LYNN — Mayor Thomas M. McGee told the City Council on Tuesday night that a tentative agreement has been reached with about a dozen of the city’s unions, for cost savings through health insurance negotiations, but declined to say whether there would be wage increases for employees.
The agreement is for contracts through the current fiscal year 2019 and on health insurance for the next three fiscal years, subject to ratification by the unions. McGee declined to say what the insurance proposal was because negotiations are ongoing.
“Health insurance has been the biggest budget driver for many years and Lynn is not unique in that situation,” said McGee. “This tentative agreement comes after months of good faith negotiations and recognition by all, that health insurance costs needed to be addressed in order for the city to move forward. It preserves the much-needed benefits for our employees, while realizing budget savings.”
All of the city’s union contracts are expired, with no raises included in this past year’s budget. The city’s proposed $367.93 million fiscal year 2020 budget does not factor in potential raises through collective bargaining, which officials anticipated could account for a major increase in expenses this year, and is based on status quo health insurance.
The School Committee has to approve the Teachers Union contract, which the panel is scheduled to discuss during executive session on Thursday. The remaining contracts have to be approved by the City Council.
Sean Cronin, Lynn’s state fiscal stability officer, said the budget doesn’t have the capacity for wage increases through new collective bargaining agreements, which includes not having the funds available for retroactive raises for FY19. The budget could potentially allow for raises if the cost savings through a change in health insurance offset the funds needed for the increases, he said.
Cronin said health insurance and collective bargaining agreements are two of the major factors that landed the city in its current financial troubles. Several years ago, the city had to negotiate collective bargaining agreements and there was no money available for it. The city was also purposely underfunding its employee health insurance, he said.
“If you step back and talk about health insurance and potential collective bargaining agreements with no funding source, you’re going right back to where you came from a couple of years ago,” Cronin said. “I don’t think you want to take the steps that you’ve taken in the past because if you go back to that, you’re talking about different forms of state oversight potentially.”
Cronin said there has to be a significant structural change in Lynn’s finances, or officials are going to find themselves in its current cycle of not being able to fund its 5-year Capital Improvement Plan or hire new police officers and crossing guards.
He said an example of that would be the findings from a report he recommended 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 McGee told the council the proposed FY20 budget sufficiently meets the city departments’ needs within Lynn’s continued fiscal constraints. After exhausting a $14 million state loan to balance the FY18 and FY19 budgets, the city was faced with a projected $5 million deficit for FY20 with no funds to address capital or changes due to collective bargaining.
McGee said the city was able to close the gap by not filling six open positions in various departments, looking at one-time expenses that could be paid for through the current fiscal year’s free cash, and a $16.6 million increase in state aid, which is largely due to a significant increase in Chapter 70 aid due to a proposed revamp of the outdated foundation budget formula for schools.
“I am pleased to state that we have made some progress that begins to pull Lynn out of its current fiscal situation,” McGee said. “We did not get here overnight, and we will not get out of this overnight. However, the proposed FY20 budget puts us on the right track.”
The budget isn’t ideal, McGee said, especially because it doesn’t address the “woefully understaffed police department.” He promised to find a way to add police to the department’s force.
Although the budget allocates funds to the city’s reserve and stabilization accounts, reserves will only equal about 1.1 percent of Lynn’s overall budget, when typical fiscal practice calls for that figure to be 5 to 10 percent, McGee said.
“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 said.
The City Council will hold a public hearing on the budget on June 11.