The crisis of the City Budget is in full swing now as City Manager Tom Ambrosino submitted a $181 million City Budget to the City Council this week that is down by $2 million from last year – a first in many years – and also has a $5 million deficit lingering.
“I would not characterize this budget submission as a positive effort,” said Ambrosino. “This is not the budget I had in mind when I was first proposing it in March. In fact, I had a budget for the first time in a long time not that did not rely on any reserves. We usually buttress our budget with about $1 million in reserves every year. I had a fully funded budget that was healthy and positive. That was all thrown out the door.”
The one silver lining is that there will not be any layoffs right now of any City or School personnel – a stark contrast to Everett which just laid off 92 school workers and is looking to lay off or eliminate many City worker positions. The budget deficit of $5 million will be filled with money from the Rainy Day Fund.
“This budget does represent using $5 million in Stabilization Fund reserves to balance the budget,” he said. “We have hit so many problems with revenue and we have reserves and think now is the time to use it. Several unions have agreed to defer raises in their pay to prevent layoffs. We’re confident we can get through Fiscal Year 2021 without layoffs.”
A key problem for the City has been revenues, particularly hotel excise tax decreases and car rental decreases. Chelsea is heavily invested in the health of Logan Airport, and with it being basically shuttered for the last three months, millions of dollars are lost and will continue to be lost.
“I’m not sure how fast the economy can come back for a city like Chelsea that is dependent on the travel industry,” he said. “We have a lot of businesses that depend on Logan Airport…Travel is down 95 percent and it has an impact on our two biggest revenue generators including the hotels and the car rental companies – particularly Enterprise. We have serious concerns going into FY 21. It’s no different than Boston or any other City or Town.”
Ambrosino said they are expected a cut of about 30 percent to State Aid payments, which make up a substantial portion of the City Budget. However, there are federal bills floating around that could make a huge difference, including the HEROES Act. Were that approved, there is a chance that State Aid could be level funded from last year and a lot of things could return.
“If that bill were to pass in some form, the state wouldn’t have to cut city and town funding so much,” he said. “That’s the same for the School Department too. They might be able to provide some of the Student Opportunity Act money that was promised. We have a budget now that has $0 for Student Opportunity Act funding.”
He said that would prevent them from having to use the $5 million Rainy Day Fund money as well.
So far, though they have been able to keep personnel on and have been able to save the Summer Youth Employment Program and the Navigators, there are things that had to be deferred. Most of those things include projects in the Capital Improvement Plan (CIP).
For instance, Marlborough Street was to be reconstructed this summer, and it really needs it after years of neglect. However, that has had to be deferred until next year when things hopefully improve.
The City Budget now goes to the Council, who has already begun having hearings this week to review the submission. It must be passed by July 1.
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