LYNN — The city’s fiscal stability officer has recommended that officials start to invest more into Lynn’s capital needs and infrastructure, which have been neglected in past years because of its financial difficulties.
Sean Cronin, senior deputy commissioner of local services for the state Department of Revenue, who oversees Lynn’s budget, has recommended that half of the city’s remaining $1 million in health insurance savings, and the $1.8 million from a higher-than-anticipated increase in state aid, go toward its $231 million, 5-year capital improvement plan.
“With the condition the city’s school buildings are in today, actions such as this are greatly warranted,” Cronin wrote in a correspondence with Mayor Thomas M. McGee and the City Council. “Absent any steps to redirect some of the savings from health insurance and additional state aid, the city will be hard pressed to find the resources needed to fund a capital improvement plan.”
For instance, he pointed to a lack of capital investment leading to the city formally withdrawing in June from the Massachusetts School Building Authority (MSBA) statement of interest process for a new Pickering Middle School.
“Due to concerns around a shortage of public commitment, combined with substantial city infrastructure needs, ongoing efforts to stabilize our budget and upgrade our bond rating, the Lynn City Council concluded they were not ready to move forward with the process of submitting a statement of interest at this time,” School Superintendent Dr. Patrick Tutwiler wrote in a June 19 letter to the MSBA.
Last week, the City Council authorized the transfer of $3.94 million of the $5 million in health insurance savings negotiated through collective bargaining to cover $1.24 million in retroactive fiscal year 2019 raises for city employees, $1.5 million for net school spending, $720,000 for 10 new police officers, and $300,000 for sidewalks, along with other expenses.
The savings were due to employees agreeing to take on a higher share of the health insurance premium contribution split. Next year, savings are anticipated to be higher because employees will take on a higher share, with the split increasing from 77/23 percent to 75/25 percent.
If the same amount of Lynn’s insurance savings and state aid increase, or $1.4 million, is put into the capital plan annually, that could be sufficient to cover Lynn’s share of a new school building. The ongoing revenue would cover annual debt service on a $20 million capital project financed over 25 years, Cronin said.
“Here’s an opportunity to take some portion of $5 million in health insurance savings for capital instead of plugging it right back into the operating budget for ongoing expenses,” Cronin said. “The past few years, they haven’t had that plan. The fiscal discipline wasn’t there, which got them into the problem they’re in.”
While Cronin said hiring additional police officers puts further pressure on the budget, McGee said adding to the Lynn’s understaffed police force was one of his top priorities. Last year, the city authorized the hiring of 19 new police officers, and part of the insurance savings will allow for 10 more.
McGee said the city will take Cronin’s recommendations for redirecting the funds to its capital plan under consideration.
“(But) being on the ground every day, the clear priority I have, recognizing all the challenges we face is bumping up the police force,” McGee said. “We know that we need capital investments. We want to make sure we do it in the right way.”
Over the next few months, he said city officials will be moving forward with the FY21 budget process and starting to plan how to find space to address its capital needs.
McGee pointed to new sources of revenue anticipated next year that could contribute to capital investment, such as the city’s first recreational marijuana store that has been approved by the state, and planned developments, and additional insurance savings.
But already, the mayor said the city has been proactive with its capital investment, leveraging millions through competitive state grants, and additional state funding.
For instance, the city received $59 million in funding through the Massachusetts Department of Transportation for city-wide roadway reconfiguration work. The funding will be used for three projects: reconstruction of a portion of Western Avenue, Essex Street and Euclid Avenue.
But despite the city’s financial difficulties, McGee believes things are moving in the right direction. He pointed to being able to balance the FY20 budget without borrowing money — Lynn had to borrow $14 million from the state to balance the FY18 and FY19 budgets — and stabilize the city’s bond rating after it had been downgraded for the past two years.
“It took us awhile to get there and it will take two to three years to get completely out of that hole,” McGee said. “We’re definitely making progress recognizing we were in a real crisis stage prior to this, but I think it’s important to recognize we’re just three months into a new budget for FY20.
“We need to recognize where we’ve been and where we’re at. We’re making progress. There’s challenges ahead, but we’re definitely moving in the right direction.”