April 11, 2017
By THOMAS GRILLO
LYNN — A team of consultants told the city what they already knew: Confronting Lynn’s fiscal challenges will hurt.
In a stark report presented to the City Council Tuesday, a Philadelphia financial advisory services firm that specializes in advising municipalities, said the city should not issue raises after union contracts expire, freeze hiring, contract EMS services to a private company, and eliminate 35 city jobs.
“Lynn now faces a critical moment,” said The PFM Group in the 18-page survey. “Absent corrective action, the city’s general fund is projected to have an $8.6 million deficit in 2017 and in each of the next five years … the longer it takes Lynn to confront its fiscal challenges, the harder and more painful it will become to implement viable solutions.”
Vieen Leung, a PFM senior managing consultant and one of the study’s authors, said to close the gap the city should consider increasing fees annually, raise taxes and implement a local meals tax.
“The deficits are real and they are daunting,” she told the Council.
Leung also said the city lacks long-term planning for capital improvements. Lynn must figure out a way to determine a city building’s life expectancy and how to fund new construction.
“The city has underinvested in its infrastructure over the last decade,” she said.
The team also recommended the city control employee pay and benefits and increase the amount city workers pay for health insurance.
Last winter, the state Department of Revenue provided Lynn with a $75,000 grant to hire PFM and help City Hall create a five-year plan toward better fiscal responsibility.
A team of three municipal finance experts combed through the city’s books over the last few months and presented the council with an outline of how to get the city back on track.
PFM said while revenues are projected to grow at an annual rate of 2.9 percent annually driven largely by property taxes and state aid, operating expenditures are expected to swell by 3.2 percent.
In at least one exception to the no-new-hire rule, PFM recommends the city hire a full-time chief financial officer (CFO) and potentially a city manager.
Today, Peter Caron, the city’s CFO, spends half of his time managing the city’s finances and the other half as head of assessing.
“While this arrangement has allowed the city to save salary costs, CFO duties should not be held by an employee who already leads one or more other departments,” the report said.
In a brief interview on Tuesday, Lynn Mayor Judith Flanagan Kennedy said she questioned some of the recommendations on how to close the budget gap.
“Some of the assumptions they used are completely unrealistic to implement, such as no wage increases through 2022,” she said.
Thomas Grillo can be reached at firstname.lastname@example.org.