The following is a snapshot overview of the proposed budget and the FY23 proposed budget in detail (note: these are subject to change between now and June 30):
- FY23 Holyoke Consolidated Budget Workbook – https://docs.google.com/spreadsheets/d/12wSsfKieel2ljRRpDng9XT3DnJJ0Tkp8/edit?usp=sharing&ouid=116914758029716249319&rtpof=true&sd=true
- Proposed Working Budget Detailed – https://docs.google.com/spreadsheets/d/111428Z6FXhLjRv52dTH8vbk64cnDkN-xWtHFOSV6cXE/edit?usp=sharing
This budget is based on current revenue and expense projections and a balanced understanding of Holyoke’s municipal service needs. State revenue and expense projections are based on the House Preliminary Budget. We are also anticipating an increase in net school aid due to the impact of the Student Opportunity Act. The proposed budget includes moderate revenue increases in net local revenue growth however these estimates remain conservative to mitigate any potential Covid Pandemic impact and other circumstances that contribute toward uncertainty. The budget does not propose a Proposition 2½ Override or any reduction in services. The budget I am presenting also leaves on table a surplus of $779,876 that will assist in the reduction of proposed tax rates for the citizens of Holyoke.
Locally, the city is looking forward to seeing moderate growth in some local revenues—but the tax base, one of the largest sources of revenue for the city, is always limited by Proposition 2½ regardless of economic factors. This budget relied on a combination of conservative budget controls, creative budgeting solutions, and moderate favorable growth in local revenues to develop a balanced budget with a surplus from the tax ceiling to the tax levy limit. Our largest increases are overwhelming due to uncontrollable related expenses such as insurance, retirement, and school budget. Because of the conservative estimations of receipts and new growth potential not yet realized, our excess capacity may be greater than anticipated. The budget is a moving target with new revenue projections being realized every day. We will know more of our revenue capacity as we get closer to fiscal year end. Because of the uncertainty for my comfort however, it’s important we preserve as much of excess capacity as possible before reacting by committing all our dollar potential to short-term and often short-sided fixes.
This budget presented here results in no service reductions in FY23 and in some areas it is restoring positions eliminated in the past and helps build-up and maintain capacity that keeps up with critical services which is my year 1 priority. Plugging the gap creating turnovers in our professional supervisor positions is important to limit disruption, reduce negative impact to local services, and maximize on the city’s potential to collect new revenue and properly navigate quality of life issues. Below I have outlined the major changes I would like to implement for FY2023 with your support:
- Competitive salaries for professional supervisor positions to avoid turnovers to other communities.
- An increase in staff capacity in the Parks Division of the DPW to better maintain our public parks.
- Restoration of the Tree Climber position to assist our Tree Warden with maintenance of public trees. Although this budget has a limited dollar amount for outside contracted services, I will be presenting line-item transfers in the new fiscal year in areas where there may be surpluses to offer flexibility for the tree warden to proactively address tree maintenance throughout the city.
- Additional laborers at the DPW to keep up with trash and recycling. Also, recognizing the challenges of attracting candidates to fill HMEO positions that require CDL’s, the idea is to train laborers to become future HMEO’s so that we create a pipeline for those opportunities.
- An additional inspector at the Building Department. We are looking forward to getting support from the City Council to subsidized inspector salaries with Marijuana Impact Funds. Considering the Council supports, this will offer additional room in the budget.
- An Assistant Chief Procurement Officer that is a certified in procurement for continuity in the purchasing department.
- Two part-time associates in the Solicitor’s office for additional support. I also look forward to investing through alternative sources (Free Cash with your support) a healthy amount for outside special counsel to offer additional flexibility in the workload.
- Fully absorbing costs of the Sr. Project Manager at the OPED office previously subsidized through grants.
- A Planner I position assuming we get support from the City Council to subsidize the cost of our Planner II position using Marijuana Impact Fee money. This will offer additional flexibility in our budget.
- In ability to maintain 4 captains instead of 3. Currently, this budget supports 3.5 captains. That will allow the current 4th captain to work through December in anticipation of one of the other 3 captains retiring in January.
- Restoration of the 8th Police Lieutenant Position.
I am also looking for support from the City Council to use Free Cash for one-time investments. For the first time in years, the city produced a positive free cash balance from the MA Department of Revenue of $2,382,813. Proposed investments for free cash include:
- Marijuana Impact Fee Stabilization – $1,591,290.58 of it will need to be transferred to the Marijuana Impact Fee Stabilization Account. When the City collected its first rounds of impact fee money before the special revenue account was created, the funds went into the general fund which is now reflected in the freecash We have host community agreements with marijuana companies that commit the city to spend the money on eligible projects that mitigate community impact.
- Regular Stabilization aka Emergency Stabilization – $98,000
- Capital Stabilization – $50,000, considering the City Council supports creating this new stabilization specifically for capital.
- Special Projects – $130,000 for consulting services to engage a police audit, parking management study, trash management and recycling study, and other special projects.
- Municipal Finance Support – $240,000 for ongoing efforts to strengthen internal controls in financial departments.
- One-time IT onboarding – $25,500 to cover one-time transition onboarding costs for services from new IT service arrangement.
- Outside Special Counsel for Solicitor’s Office – $170,000 to offer flexibility for the Solicitor’s office to keep up with workload.
- Outside Engineer Services – $68,000 to offer flexibility for incoming City Engineer to balance projects as-needed as he transitions into the new role.
- Laptop for City Council – $10,000
During Fiscal Year 2023, I will be working with the MA Division of Local Services in collaboration with department heads and the City Council to establish a Municipal Finance Management handbook that establishes clear policies and guidelines for how we manage and invest local resources including how we invest in free cash, stabilization, and capital projects.
Although much progress has been made in maximizing on the available resources to the city and establishing a budget that is responsible and transparent, there is still more work to do. As a city we must continue to exercise fiscal restraint so that we can preserve the gains we have made to date, especially as we prepare to navigate any potential shortfall and/or continue to improve our management and capital infrastructure.
Our Process and Concluded Budget
At the start of the budget process which began in January 2022, I forwarded specific instructions to each department to investigate areas in which budgets can be decreased or level funded; and if costs were expected to increase from level fund amount, that departments explain in detail reasons why. I also asked department to submit budgets that assumed a 3% increase in staffing. The reason for this was to allow me to see the whole picture of what we are dealing with and how it compares to our target number. As you can imagine, we were well over the target.
The City Auditor and I met with all city departments to consider how to best allocate our limited resources. The Auditor and I worked with departments to understand service needs and updated their targeted budget amount based on estimations of new growth values, state aid, and the city’s share of the school budget for FY23. After evaluating all contractual obligations, requests, and strategic priority to close the retention gap specifically for professional supervisor positions and how it compared to our target mark of anticipated revenue, I made the decision to not support pay raises at this time until we can further understand our full revenue limits. Pay raises would have absorbed the excess capacity and not offer any flexibility to navigate uncertainty. Therefore, what I’m looking to do is pump the brakes just a little bit until we can further gain control of what our city potential is.
As for the schools, the school district presented a budget that takes advantage of the Federal COVID Relief funds to accelerate investments anticipated by the Student Opportunity Act. This funding will substantially increase net school spending and better serve the needs of our school district and address key findings in the districts Entry Plan.
I am indebted to the many dedicated and talented city employees whose efforts make this process and report possible. I would like to commend the departments for their spirit of cooperation in formulating this budget. Their continued efforts on behalf of the city are greatly appreciated. I would also like to express many thanks to our City Auditor in providing the necessary support and guidance that helped me conclude the recommended FY23 budget.
Respectfully submitted,
Joshua A. Garcia, Mayor