State of the City and

FY2011 Draft Budget

Review

WELCOM
E
 State of the City and FY2011
Budget Review
TO DATE WE HAVE ACCOMPLISHED MUCH
• Neighborhood watch program
• Through utilization of a grant we have
hired two additional police officers
• We are working to establish a Youth
Commission
• We have begun massive road paving
improvements in our corridors and in our
downtown region.
• “Develop North Adams”
• We continue to partner with MCLA and
MASS MoCA
 State of the City and FY2011
Budget Review
• “Develop North Adams” is currently
working on beautifying some of our
small green spaces to create “pocket
parks” in the downtown corridor.
• Cleanup of the old tannery site
• Blackinton Mill
• Mohawk Theatre Project
• Super Walmart
• Airport Reconstruction
• Community Cleanup Day…in
conjunction with MCLA
•
 State of the City and FY2011
Budget Review
• Closure of the Medical Insurance
Trust Issues
• Conversations with private investors
regarding growth
• Dialogue regarding a solar cap on our
landfill
• Massachusetts Green Community
• We have fully appointed many
commissions and boards
•
 State of the City and FY2011
Budget Review
• We have been awarded a grant from
the Berkshire Regional Planning
Commission that is allowing us to
study years of past planning
documents.
• We have enhanced our website
• We have empowered our City
Council, School Committee, Boards
and Commissions
•
 State of the City and FY2011
Budget Review


 I received the keys to this city on January

4th and since that time, have struggled with
the many things that we will be discussing
here tonight. We have:
• Established scheduled meetings with Department
Heads
• Created a Finance Team
• Created and Executive Team
• Spent hours with our labor attorney
• Engaged with the Department of Revenue at a
very high level
• The DOR is in the process of completing a Financial
Management Review to guide us on “best
practices”
• Toured all of our schools
 State of the City and FY2011
Budget Review
• We have one of the lowest cash
positions in the Commonwealth
• Our infrastructure is in deplorable
condition
• Three of our city dams and many old
walls need significant and very costly
work and repairs
• This city owns way too much
property
• A transfer station/landfill issue that
has been a nightmare for residents,
employees, and most specifically the
 State of the City and FY2011
Budget Review

•
• 8 union contracts to settle
• The threat of arbitration and
potential law suit due to the
Medical Insurance Trust
• Millions in recurring debt and
operating expenses being pulled
from our budget and paid from
reserve accounts.
• We have a city with significant needs
and not enough staff to take care
 State of the City and FY2011
Budget Review
Here are some of the fiscal facts as of


12/31/2009:


Free Cash as a % of Tax Levy



Free Cash plus



Stabilization funds
• Adams – 35.90% $
2,805,000
• Williamstown – 8.84% $
1,165,000
• Clarksburg – 40.56% $
503,000
• Florida – 24.28% $
467,000
 State of the City and FY2011
Budget Review
• We have the lowest per capita
income in Berkshire County at
$16,381
• We have the highest unemployment
rate at 11.2%
• New growth continues to erode
• State aid as a percentage of our overall
receipts continues to be problematic
• In the past 4 years, the average
single family tax bill has
increased 19% from $1453.00 to
$1729.00 – 4.75% annual average

 State of the City and FY2011
Budget Review
• Our local receipts since FY2006
have dropped 10% or
approximately $634,000
• Alarmingly, our free cash on July 1,
2001 was $3.3 million….today it
is $307,000.
• In the past three fiscal years, we
have used $3.4 million from
reserve accounts to pay recurring
expenses
• Free cash is virtually gone, and
most of our reserve accounts
 State of the City and FY2011
Budget Review


 So now we are in the perfect

storm…we have seen:
• Extensive state cuts over the past three
years in excess of 17%
• The past fiscal practices of reducing the
budget and then utilizing reserves to
pay recurring long term debt and
operating expenses
• The past mantra that “low taxes” equals
“good fiscal management”
• Past fiscal management that has
caused our house of cards to
collapse.
 State of the City and FY2011
Budget Review
 So where was I during all of this?


• I was on the Council Finance Committee for

10 years
• Many of those years, I asked for revenue
information yet none was ever provided
• Many years we were given budgets literally
“days” before they needed to be approved
• I asked for an audit of the MIT yet was denied
• Could I have been a stronger
advocate….YES
• I concluded that the only way to a more
focused, more transparent, and more
efficient budget process was to run for
 State of the City and FY2011
Budget Review
• I have spent hours with the city’s
Finance Team and have been in
constant contact with the
Department of Revenue at both
the regional and state levels. They
are in full agreement with our
assumptions and quite honestly…
they helped in the formation of
much or what I will cover next.
 State of the City and FY2011
Budget Review


 ALL INDICATIONS OF A VERY BLEAK

FINANCIAL PICTURE ARE PRESENT:
• No Cash
• No Reserves
• Crumbling infrastructure – years of “deferred”
maintenance
• Using cash reserves and not revenues to pay
the bills
• Under-utilization of revenue sources
• Shrinking local economy
• More of our residents on some sort of public
assistance
• Higher drug and property crime
 State of the City and FY2011
Budget Review
We are currently working on some initiatives to help


with revenues…
• Investigating the sale of city parcels and buildings to
include the Windsor Mill
• Capping the landfill with solar to reduce our energy costs
• Looking at alternatives for the transfer station that could
reduce costs and increase revenues
• Looking at increases in water rates (third year without an
increase)
• Looking at a sewer fee
• Better utilization of Windsor Lake and the Campground
• Creating partnerships and collaborative purchasing efforts
with neighboring communities
• Consolidation of utility accounts throughout the city so that
we can better manage those costs
• More calculated assumptions for revenue…most specifically
our local receipts
 State of the City and FY2011
Budget Review
 As for growth…I have been meeting with the
following to discuss current and future
opportunities:
• MCLA
• MoCA
• MA Development
• Berkshire Regional Planning
• Berkshire Economic Development
• Our neighboring Town Administrators
• The Governor
• Congressman Olver
• Representative Bosley
• Senator Downing
• Local business leaders and developers

 State of the City and FY2011
Budget Review
 NOW I HAVE SOUNDED PRETTY
HARSH SO FAR BUT….There are
many great things happening:
• Roads
• Bridge
• Sidewalks
• Airport
• Community Groups
• Community excitement
• $50 million in Science Center
development at MCLA

 State of the City and FY2011
Budget Review



I also was blessed to
inherit so many wonderful
and supportive folks who
are stepping up in ways
that I had only dreamed
of…to help pull us up and
out of the position we are
in.
 State of the City and FY2011
Budget Review
 We have created two new groups:
• Develop North Adams – Group of community
leaders who will be working to entice small
business, re-brand and market the
community, and work on community events
• Community Economic Development
Advisory Board – this group will be a vital
component of the growth process for North
Adams and will be at the forefront of the
planning document we will be receiving soon
from Berkshire Regional Planning. We will be
hosting community visioning processes later
in the year.
• Without growth…over time…in all
sectors…without new jobs…good jobs…
we will not grow…IT IS THAT SIMPLE!
 State of the City and FY2011
Budget Review
We should be seeing some very nice visible things


this summer…
• Pocket parks
• Benches on Main St and the Veterans Memorial
• Public gardens
• Concerts at the Joe Wolfe Field complex in August
• Wilco at MoCA
• The Down Town Celebration
• The Food Fest
• Possibly some murals or public art of some sort
• I would love to light the Noel Field walking track,
playground, basketball court, and tennis courts till
10:30 every night for our youth and residents
• Birth of a Youth Commission

 State of the City and FY2011
Budget Review
Let me explain the settlement of the Medical


Insurance Trust (MIT) and its impact on the budget

and on taxes going forward.


• Settlement was in reaction to “underfunding” the MIT by

the previous administration
• I retained the services of Scanlon and Associates
• Scanlon confirmed the City had not been paying its fair
share of insurance “working rates”/premiums in
FY2008, FY2009, and FY2010 – Exposure was
identified at a number in excess of 2.1 million.
• I approached the DOR for their guidance and worked
with the city’s labor lawyer to create a strategy
• Because we have no cash reserves…it was determined
that any settlement would have to be borrowed or
amortized
 State of the City and FY2011
Budget Review
Certified Free Cash

 State of the City and FY2011
Budget Review


Reserve Accts. Use Bal 7/1/09

Bal 12/31/09
Sale of City Land Ret. Of Debt $2,327,345
$1,227,345
Parking Meter Police Sal. $ 138,833
$ 2,733
Cemetery CemeterySal. $ 111,062
$ 1,062
Technology IT Expenses $ 177,798
$ 88,598
Overlay Surplus Fire Sal. $ 287684
$ 0
State of the City and FY2011
Budget Review
 State of the City and FY2011
Budget Review
 Local Receipts projections over the
past three Fiscal Years have fallen
short:
• FY2007 – 95.45%
• FY2008 – 98.27%
• FY2009 – 94.62%
• FY2010 – 95% projected based on YTD


 We have worked very hard at

projecting local receipts for FY2011 and
we are confident, as is the Department of
Revenue, that our projections, while
conservative, are very realistic.

 State of the City and FY2011
Budget Review
 Budget
 FY2009 FY2010
FY2011 (draft)
School $14,851,697 $15,550,212
$15,693,336
City $20,284,437 $19,666,638
$20,047,406
MA Assessments $ 5,249,650 $ 5,113,699
$ 4,793,163


Total
 $40,385,784 $40,330,549
$40,533,905
 State of the City and FY2011
Budget Review
Receipts


 FY2009 FY2010
FY2011 (draft)
State Aid $20,928,335 $18,997,071
$18,013,739
Local Rec. $ 6,865,835 $ 6,545,692 $
7,302,000 ?
Local Taxes $11,052,149 $11,601,588
$12,760,113 ?
SBA Reimburse $ 659,939 $ 659,939 $
659,939
Med Ins Trust

$ 880,000
State of the City and FY2011
Budget Review
 State of the City and FY2011
Budget Review
 FY2009 FY2010
FY2011 (draft)
Budget $40,385,784
$40,330,549 $40,933,905
Receipts $39,506,258
$37,804,290 $39,615,791


 Deficit $ (879,460)
$(2,526,259) $ (918,114)


Appropriated $ 879,460 $ 2,526,859

from Free Cash and Reserves to balance budget
 State of the City and FY2011
Budget Review
 Why the large jump in Local
Receipts?


• Proposed 10% increase in water fees

(average homeowner cost of
$26.00 annually)
• Proposed sewer fee (average
homeowner sewer fee
approximately $118.00 annually –
42% of average water bill)
 State of the City and FY2011
Budget Review
 Why the large jump in Real
Estate Taxes?


 Because of the Medical Insurance Trust

Issue, the DOR mandates that we tax to
our full “capacity”


 The reality is that with or without the

MIT issue we would have had to tax to
the levy capacity to fund our budget OR
suffer MORE SIGNIFICANT CUTS!

 State of the City and FY2011
Budget Review


 HOW DO WE FIX
THIS?
•
I am suggesting three


scenarios
 State of the City and FY2011
Budget Review
 Scenario – 1


• 10% tax increase - $183 on average $140,000

home
• 10% water rate increase - $26 on average water
bill
• Sewer fee – 42% of water bill or $118 on average


 Monthly average increase cost to

homeowner = $27.25

 State of the City and FY2011
Budget Review
 Scenario 2
• If there is compromise between the Governor
and the Legislature on local receipts and we
receive more aid…we could consider a
Proposition 2 ½ override of $1,000,000.
• This would raise our base…eliminate the need
for a sewer fee, water increase and
utilization of what precious little reserves
we have left
• This would create an approximate 19%
increase in taxes impacting the
average homeowner $333 annually
 State of the City and FY2011
Budget Review
 Scenario 3
• If there is no compromise between the
Governor and the Legislature on local
receipts and we receive aid as proposed
by Ways & Means…we could consider a
Propositions 2 ½ override of $1,500,000.
• This would raise our base…eliminate the
need for a sewer fee, water increase and
utilization of what precious little reserves
we have left
• This would create an approximate
23% increase in taxes impacting the
average homeowner $408 annually

 State of the City and FY2011
Budget Review
 Scenario 1 Scenario 2
Scenario 3
Tax increase $183.00 $333.00
$408.00
Water increase $ 26.00
Sewer fee $118.00
Total impact $327.00 $333.00
$408.00


• Scenario 1 – would still need to utilize over $800,000

in reserves
• Scenario 2 – would fix the problem if there is a
compromise in state aid – without use of reserves
• Scenario 3 – would fix the problem if there is no
 State of the City and FY2011
Budget Review
• These are not pretty scenarios
• These are not economically pretty times
• We cannot continue to play the shell
game with our finances
• We cannot continue to count on the
state or our dwindling reserves to
keep bailing us out
• We are faced with significant budgetary
obstacles
• We are in a financial mess
 State of the City and FY2011
Budget Review
• We need to make the financial
adjustments to get our budget back
on track
• When the state finalizes their
budget…I will be making my
recommendation as to what
scenario I think will be our best
fiscal fix
• We need to consider not just how we
get through this fiscal year but how
 State of the City and FY2011
Budget Review
• As I mentioned…we have significant
infrastructure issues due to years of
deferred maintenance
• We are currently looking at a new
educational model for our children,
that in the not so distant future could
put significant strain on our resources
• The draft budget that I presented
represents approximately $700,000 in
cuts
• I am currently working on a 5-year
capital plan as well as a three year
budget projection document
 State of the City and FY2011
Budget Review
• I WILL NOT RECOMMEND CUTTING THE
BUDGET ANY FURTHER!
• I WILL NOT EXPOSE OUR SCHOOL
DEPARTMENT TO FURTHER CUTS
• I TRULY BELIEVE THAT OUR SCHOOL
BUDGET IS THE ONLY REAL
“INVESTMENT” DOLLARS THAT WE
SPEND
• I WILL NOT SHORT CHANGE OUR
RESIDENTS BY DEPLETING BASIC
PUBLIC SERVICE AND PUBLIC SAFETY
LEVELS THAT WE HAVE GROWN TO
EXPECT
 State of the City and FY2011
Budget Review
• This fine City of North Adams has so
much promise and potential
• It is up to us to move this potential
forward
• I have inherited a fiscal mess…a
management mess…I need your
help and support to fix it
• I intend to remain open and
transparent
• I pledge…with your help…to move
 State of the City and FY2011
Budget Review


 QUESTIONS??