LYNN — Despite a projected $5 million deficit for next year, chief financial officer Michael Bertino said the city’s proposed $367.93 million fiscal year 2020 budget is balanced, but doesn’t factor in potential raises that could come through ongoing union contract negotiations.
Mayor Thomas M. McGee has submitted the budget to the City Council, which represents a $17.27 million increase in spending over last year’s budget.
Bertino attributed the substantial budget increase over last year to the anticipated comparable increase in Chapter 70 funding, the major program of state aid to public schools.
The proposed Senate budget would allocate an increase of $18.15 million in Chapter 70 aid to Lynn in FY2020, for a total of $185.8 million, according to figures provided by State Sen. Brendan Crighton.
The projected budget for the Lynn Public Schools is $159.3 million.
The projected deficit came on the heels of exhausting a $14 million state loan to balance the last two years’ budgets. Bertino said the city was able to achieve a balanced budget through scaling back expenses “all around.” Department heads were instructed to level fund their budgets.
Total anticipated state aid is $211.7 million.
“Everyone wants more money, but there’s only so much to go around, so we have to do the best we can with what we have,” Bertino said. “We’re trying to get by right now until we can position the city. This is step one and there’s many more steps to go.”
Bertino said there were no layoffs, but the city was able to close the projected gap by not filling most open positions. The only positions that were filled were public safety and revenue generating ones, which means there will be vacancies in numerous city departments.
McGee wrote in a letter to the City Council that the proposed budget includes $1 million to meet the city’s statutory required reserve, a $200,000 increase in the annual reserve, a $215,000 increase for the snow and ice budget, fully funds the city’s net school spending requirement for education, and correctly budgets its share of health insurance costs based on 100 percent utilization.
“This document is a reflection of our dedication to fostering economic growth, improving our financial management practices, and committing to providing a high level of municipal government services within the continuing fiscal constraints,” McGee wrote.
Council budget hearings are scheduled to begin today, with department heads expected to report on their respective budgets.
The city will also have a lower than desired capital investment, or $2.54 million, which comes out to a 7 percent decrease over last year. The items selected to be funded from Lynn’s 5-year capital improvement plan in FY2020 include police, fire and Department of Public Works (DPW) vehicles to replace outdated equipment.
The budget does not factor in potential raises through collective bargaining, Bertino said, which city officials anticipated could account for a major increase in expenses this year.
Negotiations are still ongoing for about a dozen union contracts that have expired, including those with teachers, police, fire, library and City Hall groups, such as the DPW and the Inspectional Services Department. City officials have said those negotiations have to be completed before the budget can be approved.
Bertino said the city doesn’t have the money to account for, or estimate what potential raises negotiated through collective bargaining would be.
“It’s not that there will be no raises,” Bertino said. “It’s just the negotiations aren’t done yet. It’s just something that you don’t plan on the increases until you know what they are. Then, you’ve got to figure out what the cost is and you have to come up with the money to cover the cost.”
Health insurance is budgeted as status quo and any potential changes are part of the ongoing negotiations, Bertino said. The budget includes a 2.53 percent increase in health insurance, or a bump of about $1.3 million.
In March, Sean Cronin, Lynn’s state fiscal stability officer, recommended a report to the mayor and City Council that showed the city could see a budget savings of $10.4 million this year if it were to switch its health insurance plan to the commonwealth’s Group Insurance Commission (GIC).
But despite lower premiums, the report showed the switch could result in increased out-of-pocket expenses for some employees and retirees who have to frequently use their health insurance.
The fiscal year ends on June 30 and according to its agenda, the City Council is expected to schedule a June 11 public hearing for the proposed FY20 budget.