City money pit gets deeper

Bad news for the city, as Gov. Deval Patrick has rejected Worcester’s bid for Home Rule Petitions on Early Retirement (ERI) and Pension Schedule Extension, which City Manager Michael O’Brien says would have saved the city $6.5 million. O’Brien says the city now has to address an $8M deficit because of local aid cuts, including reduced reimbursements for the Quinn Bill. The bulk of O’Brien’s statement to the City Council is below:
“As you know, our fiscal outlook for FY2009 and FY2010 remains less than stable due to growing state aid reductions and other state assistance cuts. To date, we have stabilized our city budget in the face of these negative forces, though we all recognize we are doing less with less. We have been creative and thoughtful in seeking and securing reforms to redirect tax dollars to preserve city services in these uncertain and unstable economic times.
“Our two filed Home Rule Petitions on Early Retirement (ERI) and Pension Schedule Extension are indicative of our problem-solving approach. These two financially sound and balanced proposals would redirect some $6.5 million to preserve services. These petitions have a track record of previous Legislative and Governor approvals and we, as a city, have previously accessed and applied these measures in fiscally responsible manners that are worthy of official recognition. In fact, we will pay off our pension liability some seven years sooner than planned from the FY2002 and FY2003 city ERIs. We have also, in our previous ERIs, created reserves and other checks and balances that we incorporated in our current petitions. We recognize that outside review is key and our proposals include formal annual reviews by PERAC and DOR as another layer of checks and balances. Our strong management is proven and has been acknowledged by Beacon Hill.
“We filed our petitions in February 2009. We have followed up, lobbied, met with leadership and modified our petitions per the Legislature’s requests, as recently as two weeks ago, to make them even more restrictive (while still allowing our ability to achieve our goals). The ERI was reported out favorably from the Legislature’s Joint Committee on Public Service last week.
“I regret to inform you that I have been informed by the Governor today that there will likely be a joint statement issued this afternoon by the Governor, Senate President and the House Speaker that will effectively reject our petitions. The statement may also cite concerns that other, less fiscally responsible communities (of the 350 other political subdivisions of the Commonwealth) will also want to file these type petitions and they do not want to establish the precedent.
“Their actions to reject these petitions, and the resultant loss of $6.5 million in city taxpayer savings, further compounds the state’s devastating local aid cuts to date —including deep cuts to state Quinn Bill reimbursements. In total, we will now have to address over $8M in FY2010 deficits due to state actions with additional layoffs (hundreds), other reductions, other reforms and/ or new revenues. I am finalizing my assessments and will forward this report this Friday.
“At a minimum, ERI and Pension Schedule Extensions must be studied and included in a state municipal relief package this fall if home rule petitions will not be considered. We are not alone in our fiscal strife and FY2011 is projected to be even more difficult. These are reasonable, fiscally balanced solutions and we work on real options versus the real prospect of deep sustained cuts.”

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2 Comments

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2 responses to “City money pit gets deeper

  1. Thanks for the early notice on this!

  2. Net effect, the CM will have do more cutting. Can’t imagine the School Dept. will come away unscathed.

    So Tracy, what ideas do you have to deal with what looks like a potentially serious budget issue in the school dept.?

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