The FY2009 proposed budget is available through the navigation bar to the left. Hard copies of the budget document may also be found in City Hall, at Forbes Library and at Lilly Library for public viewing.

To the Northampton City Council:

I respectfully submit my Fiscal Year 2009 budget proposal to the honorable members of the City Council for your consideration and approval in accordance with Chapter 44 Section 32 of the Massachusetts General Laws. The Fiscal Year Budget totals to $87,005,485; the General Fund total is $72,220,628; the Water Enterprise Fund total is $5,961,459; the Sewer Enterprise Fund total is $4,447,425 and the Solid Waste Enterprise Fund total is $4,375,973.

The past year has been a productive one for the City, even in the face of tight resources. The City's Comprehensive Plan Sustainable Northampton was approved by the Planning Board and this Council, setting the direction for growth in the City for the next ten years. The Commonwealth once again recognized the City as a leader in sustainable practices by awarding us the top score in the Commonwealth Capital Program. We hired Chris Mason as our energy officer with Clean Energy Choice funds; he has been working with departments across the City to save energy and dollars. The state hospital property is being transformed into Village Hill; a mixed income community that continues to grow even in this recession. We celebrated the opening of our new Senior Center with Patte Shaughnessy, the staff and Council on Aging Board. Our Ambulance service is thriving; ensuring high quality medical services to members of the community. The students in our two school systems continue to excel at the highest levels including national champions at Smith Vocational and state wide recognition for arts programming at Northampton High.

In order to understand the problems we face in this upcoming budget it is necessary to look back on recent history. In 2003, the City faced very deep state aid cuts. The total aid lost was close to three million dollars. We took a three pronged approach to balancing the budget that year - reductions, reorganization and the use of reserves. The budget called for the use of $1.2 million in reserves in Fiscal Year 2004, $800,000 in Fiscal Year 2005 and $400,000 in Fiscal Year 2006. The Council also created a policy for funding the a Capital Stabilization Fund and a Stabilization Fund that has acted as a "rainy day fund"; transferring any free cash in excess of 2.5 % of the general fund into the Stabilization Funds equally. The following year we asked the voters to approve an override for $1.7 million. This override was defeated and we cut over thirty positions including public safety and school positions. However, the careful oversight, use and replenishment of reserves has carried us through to Fiscal Year 2009. The strategy of limited and prudent use of reserves has served us much longer than initially envisioned in Fiscal Year 2003. Last year, the budget was balanced using $1.6 million from the Stabilization Fund. The current balance in the Stabilization Fund is $842,235.

Limited Growth in State Aid
State revenues have increased very modestly over the last five years. We now receive $975,161 more from the Commonwealth than we did in 2002. This is an average of $195,000 per year over the last five years, but in actuality, this increase is primarily the restoration of Lottery aid in 2007 and modest increases in Chapter 70 School Aid. The City will still receive $600,000 less in school aid this year than we did in 2003. Over this same period, the local property tax levy grew by the allowed 2.5% plus new growth. In 2003 the 2.5% increase brought $635,000 in new local revenues to the budget; this has grown to $858,000 in this Fiscal Year. The City averaged $760,000 in new growth from construction per year over the same period.

This year presents challenges on multiple fronts. The recession has put pressure on the budget in a number of areas. We are estimating only $500,000 in new growth, a decline from the average of $760,000 that we have seen over the last five years. Car sales are down and we have projected only $18,000 in growth from excise taxes on vehicles. This is down $176,000 from the high point for this revenue source in 2005. Interest income is projected to be down by 15%, or $86,000. Parking tickets are projected at $780,000, no increase from the last fiscal year, and down over $200,000 from the high point of $1 million in 2005. Most of our permit revenue comes from the Building Inspector's Office and we are projecting only 1% growth in those permits as fewer homeowners begin projects in these tight financial times.

State Aid is estimated at $18 million for Fiscal Year 2009. In FY 2003, State Aid supported 29% of our operating budget. This coming year, State Aid is projected to comprise 25% only of the City's revenue base. The State Aid contained in the Senate and House joint resolution at this time is an increase of $679,057, or 3.9% over Fiscal Year 2008. When this revenue increase is matched with the proposed increases in Cherry Sheet Charges, the net increase over FY2008 in State Aid to the City of Northampton is only $482,905, or 3.1%.

Significant Fixed Cost Increases

Health insurance continues to be a challenge to our budget as it is for many other cities and towns. We have worked with our employee labor organizations to keep the rate of increased cost of insurance down for their members and for the City. This year, we were given a price increase of 12%, or $904,450 when we began the renewal process in January. Working with the City's Insurance Advisory Committee we have been able to bring that increase down to 2% or $200,000. This requires modest changes to our current employee's HMO plan, which must be bargained with our labor unions, and a restructuring of our retiree offerings. But this dramatic savings will prevent the additional loss of personnel and further reductions in services while still providing high quality health care to our employees and their families. State law requires that we bargain any changes in health insurance plan design with our unions; we are in that process right now. I am grateful to the Union leadership and city employees for their work with the City during this process,

The City's required pension contribution will increase by $129,000 this year.

Energy costs are an area of rapid growth in the budget. I have increased utility line items in City departments on average 10% to cover the cost of oil and gas for heating, electricity and gasoline, biodiesel and diesel fuel for vehicles. In this budget I have also reduced the mileage reimbursement in many departments; where feasible, staff will use City vehicles which can be deployed at a much lower cost per mile. I have also asked Central Services to look for savings of $50,000 in the street lighting account. This may mean a reduction of street lights across the city, where such a loss will not present a significant danger to public safety.

The General Fund Budget
The Fiscal Year 2009 General Fund Budget will increase by 1.8% over FY2008. This increase includes the use of $602,758 from the Stabilization Fund. As I have mentioned, utilities and fuels, as well as many municipal supplies, and negotiated salaries have all increased at greater than 2%. While some departments show increases, many show decreases or only minimal increases. There have been service reductions across the City and there are vacant positions that will not be filled.

• The Northampton Public Schools and the Smith Vocational and Agricultural High School received a 2% increase in their appropriations. Smith Vocational will be reducing a shop and delaying textbook purchases as a result. The Northampton Public Schools is proposing the reduction of teachers, aides, custodians and cafeteria workers, cuts in supply budgets, and increases of transportation fees. The District is also proposing to use $400,000 in school choice reserves to bring the budget into balance. The School Committee is weighing a proposal to create a Strategic Plan for the Northampton Public Schools to evaluate funding, demographics, alternative organizational and facility changes in the delivery of educational services. This kind of planning is necessary to formulate cost-effective ways to offer the high quality education that our children deserve.
  
• This budget cuts the funding for two positions in the Police Department. Overtime is also cut, as is training.
  
• The Fire Department has received a Safer Act Grant of $210,000 to fund two positions over the next five years. It is a condition of the grant that we cannot cut personnel during that time. This budget moves three positions from the General Fund into the EMS account, and eliminates the reserve program. There are reductions in training the training officer will move to work on shift. The position of Special Projects Supervisor has been eliminated. Overtime is level funded.
  
• Dispatch will be sharing one position with the Fire Department which will reduce the funded positions in Dispatch by one half of a position.
  
  
• DPW will have one less position. In addition, the department will be rearranging work hours in order to bring down overtime costs. There also will be savings in personnel costs due to employee turnover.
  
• Library Outreach hours will be eliminated.
  
• The positions in the collector's office that support the collection of parking revenues will be funded with parking revenues - a shift of $77,814 from the General Fund.
  
• The clerk position in the Assessor's Office will be reduced to half-time.
  
• Ordinary Maintenance budgets have been cut in almost all City departments.
  

"...next year could be even worse."
While this year will be very difficult, next year could be even worse. The state has a structural deficit of at least $500 million and there is no plan to close that gap. Our Lottery Aid has been level funded because the lottery is $124 million below its earnings in 2008. Even more worrisome is a ballot question that would eliminate the income tax entirely. If that question passes, the state would have to cut $12.7 billion - three times the amount of state aid that cities and towns received for education this year. There was a question that would have capped the property tax increase at 1% per year - fortunately that did not get enough signatures to make it onto the ballot. The Governor has proposed local option taxes on meals and telecommunication tax reforms which could bring Northampton up to $1.6 million dollars, but I do not believe that these changes will pass the Legislature before the income tax referendum is decided. The defeat of the income tax referendum is critical to any discussion of local option taxes.

I will be working with our unions to explore the option of joining the Commonwealth's Group Insurance Commission (GIC). The legislation that allows this option for municipalities requires that we must notify the state of our intent to join the GIC by the October before the next fiscal year. We will be having discussions with our labor unions through the summer in order to determine whether this is the right choice for Northampton before the deadline.

"What kind of City do we want?"
Four years ago I asked "What kind of City do we want to be?" That same question is relevant today. Do we want to have ever increasing fees for services like school buses and recreational activities? Do we want to have class sizes above what we all agree is reasonable and desirable? Do we want to erode our sense of public safety because of an understaffed police department? Do we want our libraries to be able to serve home-bound elders? If the state government is not able to give local aid at a level that allows us to fund local services, and is unwilling to give us local authority to raise local option taxes, then we will need to decide these questions on our own. I expect that we will need to have an override vote next spring to give all of us the opportunity to have a say about the kind of community we want and the kind of services we think we need. Some look upon the idea of an override vote as divisive. It is hard to talk about raising taxes and it is hard to disagree with neighbors and friends. However, this is the mechanism we have to talk about city services. It will be important for elected and appointed officials to clearly show citizens how their money is being spent and why. It will be important for citizens to have many opportunities to understand the complexities of municipal government. And it will be critical that we all express our opinion about the kind of local services we want for ourselves and our neighbors and can afford to provide in a sustainable way.

I want to thank the staff in my office, Finance Director Chris Pile, Corinne Philippides and especially Karen Bellavance-Grace for the enormous effort they made to create this budget document. I would also like to thank the department heads, school leadership, union leaders and all of the employees for the passion and dedication that they bring to their work every day. It is my honor to work with them to serve you.

Respectfully submitted,



Mary Clare Higgins
Mayor