Premiums expected to match hike

PITTSFIELD PUBLIC SCHOOLS

The Berkshire Eagle

PITTSFIELD - Easy come, easy go.

A few weeks ago, the Pittsfield Public Schools learned its share of Chapter 70 state aid to schools was expected to increase by more than $4 million, owed to its large percentage of students from lower- income households.

But that windfall felt distant on Wednesday night when Mayor Peter Marchetti and Finance Director Matthew Kerwood informed City Council and School Committee members that Pittsfield is facing an increase of nearly 15 percent in its health premiums for fiscal 2026.

"That increase is worth [$4.5] million - the exact amount of money [the city's Chapter 70 funding] was increasing," Marchetti said. "So we win some, we lose some."

HEALTH PREMIUMS HIKE

Kerwood said the city learned at the recent Massachusetts Municipal Association conference that premiums were likely to increase between 9 and 19 percent, with an average increase of 14.8 percent.

The city obtains its Blue Cross Blue Shield health insurance through the Massachusetts Interlocal Insurance Association, which represents more than 400 municipal government entities.

BUDGET, Page 2

Budget

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Kerwood said Thursday it's the biggest premium increase he's seen in years, and that it's being driven by the cost of health care, particularly prescription drugs.

Pittsfield is not alone in facing higher health premiums. Earlier this week, Berk-shire Health Group, which serves a number of communities, including Lenox, announced its premiums are jumping 16 percent for fiscal 2026, which begins July 1.

Pittsfield saw its premiums increase about 5.5 percent in fiscal 2025, Kerwood said.

BUDGET SEASON BEGINS

Marchetti and Kerwood presented a budget outlook to the City Council-School Commit-tee joint session as a kickoff to the city budget season. They provided members with a snapshot of city finances, comparisons of its tax rate with other county cities and towns and comparable Massachusetts communities, and a reminder that the city provides more services than most of its neighbors - such as full-time police and fire protection and maintaining 450 lane miles of roads.

Marchetti noted that the city's change in providing one of those services, curbside trash and recycling, is on track to save $367,000 by the end of the fiscal year (June 30) if its improved recycling performance holds true. He said the city's recycling rate rose to 20 percent in January - double where it stood a year ago - and at that rate, the city would save $500,000 in a full year.

The presentation showed that, as Pittsfield's tax rate has decreased over the past five years, its property values have continued to appreciate, leading to an average annual tax bill increase of $275.

The value of the average single-family home in Pittsfield has increased 44.8 percent over the past five years, from $203,901 in 2021 to $295,292, according to the data Marchetti and Kerwood presented. That's why, despite the tax rate decreasing 6.8 percent over the same time period, the average single-family home tax bill has risen to $5,298. It was $3,925 in 2021.

By state law, property assessments are based on home sales from the two prior years. This year, values will be determined based on sales during 2023 and 2024, and with assessments based on values as of Jan. 1.

Marchetti reminded City Council and School Committee members that he's not immune to those dynamics: The assessed value of his home has nearly doubled in five years, and his most recent tax bill increased by 24.5 percent.

"When I get my tax bill, it's still sticker shock," he said.

When it comes to writing the fiscal 2026 spending plan, Marchetti said there won't be a repeat of last year's process, in which he asked department heads to come up with multiple spending plans for a variety of scenarios- a level-service budget, a level-funded budget requiring cuts in service, and a budget with a 5 percent reduction.

City Councilor Earl Persip III echoed that message, warning that there's no room to cut before employees and services are affected. "There's no flashy stuff in this budget," he said.

LIMITED LEVY CAPACITY

While Pittsfield has $5,832,724 in its stabilization fund and $8,178,625 in free cash, Kerwood noted the city's excess levy capacity - the difference between what the city raises in taxes and what it can raise under Proposition 2 ½ taxation restraints - sits at about $285,000. He called that "precariously low" and listed several reasons why it concerns him.

Bond rating agencies, such as Standard & Poor's, which rates Pittsfield's bonds at "AA+," see cash reserves and excess levy capacity as indicators that there's funding available in case of emergency.

The second part? "If you get to a point [where] you cannot make the numbers work within the levy, you're potentially looking at the possibility that if you don't reduce expenses dramatically, you're looking at a Proposition 2 ½ override," Kerwood said.

On Thursday, he added that's what makes generating new growth through construction and improvements an important goal. "It's activity that's increasing the value of real estate. That's the only way you can expand your levy capacity in any given year."

Kerwood also noted that the city's share of cannabis excise taxes sits at $239,427 - 34 percent of what he had projected for the fiscal year. He's not expecting to reach the estimated revenue due to lower cannabis prices, thanks to oversupply, and a reduction in out-of-state business now that more neighboring states are legalizing cannabis possession and sales.

Other revenue sources are on track, Kerwood said, with hotel and meal excise taxes among the strongest performers. The city's hotel tax revenue of $638,033 is 70 percent of its expected return, while meals tax revenue of $506,238 represents 55 percent of what the city anticipated - with about five months remaining in fiscal 2025.

Motor vehicle excise tax revenue is very low, at $904,441 or 16.4 percent of estimated returns, but Kerwood expects much stronger performance in March.

Reach Greg Sukiennik at [email protected] or at 413-496-6249.