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2006-05-30 special Special Meeting of Beverly City Council 7:00 PM May 30, 2006 Roll Call : Councilors Present: John Burke, William Coughlin, Timothy Flaherty, Miranda Gooding, Patricia Grimes, Kevin Hobin, Donald Martin, , Maureen Troubetaris, Paul Guanci Pledge of Allegiance to the Flag : Led by Councilor Hobin Communications from His Honor the Mayor : #128 Call for Special Meeting of May30, 2006 #129 May 30, 2006 Honorable City Council City Hall Beverly, MA 01915 Dear Honorable Council: I present to you tonight the FY 2007 Operating Budget for the City of Beverly. This budget features unusually strong revenue growth of $4.6 Million. Despite this growth in revenues we must once again inject funds from the City’s savings account in the amount of $1.25 Million to achieve a balanced budget as required by law. The funds subsidy from savings is less than the $1.45 Million of savings needed last year but means that the spending growth above $3.35 Million, the net of the $4.6 Million less $1.25 Million, is made possible only by utilizing by savings, a practice which cannot continue indefinitely. Included in the $4.6 Million is $800,000 of new growth from the expiration of the TIF (Tax Increment Financing Agreement) at Cummings Center. From July 1, 2006 on, this property will pay full taxes on the fully assessed value. Other components in the $4.6 Million of growth are $1.5 Million from the annual 2.5% tax levy increase, $800,000 from other new growth and $1.2 Million in increased State Aid. As you know, the $800,000 from the Cummings Center has been earmarked to be used to pay for debt service on the new High School academic wing in the future. We had intended to spend that $800,000 this year on replacement equipment and trucks in the Public Services Department which are now ten years old. As budget discussions progressed, it became clear that unless those funds were diverted to the School System Budget, Beverly would face a calamitous situation within the school system involving massive layoffs and student disruption. Thus, we made the decision to provide the schools with the $800,000 for the upcoming fiscal year. It is clear to me and I believe to everyone in Beverly that the education of our children is our most important task. Since the mid-1990s when we first overcame the $8.5 Million deficit which had nearly pushed Beverly into receivership, we have striven mightily to increase educational spending and with considerable success. Even after the State cut back on Chapter 70 Educational Aid in FY 2003, Beverly continued to grow educational spending by selling assets including fire stations and the Edwards School. For FY 2006 the Department of Education website shows annual per pupil spending in Beverly of $9731 with $8328 of that coming from local Beverly tax dollars and $1403 coming from the State. While these numbers represent an average across all students, both special education and all other, and thus have limited value for some uses, they do demonstrate Beverly’s commitment to education. In total the DOE website shows Net School Spending for FY 2006 at $43,914.000 some $5,446,000 or 14.2% more than the minimum requirement. For FY 2007 we have managed to budget a total of $2.8 Million in increased funding for the schools including the $800,000 discussed earlier. $2.55 Million of that is shown on pp. 58 and 59 of the budget. The balance represents increased school costs paid directly by the City on behalf of the schools; some of these costs apply to active employees and some to school system retirees. Despite the presence of $2.8 Million in new money, the School Superintendent and the School Committee have faced a very difficult task in preparing a budget. The rate of growth of school operating costs is simply too high to be sustainable. To be sure the State of Massachusetts has failed Beverly with FY 2007 school aid far less than what we received in FY 03, in fact more that $1 Million less. Part of this treatment stems from declining total enrollment in Beverly’s Public School System. The unfortunate conclusion we are forced to make is that the State will be of little help in solving our school budget issues in the future. The second point is that while we have mustered a total of $2,800,000 this year to deal with school cost increases, that amount of money was (a) insufficient to balance the school budget without significant personnel reductions for FY2007 and (b) much more money than we can add to the School Budget on an ongoing basis. Painful as it is we have asked the School Superintendent and the School Committee to develop a School Budget which by FY 2009 is sustainable, and to aid in that effort we will provide the use of at least some of the $800,000 described earlier up to that time. We all need to remember that the revenue growth received this year is unusually large and unlikely to be repeated in future years. There are those in the community who wish to support an override for operating costs. While the City Council saw little enthusiasm for such an action, those favoring an operating budget override certainly have a right to be heard and may wish to 63 bring their concerns to the Council much earlier next year. The paramount concern in this regard is that unless the rate of growth of the School Budget slows considerably, such override efforts would be repeatedly necessary. It is absolutely essential that the future school budget funding issue be faced squarely in the early fall and answers be found. This problem is not unique to Beverly but rather confronts communities throughout the State of Massachusetts. On other fronts this budget is somewhat bland. There is little change in employment levels on the city side. We do budget consulting funds earlier agreed with the Council to implement the Master Plan and encourage economic development which will yield new tax dollars. You will note that the increase in the percentage premium for health insurance paid by all municipal employees as well as the passage of required Medicare B for eligible municipal employees have helped us to hold the increase in medical premiums to 7.2% for FY 2007. Very truly yours, William F. Scanlon, Jr., Mayor Refer to Finance and Property and Committee of the Whole Reports from Committees: #129 The Committee on Finance and Property to whom was referred the matter of FY 2007 Budget have considered said matter and beg leave to report as follows, to wit: Submit the accompanying order and recommend its adoption. Ordered: That the City Council of the City of Beverly hold a Public Hearing on Monday, June 12, 2006, at 7:00 PM in Council Chambers, Third Floor, 191 Cabot Street Beverly, MA relative to the FY 2007 Budget. First Passage: May 30, 2006 Public Hearing: June 12, 2006 Final Passage: June 28, 2006 Order read once and adopted 9-0 Vote Meeting adjourned: 7:43 PM Frances A. Macdonald, CMC City Clerk 64