Lynn mayor asks for $16M bond to close budget gap

Mayor McGee and city unions ratified changes to the Lynn's self-insured health plan that, McGee said, generate $4.3 million in savings over the next three years. (File Photo)

LYNN — Six weeks into his new job, Mayor Thomas M. McGee has asked the City Council to approve a $16 million bond to close the city’s budget deficit.

The 10-year bond is intended to close the $8.1 million budget deficit the city is facing this year and the approximately $3.5 million deficit it could be faced with next year, according to McGee.

Over the weekend, City Council President Darren Cyr contacted council members to give them a heads-up that the measure would before the panel. On Tuesday night, the City Council voted to set down a public hearing — a vote is expected on Tuesday, Feb. 27.

The bond is part of a home rule petition, legislation that allows the city to borrow up to $16 million over the next two years, which is intended to balance the FY18 budget and stabilize the FY19 budget that begins on July 1, McGee said.

The legislation, after passing through the Council and being signed by the mayor, would go through the State House, state Senate and would appear on Gov. Charlie Baker’s desk.

“This allows us to use bonded money for operating expenses, which is what this legislation is about,” McGee said. “This isn’t money we’re receiving. This is money we’re borrowing.

“The (Massachusetts) Department of Revenue, there’s numerous reporting requirements with making sure we’re addressing what caused the underlying deficit to occur and we need to continue to give them that information during the years we’re paying off the bond … We’ll be continuing to work with the Department of Revenue to give them the information to reflect that we’re making the right decisions and making progress and stabilizing our budget moving forward.”

The city is mandated to have a balanced budget, which has to be resolved so final tax bills can be mailed out by April 1, McGee said. The problem that led to the budget deficit, he said, is that expenses were growing faster than revenues — net school spending is an issue the city has been facing over the past several years, which also played into the gap, and led to the critical place the city is in right now.

“The council will not only take up the loan, but whether the city should extend the trash fee to single-family homeowners,” said City Councilor Brian LaPierre. “Last year, the council approved the fee for multi-family, out-of-towners. In addition, the home rule petition will form a committee to study whether the city’s contribution to employees’ health plans should be reduced. Today, some employees pay 17 percent of the health premium, while the city picks up 83 percent.

“The Department of Revenue wants to know how we will raise revenue along with borrowing. A citywide trash fee would raise about $2 million annually and the state has told us to get back to the table on health insurance (with unions) where we could save millions.”

McGee said the annual trash cost to the city is more than $6 million, and the trash fee would be $90 annually, or two biannual bills of $45 each. He said the $2.2 million revenue the city would get from that would reduce the $6 million cost to the city and would show the city is addressing the underlying conditions that are affecting the deficit.

Since he’s been sworn in, to address the budget crisis, McGee said he and Cyr have been working closely with the city’s chief financial officer (CFO) Peter Caron and the Department of Revenue to come up with the proposal that was submitted to the council on Tuesday night.

Also included in the home rule petition is the elimination of the residency requirement for the next superintendent of schools and CFO. Superintendent Dr. Catherine C. Latham and CFO Peter Caron plan to retire later this year.

In discussion with the Department of Revenue to win approval of the bond, the state agency has said the best candidate should be hired regardless of where they live, LaPierre said.

Nathalie Dailida, a DOR spokeswoman, did not return a call seeking comment.

“It doesn’t exclude Lynn people,” said McGee. “It just means that the jobs posted will not be subject to the residency requirement and the thought behind that, talking closely with the Department of Revenue, it opens up the opportunity to make sure we fill those positions with the best possible candidates that apply.

“I think particularly with the CFO, it’s really important that we’ve got the best possible person in here that will allow us to really get out hands around the finances, once Peter Caron moves on.”

In addition, with 24 communities looking for superintendent positions right now, McGee said the residency elimination allows the city have a better reach on making sure the best candidate applies for the Lynn superintendent position.

Cyr said Lynn is only one of three communities that has residency for the superintendent, in addition to Brockton and Nantucket.

“It’s been a tough six to seven weeks, but it’s been a pleasurable one working with the mayor and everyone recognizing the severity of the situation and we’re all going to do whatever we have to do to rectify it,” Cyr said. “There are things in there that not everybody agrees with, but we know that we all have to get through this, do what we have to do so we can make the city solve it.”

McGee added “some of these are tough decisions to make but it really allows us to get on solid footing for what we need to do for this year and moving forward.”

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