Local Government and Politics, News

City Council President: Loan may not cover Lynn’s budget deficit

Lynn City Hall (File Photo)

LYNN — The $14 million loan to fill the city’s budget deficit will not be enough to cure city’s financial woes, according to City Council President Darren Cyr.

In a television interview last week on the Lynn Community Television program “Frankly Speaking,” the Ward 3 councilor said the city recently learned healthcare costs have been underfunded to the tune of $7 million, leaving another huge budget gap.

“Instead of having, like we should have, an $8 million surplus, we are in the hole $7 million,” Cyr said in response to a viewer’s question. “Every single day, the mayor, department heads and the council are working on ways, along with Sean Cronin at the the state (Department of Revenue), to come up with a way so we can have a balanced budget by June 1.”

It’s unclear how much the unexpected healthcare payment will impact next year’s budget. Mayor Thomas M. McGee and Peter Caron, the city’s chief financial officer, declined comment, noting the proposed 2019 budget won’t be released until Friday.

In an interview with The Item, Cyr blamed former Mayor Judith Flanagan Kennedy for the city’s latest financial troubles.

“Health insurance has not been fully funded for the last eight  years,” he said. “There’s not a lot I can say, the mayor’s office knows a lot more about it than I do…call the previous mayor and ask her.”

Kennedy, who has started work as a dispatcher for the Lynn Fire Department this week, also declined comment. Caron acknowledged health insurance is an issue because the city’s costs continue to rise. He said the city needs to put in more money for health insurance but declined to provide data.

But in an 18-page report to Kennedy last spring, PFM, a Philadelphia financial advisory services firm that specializes in advising municipalities, said the cost of Lynn’s employee health benefits would rise to $48.2 million in 2019, up from $45.6 million this year, a nearly 6 percent hike.

“Lynn continues to face rising cost pressures driven by personnel cost growth, including the costs of pension and health care benefits, and school enrollment,” the report said. “In the face of these challenges, the traditional approach to budgeting that looks at problems and solutions one year at a time is inadequate to meet the goal of fiscal sustainability.”

Caron said the $7 million number mentioned by Cyr on TV may be a reference to a comment the mayor made at a recent department head meeting. At that time, the mayor had asked  managers to submit a co-called dream budget.

“The mayor asked all the departments to submit a so-called wish list budget, what they feel they need to operate their departments,” he said. “But now he is the process of paring down those requests.”

In March, Gov. Charlie Baker and the Legislature signed off on a $14 million loan to fix the city’s deficit. The 10-year note was intended to close the $8.1 million budget deficit the city is facing this year and the approximately $3.5 million deficit in 2019.

The loan was paired with a new trash fee that charges homeowners $90 annually for trash removal, designed to generate about $2 million annually.

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