Local Government and Politics, News

Lynn City Council OKs $368M budget

LYNN — The City Council unanimously approved Lynn’s proposed $367.93 million fiscal year 2020 budget on Tuesday night, but Mayor Thomas M. McGee will likely come back before the panel to have it amended.

“We worked hard to get a balanced budget through the whole process since the fall, working with the department heads, recognizing we had some real challenges,” McGee said. “We had two years where we had to borrow money to balance our budget, so it’s a good step forward to be at a balanced budget at this point.”

After exhausting a $14 million state loan to balance the last two years’ budgets, the city was also facing a projected $5 million budget gap for FY20.

McGee said the possible proposed amendments to the budget would be based on potential changes in state aid to Lynn when the state budget is finalized, and how costs would be impacted through raises and changes in health insurance negotiated through collective bargaining agreements with the city’s dozen unions.

The FY20 budget doesn’t factor in potential wage increases and changes in health insurance through collective bargaining. A Health Insurance Memorandum of Agreement between the city of Lynn and its unions, obtained by The Item, shows retroactive employee raises of 1 percent for July 1, 2018 and 0.5 percent for Jan. 1, 2019, and a tentative three-year agreement for health insurance coverage.

McGee has said changes in health insurance coverage will result in a cost savings, but it’s unclear what the savings would be and how much of an increase in expenses would result from employee raises. Chief Financial Officer Michael Bertino has said a 1 percent raise could result in a $550,000 increase.

The tentative agreement has not been ratified by the unions, which McGee expected would be completed over the next week. The agreement would then come before the council for approval, and the mayor said he could be looking for an amendment to the budget based on those changes.

McGee said he could also be looking for an amendment if the city sees a change in its state aid when the state budget is finalized. Lynn’s budget uses “conservative” state aid numbers proposed by Gov. Charlie Baker, but numbers proposed by the state Senate includes a higher amount of state aid to Lynn.

Lynn’s budget is based on $211.7 million of anticipated state aid.

“If there’s higher numbers, then we would come back with an amendment to reflect those higher increases of state aid,” McGee said. “If there is an agreement that we come to on the health insurance, that will hopefully happen and be a positive impact on the budget as well.”

McGee credited the council for approving nearly $3 million in transfers earlier in the evening, which he said was important to balancing the budget and building up the city’s reserves.

The transfers, which had been tabled on May 14, included transferring $2.8 million of free cash, with $1.5 million of that going into reserve accounts. The other funds transferred were used to fund deficits and various expenses, such as using $450,000 of free cash to fund the FY19 snow and ice deficit.

A $1 million transfer of free cash established a “rainy day” stabilization fund for the purpose of paying any unforeseen costs and expenses, except those related to employee salaries and employee contractual benefits. A $500,000 transfer established a capital stabilization fund for the purpose of capital repairs.

“We’re still at a very minimal rainy day fund, but we’re putting more money into that, which I think is a very positive step and I think will be received well by the bond rating agencies,” McGee said.

The city hopes to improve its low bond rating, which has been downgraded twice in the past three years and is at Baa1 with a negative outlook, according to Moody’s Investors Service.

“Those transfers reflect positive progress on stabilizing our budget,” McGee said. “So, it’s a piece of not only balancing our budget, but putting dollars away to have some money in our rainy day fund as we continue to work to grow that.”


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