Plan raises pay, taxes: City’s $266M budget goes before public tomorrow [The Sun, Lowell, Mass.]

Jun. 7--LOWELL -- The City Council will hold a public hearing tomorrow on City Manager Bernie Lynch's proposed $266 million operating budget for fiscal 2011, which includes pay increases for nearly every city employee and foreshadows upcoming water, sewer and parking-rate increases.

The budget reflects a $1.7 million increase over the current year's operating budget. The property-tax levy is slated to increase by 2.5 percent, plus $1.7 million in projected new growth.

The $266 million operating budget -- combined with $15.9 million in non-appropriated funds, including state assessments, the abatement overlay account and the snow and ice deficit, plus $54 million in funding for the water, wastewater and parking enterprise funds, which are funded by ratepayers -- comes to a total spending plan of $336 million.

In fiscal 2010, which ends June 30, the total figure came to $318 million. The $18 million difference in fiscal 2011 comes in the wastewater enterprise fund, which is carrying $21 million in debt service for extensive work being done at the Duck Island treatment plant, a significant amount of which Lynch says will be paid for by federal stimulus funds.

The city, which counts on state aid to fund about half its budget, saw that figure decrease by $4.6 million this year, including a $3 million decrease in Chapter 70 education aid.

Total state aid has been slashed from $154.8 million in fiscal 2008 to an anticipated $139.5 million in fiscal 2011. Aid

cuts are anticipated to continue again next year.

The budget includes no new positions or layoffs, and all employees, with the exception of police patrolmen, City Auditor Sheryl Wright and Lynch, are slated to receive raises.

All union personnel will receive 3 percent raises. Nonunion employees will receive a 2.5 percent increase, with an additional 1.75 percent merit-based increase in January.

Last year, non-school union employees deferred their raises.

"The unions played by the rules," Lynch said. "They deferred everything and kept providing services despite a 15 percent reduction of the work force over the last few years. Now we have to keep up our end of the bargain. We are contractually obligated to provide these raises."

The budget puts aside $375,000 to fund the unsettled Police Patrolmen Union's contract.

Nonunion personnel did not receive midyear pay increases during fiscal 2009 or this fiscal year. Lynch said their salary increases are dictated by city ordinance.

Additionally, Assistant City Manager Adam Baacke will receive an additional $2,900 as a step increase -- for a total pay raise of about $6,962 -- consistent with the extra duties he is taking on as part of the City Hall reorganization plan approved by the City Council last week.

Water, sewer and parking rate hikes are on the horizon, according to Lynch's narrative within the budget document.

Annual deficits in the wastewater enterprise fund are expected to deplete the fund's reserves from $8.5 million to $1.5 million by the end of 2011. The largest expense in the wastewater budget, representing 38.5 percent of its $19.3 million budget, is debt service due to mandated system improvements and plant upgrades.

Wastewater revenue may increase in coming years as the intermunicipal agreements the city holds with neighboring towns that utilize the Duck Island treatment plant are renegotiated.

The parking enterprise fund is also dealing with a structural deficit and is expected to deplete its reserves from $754,380 at the end of fiscal 2009 to $46,926 by the end of fiscal 2011, largely due to the debt service associated with the Early Garage on Middlesex Street.

The budget document states that rate increases will be needed "relatively soon," for both wastewater and parking.

The water enterprise fund is expected to end this fiscal year with a $251,522 deficit, which will grow to more than $1 million by the end of fiscal 2011. A rate increase must be voted by the council before the city can set next year's tax rate.

Debt service accounts for 34 percent of the water fund's expenditures, due to $19 million in improvements approved by the City Council in 2007.

The city has increased its contribution to the schools by $1.17 million for fiscal 2011. Lynch said $1 million of the total will come from municipal relief legislation expected to be passed by the Legislature that allows retirement boards to extend the deadline for fully funding liabilities from 2028 to 2040. The move is anticipated to save the city $1 million in calendar year 2010. The city has $150 million in unfunded pension liability.

Lynch said the change was recommended by the Public Employees Retirement Administration Commission's Actuarial Advisory Board in an effort to "smooth out" retirement assessments in the wake of the 2008 stock-market crash.

"To stay in line to be fully funded by 2028, assessments would have to skyrocket," Lynch said, adding that as the market rebounds, all gains in the city's investment revenues will have to go toward funding the pension liability.

"We can also, in the future, appropriate funds to be put towards our pension liability to give us more flexibility in the next downward cycle to smooth things out," he said.

The city saw a decrease of $700,000 in local receipts but saved about $700,000 in operating costs by transferring the Tsongas Arena to UMass Lowell.

Another $250,000 to $300,000 in savings is anticipated from the city's purchase of streetlights. Also, the increased local-option meals tax is expected to bring in $732,000.

The city's unemployment costs have decreased because there will not be any layoffs this year, as opposed to last June, when the city laid off more than 40 employees. (That does not include layoffs anticipated from the School Department's $4 million in budget cuts.)

Health-insurance rates have increased by 10 percent, but costs are expected to be below that amount as more employees migrate to less-expensive plans, Lynch said.

Lynch also increased the Veterans Services budget by $94,000 to account for an increase in assistance requests by both Iraq War veterans and those of prior generations, which have increased due to the poor economy.

The City Council's budget hearing is tomorrow, starting at 5 p.m., in the Council Chamber at City Hall.

To see more of The Sun, or to subscribe to the newspaper, go to http://www.lowellsun.com.

Copyright (c) 2010, The Sun, Lowell, Mass.

Distributed by McClatchy-Tribune Information Services.

For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.