The City Council began holding hearings on the proposed $231,135,736 Fiscal Year 2024 budget this week.
The school side of the proposed budget is just over $132 million, while the municipal share is just under $99 million.
One of the topics that came up at Monday night’s hearing centered around how the city should use its healthy reserve of free cash.
In February, the state’s Department of Revenue certified the city’s Free Cash at the end of Fiscal Year 2022 at just over $17 million for the city’s general fund, just over $4 million for the sewer enterprise fund, and $2.1 million for the water enterprise fund. Free cash is the money that is typically left over at the end of the fiscal year.
“In the city, we have a $98 million budget and we’ve got $23 million in free cash,” said District 1 Councilor Todd Taylor.
Interim City Manager Ned Keefe later noted that $17 million of free cash was for the general fund, while the remaining money was in the water and sewer enterprise accounts.
“I know we just experienced a pandemic, I know that we have unforeseen circumstances, we’ve got serious infrastructure problems with our sewers, there are a lot of things we need money for,” said Taylor. “But (that) seems like an awful lot of money. I talked to the previous city manager about this, about a habit of over budgeting on the backs of the taxpayers in order to create this slush fund that we use for necessary unforeseen expenses.”
Taylor said he would be remiss as a councilor during the budget hearings if he didn’t bring up the option of possibly funneling some of that free cash back to the taxpayers.
“I think it is important for the public to understand what is going on here with the money,” said Taylor. “I think that some of our revenues are starting to come back now stronger than we thought … and things are looking pretty good. I can’t help but wonder if we can try to have a little more mercy on the taxpayers.”
Keefe said he understood the point Taylor was making. He also noted that part of the relationship between the council and the city manager is about setting budget policies, and that it warranted further discussion in general.
“I think another point to make on this is that when we are preparing the capital plan, you will find that this year’s capital plan had over $12 million in free cash programmed into it for next year, so what we are essentially saying is that by having free cash, we’re not creating long-term liability in our capital plan,” Keefe said. “We are borrowing at a very low level to achieve capital projects and we are paying for those out of current operating funds.”
Taylor said he understood the point about not creating long-term borrowing liability, but said there should also be a balance between funding capital projects and providing relief for taxpayers.
“Things have gotten pretty tough economically, and I think we can try to give a little money back to the taxpayers to make up for some of this other stuff that isn’t caused by the city,” Taylor said.
District 6 Councilor Giovanni Recupero said he agreed that there should be measures taken to give more tax relief to homeowners who live in the city, and asked about the feasibility of using the free cash and forgoing a property tax increase for one year.
“For homeowners, it is getting harder and harder for them to live, and then they have to pass on the cost to their tenants,” said Recupero.
Councilor-at-Large Damali Vidot said she understood the concerns of her fellow councilors, but had concerns about using the free cash and then not having money on hand for financial emergencies.
“When I think about the 90s and us going into receivership, when I think about how big we are getting and we can’t even fit all of our offices in (City Hall), it scares me for us to just give money away because we have it to spend it,” said Vidot. “I think that the way we show the wealth or that we treat our residents how they deserve is in the way that we provide quality service here, and that means not nickel and dining people for the smallest of infractions. In order to build morale, I don’t think it is necessarily giving the free cash that we have reserved, but it’s how we treat the people who come into this building and making sure we are providing quality services.
“I, for one, am a little scared about spending that money; I worry about the day we can’t afford how big we are getting.”