HAVERHILL — The mayor’s office expects to release its proposed budget for the new fiscal year on Friday followed by the start of budget hearings next Wednesday. Property taxes will be rising, potentially more than last year, but by just how much is still to be determined.
City Finance Director Angel Perkins presented a budget overview at the May 7 City Council meeting in advance of the release of the proposed budget.
Details, including how much of a property tax increase the owner of the average valued home can expect to pay, will be discussed at the first City Council budget hearing on May 22.
Budget presentations by department are expected to continue through May and conclude June 3, followed by adoption of the budget on June 4 in addition to approval of a 10-year budget plan and capital plan. The budget must be submitted to the state by June 30.
According to the mayor’s office, the city will use $4 million of excess levy capacity to help balance the new budget, leaving $2.4 million as a buffer. Levy capacity is money the city will need to raise in taxes and which was not raised in the past though the city was allowed to do so by law.
Mayor Melinda Barrett’s Chief of Staff, Christine Lindberg, said Barrett had assembled a budget team that included representatives from the City Council and School Committee who worked collaboratively to craft a balanced budget that comes with the full support of city departments.
She said this new approach to building a budget is intended to avoid the kind of contentious budget hearings that occurred last year between Mayor James Fiorentini and the council.
2025 appropriations
Finance Director Perkins said the mayor’s budget proposal includes a bottom line increase of 6.13% or $15.1 million over the FY2024 budget. The proposed budget decreases the city and school budget requests by $15.3 million in order to present a balanced operating budget.
“One problem we do have is the use of our free cash,” she said, explaining the city used $6.3 million in free cash to fund the 2024 operating budget. “Our free cash was only certified this year at 6.8%. Clearly we’re using a lot more than 20% of a one-time fund.”
Free cash represents the amount of a community’s funds that are unrestricted and available for appropriation.
“I don’t think we’re going to fully resolve this until 2033,” Perkins said. “We are going to make strides, for instance this year we reduced the use of free cash by $800,000, which we had to reduce in another appropriation or raise in another revenue source in order to maintain level service budgets.”
New budget policies
Perkins told the council that under the mayor’s new budget policies, the city will avoid using one-time funds to pay for reoccurring expenses.
Also the city will not use “gimmicks” such as deferring expenses to future years, booking future revenue in the current fiscal year or the inappropriate rolling over of debt to balance the budget.
Perkins said these kinds of actions merely pass today’s costs onto future taxpayers and residents, and that these costs usually grow as they are deferred.
Delaying building and equipment maintenance or postponing the cost of operations are two of the most common procedures used to artificially create the appearance of a balanced budget, she said.
“We don’t want to underestimate budgets,” Perkins said. “It, as we’ve said before, kicks the can (down the road.)
Perkins said she and the mayor have been working with the city’s bond rater (S&P) and expects a rating soon. The higher the bond rating the better the interest rate on borrowing.
Budget pressures
The city will need to borrow $152 million for the Consentino School, which it will have to raise in taxes, and also pay for a ladder truck ($1.76 million); modular classrooms for JG Whittier Middle School ($3.8 million); tennis/pickleball courts at HHS ($3.2 million) and two salting and snowplowing trucks ($516,540).
“We decided to increase snow and ice appropriation that has historically been $710,000 but we are spending on average $2.6 million a year so we dedicated an additional $500,000,” she said.
Perkins noted there were several collective bargaining agreement settlements that were reached this year that the city needed to fund in the FY25 budget.
2025 budget accomplishments
Perkins noted the city fully funded a firefighter contract that included retroactive pay for two years and eight months and paid for in one operating cycle.
She said the mayor agreed to add pay incentives to the police department, subject to union negotiation. The police union contract expires in June of 2025.
Lindberg said Police Chief Robert Pistone asked for an educational incentive for his officers.
“The chief feels this will make us more competitive and retain qualified officers we are losing to other area departments,” she said. “The law allows this, with a memorandum of understanding that we will negotiate next year. If we had to wait another year for this we could lose a lot of officers.”
She said the budget also funded a city solicitor and a full-time elections supervisor. As a cost saving measure and to increase the level of service, the city will be transitioned to an in-house shared IT department with the Haverhill Public Schools.
The mayor’s budget also funds high-priority capital items including a boiler, skylight and sewer pump for the Citizens Center, as well as police computer replacement and an IT core network overhaul.
“The mayor finally agreed to fund an additional $800,000 for the school department to help mitigate the lost of ESSER funds,” Perkins said.
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