HOLYOKE – The COVID-19 pandemic caused a drop in local revenues of nearly $ 2 million this year, Mayor Alex B. Morse told city council on Tuesday.
Morse called on city councils to transfer $ 883,000 to balance the budget, a requirement before the city’s property tax rates are set. “It’s pretty easy. I haven’t glossed over anything, ”he told the council.
The Finance Committee will hold a special meeting on December 18 at 5:00 p.m. to review Morse’s proposed transfers and budget plan. Once approved, the council would vote on the transfers and possibly set the tax rate.
The mayor said little had changed since he presented his original spending plan of $ 141.36 million in May. The council cut nearly $ 1 million from the mayor’s original budget.
Like most communities, the mayor and city council were unsure of the impact the pandemic had on local and state revenues.
“This year 2020 was unprecedented. The impact of COVID-19 on the city has been real and measurable, particularly on public health, but also on the city’s operations and our budget, “said Morse.
He added that the city’s workforce and services remain stable and no cuts are planned in either category.
“Not every church in the Commonwealth or across the country can say that. We decided earlier this year to do whatever we can to weather the storm, ”said Morse.
The mayor took a conservative approach to drawing up the budget for the 2021 financial year. At the time, Morse estimated a 5% reduction in property tax revenue. His finance team also forecast a drop in taxes on hotel and restaurant meals.
Morse’s estimate of a $ 2 million decline in local revenue compared to fiscal 2020, which ended June 30, is higher than the original forecast of $ 1.93 million. About $ 500,000 of the decline is due to a pilot program that collects taxes on personal property.
The city also lost $ 75,000 in license and permit fees after the Licensing Board waived some small business fees during the pandemic. Another $ 100,000 was lost in parking garage revenue from city garages.
However, the excise tax for cannabis companies rose by $ 220,000 – a ray of hope in a depressing fiscal year.
The Massachusetts Department of the Treasury is asking the city to correct a previous fiscal year deficit in the Sewer Fund.
According to Morse, the Sewage Fund also has an operating deficit of $ 1.1 million for FY2021, which is reflected in the current deficit figures. “That put a strain on the budget between the beginning of this year and now, too,” said Morse.
The state ordered a moratorium on water shutdowns for failing to pay sewage charges during the pandemic, resulting in more than $ 500,000 in lost revenue between 2020 and 2021.
The public works department also reported unexpected costs due to sewer collapses. “Even though the council increased the sewage rate a few years ago, we still don’t have a sustainable sewage rate to cover 100% of the cost,” Morse said.
Even with a collection rate of 100%, according to Morse, the sewage fund would still have an operational deficit.
The city’s school district will also have to cut funding by $ 4.2 million, mainly tied to transportation costs.
According to Morse, higher residential and commercial real estate values and new growth of $ 1.1 million provide “glimmers of hope”.
In June, the Stabilization Fund was over $ 13 million and gained $ 1.3 million through investments. Morse called for money to be redistributed from the fund to balance the budget.
The mayor’s budget assumptions are based on little to no free cash allocations from the state. “We’re not in the red, but we shouldn’t count on free money to balance the budget,” he said.
Morse says municipalities across the country are pushing for direct federal aid. Holyoke received nearly $ 3 million in federal funding from the CARES Act. However, the law prevents local governments from supplementing lost revenue.
Ward 3 Alderman David Bartley said the finance committee should review the mayor’s proposed transfers prior to council approval. “At least we can get a chance to digest this and get some give and take,” he said.
Morse agreed to Bartley’s call for a special meeting that would contain more information on the school department and state budgets.
Last week, Governor Charlie Baker signed the $ 45.9 billion budget for fiscal 2021 that will keep central government services up and running amid the COVID-19 pandemic. The budget includes facilities for education and economic development.
An additional $ 107.4 million budget bill provides $ 49.4 million for small businesses hit by the crisis and $ 53 million to help reduce student learning gaps at home.
The state budget does not demand any new taxes and “maintains substantial financial reserves for the future”.