revenue at boththe regional and state levels. Theyare in full agreement with our

assumptions and quite honestlythey helped in the formation ofmuch or what I will cover next.


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ALL INDICATIONS OF A VERY BLEAKFINANCIAL PICTURE ARE PRESENT:

No Cash

No Reserves

Crumbling infrastructure years of deferredmaintenance

Using cash reserves and not revenues to pay

the bills Under-utilization of revenue sources

Shrinking local economy

More of our residents on some sort of publicassistance

Higher drug and property crime


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We are currently working on some initiatives to helpwith revenues

Investigating the sale of city parcels and buildings toinclude the Windsor Mill

Capping the landfill with solar to reduce our energy costs

Looking at alternatives for the transfer station that couldreduce costs and increase revenues

Looking at increases in water rates (third year without anincrease)

Looking at a sewer fee

Better utilization of Windsor Lake and the Campground Creating partnerships and collaborative purchasing efforts

with neighboring communities

Consolidation of utility accounts throughout the city so thatwe can better manage those costs

More calculated assumptions for revenuemost specifically

our local receipts


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As for growthI have been meeting with thefollowing to discuss current and futureopportunities:

MCLA

MoCA

MA Development

Berkshire Regional Planning

Berkshire Economic Development

Our neighboring Town Administrators

The Governor Congressman Olver

Representative Bosley

Senator Downing

Local business leaders and developers


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NOW I HAVE SOUNDED PRETTYHARSH SO FAR BUT.There aremany great things happening:

Roads Bridge Sidewalks Airport

Community Groups Community excitement $50 million in Science Center

development at MCLA


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I also was blessed to

inherit so many wonderfuland supportive folks whoare stepping up in ways

that I had only dreamedofto help pull us up andout of the position we arein.


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We have created two new groups:

Develop North Adams Group of communityleaders who will be working to entice smallbusiness, re-brand and market the

community, and work on community events Community Economic Development

Advisory Board this group will be a vitalcomponent of the growth process for NorthAdams and will be at the forefront of the

planning document we will be receiving soonfrom Berkshire Regional Planning. We will behosting community visioning processes laterin the year.

Without growthover timein allsectorswithout new jobsgood jobswe will not growIT IS THAT SIMPLE!


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We should be seeing some very nice visible thingsthis summer

Pocket parks

Benches on Main St and the Veterans Memorial

Public gardens Concerts at the Joe Wolfe Field complex in August

Wilco at MoCA

The Down Town Celebration

The Food Fest

Possibly some murals or public art of some sort I would love to light the Noel Field walking track,

playground, basketball court, and tennis courts till10:30 every night for our youth and residents

Birth of a Youth Commission


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Let me explain the settlement of the MedicalInsurance Trust (MIT) and its impact on the budgetand on taxes going forward.

Settlement was in reaction to underfunding the MIT bythe previous administration

I retained the services of Scanlon and Associates

Scanlon confirmed the City had not been paying its fairshare of insurance working rates/premiums in

FY2008, FY2009, and FY2010 Exposure wasidentified at a number in excess of 2.1 million.

I approached the DOR for their guidance and workedwith the citys labor lawyer to create a strategy

Because we have no cash reservesit was determined

that any settlement would have to be borrowed oramortized


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Certified Free Cash


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Reserve Accts. Use Bal 7/1/09Bal 12/31/09

Sale of City Land Ret. Of Debt $2,327,345$1,227,345Parking Meter Police Sal. $ 138,833

$ 2,733

Cemetery CemeterySal. $ 111,062$ 1,062 Technology IT Expenses $ 177,798

$ 88,598Overlay Surplus Fire Sal. $ 287684

$ 0


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Local Receipts projections over thepast three Fiscal Years have fallenshort:

FY2007 95.45%

FY2008 98.27% FY2009 94.62%

FY2010 95% projected based on YTD

We have worked very hard atprojecting local receipts for FY2011 andwe are confident, as is the Department ofRevenue, that our projections, while

conservative, are very realistic.


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Budget FY2009 FY2010

FY2011 (draft)

School $14,851,697 $15,550,212$15,693,336City $20,284,437 $19,666,638

$20,047,406MA Assessments $ 5,249,650 $ 5,113,699

$ 4,793,163

Total $40,385,784 $40,330,549$40,533,905


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Receipts FY2009 FY2010

FY2011 (draft)

State Aid $20,928,335 $18,997,071$18,013,739

Local Rec. $ 6,865,835 $ 6,545,692 $7,302,000 ?

Local Taxes $11,052,149 $11,601,588$12,760,113 ?SBA Reimburse $ 659,939 $ 659,939 $

659,939

Med Ins Trust$ 880,000


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FY2009 FY2010FY2011 (draft)

Budget $40,385,784$40,330,549 $40,933,905

Receipts $39,506,258$37,804,290 $39,615,791

Deficit $ (879,460)$(2,526,259) $ (918,114)

Appropriated $ 879,460 $ 2,526,859

from Free Cash and Reserves to balance budget


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Why the large jump in LocalReceipts?

Proposed 10% increase in water fees(average homeowner cost of$26.00 annually)

Proposed sewer fee (averagehomeowner sewer feeapproximately $118.00 annually

42% of average water bill)


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Why the large jump in RealEstate Taxes?

Because of the Medical Insurance TrustIssue, the DOR mandates that we tax toour full capacity

The reality is that with or without theMIT issue we would have had to tax tothe levy capacity to fund our budget ORsuffer MORE SIGNIFICANT CUTS!


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HOW DO WE FIXTHIS?

I am suggesting three

scenarios


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Scenario 1

10% tax increase - $183 on average $140,000

home 10% water rate increase - $26 on average water

bill

Sewer fee 42% of water bill or $118 on average

Monthly average increase cost tohomeowner = $27.25


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Scenario 2

If there is compromise between the Governorand the Legislature on local receipts and we

receive more aidwe could consider aProposition 2 override of $1,000,000.

This would raise our baseeliminate the needfor a sewer fee, water increase and

utilization of what precious little reserveswe have left

This would create an approximate 19%increase in taxes impacting the

average homeowner $333 annually


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Scenario 3 If there is no compromise between the

Governor and the Legislature on localreceipts and we receive aid as proposedby Ways & Meanswe could consider aPropositions 2 override of $1,500,000.

This would raise our baseeliminate theneed for a sewer fee, water increase and

utilization of what precious little reserveswe have left This would create an approximate

23% increase in taxes impacting theaverage homeowner $408 annually


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Scenario 1 Scenario 2Scenario 3

Tax increase $183.00 $333.00$408.00

Water increase $ 26.00Sewer fee $118.00Total impact $327.00 $333.00

$408.00 Scenario 1 would still need to utilize over $800,000

in reserves

Scenario 2 would fix the problem if there is acompromise in state aid without use of reserves

Scenario 3 would fix the problem if there is no


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These are not pretty scenarios

These are not economically pretty times

We cannot continue to play the shell

game with our finances

We cannot continue to count on thestate or our dwindling reserves to

keep bailing us out We are faced with significant budgetary

obstacles

We are in a financial mess


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We need to make the financialadjustments to get our budget backon track

When the state finalizes theirbudgetI will be making myrecommendation as to what

scenario I think will be our bestfiscal fix

We need to consider not just how we

get through this fiscal year but how


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As I mentionedwe have significantinfrastructure issues due to years ofdeferred maintenance

We are currently looking at a neweducational model for our children,that in the not so distant future couldput significant strain on our resources

The draft budget that I presented

represents approximately $700,000 incuts

I am currently working on a 5-yearcapital plan as well as a three year

budget projection document


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I WILL NOT RECOMMEND CUTTING THEBUDGET ANY FURTHER!

I WILL NOT EXPOSE OUR SCHOOLDEPARTMENT TO FURTHER CUTS

I TRULY BELIEVE THAT OUR SCHOOLBUDGET IS THE ONLY REALINVESTMENT DOLLARS THAT WESPEND

I WILL NOT SHORT CHANGE OURRESIDENTS BY DEPLETING BASICPUBLIC SERVICE AND PUBLIC SAFETYLEVELS THAT WE HAVE GROWN TO

EXPECT


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This fine City of North Adams has somuch promise and potential

It is up to us to move this potential

forward

I have inherited a fiscal messamanagement messI need your

help and support to fix it I intend to remain open and

transparent

I pledgewith your helpto move


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QUESTIONS??

state of the city & budget presentation 2010

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