LYNN — It appears the city will have to borrow half a million dollars more than anticipated to balance this year’s budget.
Michael Bertino, the city’s chief financial officer, appeared before the City Council on Tuesday night to ask the panel to authorize borrowing $4.5 million this year.
The city had to borrow $9.5 million to balance its fiscal year 2018 budget and over the summer, it was projected that officials would have to borrow $4 million to balance the FY19 budget.
City officials had to dig themselves out of a financial hole through legislation, a home rule petition that was approved earlier this year by the City Council, state legislature and signed off on by Gov. Charlie Baker, that allowed the city to borrow up to $14 million to close its budget deficit.
Bertino said he and Mayor Thomas M. McGee are recommending that the city borrow the remaining $500,000 available through the loan.
The City Council is slated to vote on whether to borrow the $4.5 million on Oct. 23.
City Council President Darren Cyr said he was notified of the need for additional funds last Friday.
Councilors expressed frustration with the lack of a strategy outlined, or communicated to them, for balancing the FY20 budget, when borrowing through the home rule petition will no longer be an option, and overall, what is being done to solve its financial crisis.
“Before I could vote on that (the $4.5 million), I want to know some of the ways (we) can achieve a balanced budget without some of the borrowing capabilities in 2020,” said Ward 2 Councilor Rick Starbard. “Before we go deeper in the hole, I want to know what the plans are in future years.”
Ward 1 Councilor Wayne Lozzi said he wanted to know if the city would still be facing a budget deficit in FY20 if the council approved the $4.5 million. He compared the situation to “biting the bullet and tolerating how much pain.” There are going to have to be difficult cuts made, he said.
“I don’t want to see us borrowing and being in trouble down the road,” Lozzi said. “We’ve been frustrated with this for almost two years now and we’re not getting answers to the questions we’ve been asking to ensure things are going to run smoothly.”
Cyr requested that Bertino prepare a document for them ahead of their scheduled vote on what would happen if the council didn’t pass the $4.5 million, regarding how many layoffs that would mean or what city services would be lost.
The reason the extra $500,000 came into play, Bertino said, is as part of the bailout, the city had to enter all of its information into a gateway system so it could be reviewed by the state. Upon reviewing the information, he said it became clear several budget line items have changed since the summer, when the $319.5 million budget was approved.
The city got an increase in state aid through the state budget, but offsetting that revenue increase is the state drawing back money through other means such as charter school tuition and school choice tuitions, leaving the city with about $1.3 million less than numbers used over the summer.
Another factor was not realizing the healthcare trusts deficit was double what was budgeted, due to charges incurred in June that the city didn’t receive the bills for until late July or early August. In all, the city is left about $1.1 million short.
When a city’s budget is as tight as Lynn’s, there are no reserves to back up those lost projected funds, according to Bertino.
“This position we’re in wasn’t caused overnight,” Bertino said. “It was caused over time.”