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Lynn city council will consider whether or not to exhaust funds from $14 million loan on Tuesday

LYNN — The City Council on Tuesday will consider whether to exhaust the funds from a $14 million loan it received from the state to close last year’s deficit.

To solve the money woes that came up during fiscal 2018, Mayor Thomas M. McGee said the city needs the last $500,000 that hadn’t been earmarked. If the council grants the request, that would close the books on the loan.

McGee said Monday the money will allow the city to present a realistic FY 2019 budget that includes setting the tax rate.

“This will put the FY ’19 budget on track,” he said. “Obviously, we face challenges in 2020. We have a big hole to dig out of. That’s our challenge going forward. But we’ve put a reasonable budget together to handle FY ’19.”

The mayor said he is not looking to borrow any more money.

The $14 million was loaned to the city when fiscal 2018 was put together to solve lingering deficits. McGee used $9.5 million to resolve those issues, and intended $4 million be put aside to solve any deficits so the city could go forward with the budget for FY ’19, with $500,000 held in reserve.

But due to unforeseen issues from last year, including the medical insurance statement that came in June, it turned out that it was $400,000 more than had been budgeted. That’s why the cash is needed, McGee said.

“The final revenue figures did not come in as favorable as the (FY ’18) budget assumed,” said Sean Cronin, senior deputy commissioner of local services for the Department of Revenue. “One of the ways to plug that shortfall was to tap into that $14 million. The council has to take a vote to authorize (spending that money). Once it does, the $14 million is spent.”

Cronin said without the bond, it would have been impossible to resolve the fiscal crisis.

“We knew the city was going to have challenges for the next budget too,” he said. “For Fiscal ’20, which is what I’ll be focusing on at (tonight’s) meeting, there will be no more money to fix deficits. There will have to be some hard discussions.”

City Council President Darren Cyr said the panel will examine everything.

Solving the budget deficit is important for a number of reasons, he said, the biggest one is enabling the city to set the new tax rate on time.

Cronin said the issue began because the city had been underfunding the cost of health insurance for its employees going back several years, and that the debt just got too extensive.

“Now, they’ve correctly budgeted for health insurance,” he said. “So going into 2020, save for snow and ice, which you can never accurately predict, they should have no more deficits to cover.”

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