Honorable City Councilors and Residents of Holyoke,
I present to you an FY21 Budget Proposal in the amount of $142,343,394.
These are unprecedented times in our city as we deal with the ongoing Coronavirus crisis. Much is still uncertain as to the level of State and Federal funding that will be coming to Holyoke in the following months, but with the end of the Fiscal Year approaching, a new budget is needed for FY21. Recognizing these uncertainties, I have instructed our financial team to utilize predicted loss of local revenue for our Tax Recap, and we are utilizing the Governor’s January 2020 budget proposal to project our State Aid. It is my hope that upcoming State Aid and Federal Aid will increase our city’s financial capacity, but we are also prepared should more drastic budgeting measures be needed. We will continue to monitor the situation over the coming months. I expect clearer guidance before July 1st, and certainly before the tax rate is set towards the end of the year.
The FY21 budget proposal represents majority level funding across departments with the exception of prior negotiated obligations in union contract raises. For the time being, staffing levels will remain level-set, with no layoffs planned in the budget. Several of you have inquired as to the potential need for layoffs, but after reviewing the operational and financial implications, I believe that layoffs should be a last resort pending further information on state and federal aid. Layoffs at this time would be unwarranted in that they would risk creating operational holes at a time when city operations are more critical than ever. Layoffs are also not as financially beneficial in the short term as they might seem, since the City would still be responsible for a minimum of 50% of the unemployment payments for a period of up to 39 weeks. Cost savings to the City from layoffs would be primarily realized over an extended period of time (1+ years). We will continue to update staffing plans as funding information becomes more clear.
This year's budget process kicked off in early January with a Budget Committee of the City Auditor, Tax Collector, and the Mayor’s Chief of Staff. From January through March this team worked with City Department Heads, the Division of Local Services, and our outside Audit Agency, Melanson Heath, to develop as accurate of a city budget as possible. The team conducted a 5-year audit of historical department expenditures and worked with Department Heads to adjust their budget proposals in an effort to reduce the need for mid-year financial transfers. The resulting budget from Department Heads, reviewed by the budget committee, is a request for $144,665,074. After reviewing these proposals and taking into consideration our likely reduction in revenues, I have made cuts to the tune of $2,334,680 which leaves the budgeted figure of $142,343,394, and a deficit to be covered of $928,534.
For the FY21 budget, The Tax Collector estimated a 5% reduction in our collection rate for local property taxes from 98 to 93%, a conservative estimate since we do not expect the reduction will be that severe. Our Tax Collector, Kate Jackowski, developed projections for the loss of local taxes, such as hotel and meals tax, based on the loss in revenue tracked during April, and projected out for ongoing local closures. The projections are developed on a full closure of business for ¼ of the new fiscal year along with a phased re-opening for the remainder.
To date we are fortunate that the City has not engaged in deficit spending to fund our Coronavirus response. This is wholly due to the incredible preparations taken by our Board of Health, Public Safety Departments, and our City’s Emergency Response Team. This fiscal and operational responsibility has been strong throughout the year. Some highlights from FY20 include:
Transition to Whalley Computers for our Managed IT services
Whalley computers has worked to evaluate and consolidate our hardware and software contracts throughout the city to yield savings and improved technical service. The city now has 24/7 monitoring and support of our technical systems which has proved invaluable in a time when many individuals are working from home and the threat of cyber attacks and outages are on the rise. We have eliminated over $25,000 in unnecessary software expenditures, and consolidating hardware contracts such as printers & copiers, will save the city over $50,000 a year. We are currently working with Whalley to manage a transition from Desktop PC’s to laptops with docking stations to further increase our work-from-home and mobile work capabilities.
Investing in Public Safety
As part of the contract negotiations with the Holyoke Police Department, and with strong leadership of the Chief of the Police, HPD has begun carrying and administering life-saving NARCAN. HPD has also entered into a new cruiser leasing contract in an effort to modernize our vehicle fleet. The Holyoke Fire Department has welcomed a new Fire Chief in Jeff Przkepowski and both Chief Febo and Chief Przekpowski have managed an incredible response to the ongoing COVID crisis by shifting operations and implementing strong safety measures and protocols.
Expanded Levy Capacity and Strong Stabilization Fund
FY20 marked the first year in recent memory that the City of Holyoke was able to set a tax rate below our Levy Limit. The growth has been largely driven by home sales in Holyoke, with additional new growth coming on line from new construction and businesses openings. Additionally, the size of the city’s Stabilization Fund remains a strength to the community, especially in these unpredictable times. As of May 1st, the balance stands at $12,221,250.
FY21 Government under COVID
While many of the personnel lines will remain the same from FY20 to FY21, city operations will continue to change in response to the ongoing COVID crisis.
Enhancing Technical Capacity - We are continuing to boost our technical capacity to cut down wait time and reduce person-to-person contact for city services. The City will begin to roll out laptops to employees, replacing temporary laptops that were provided by the Holyoke Public Schools. A new City Website was launched which will serve as the homepage for accessing information and processing requests by the residents and businesses of Holyoke. New permitting software will allow for faster processing and better tracking of permitting applications, and new meeting minutes and legislation tracking software will provide much needed support for the City Clerk’s office and City Council and will have a positive impact on all departments.
Reducing Municipal Waste Disposal and Improving Sustainability - For the first time in modern history, 74 communities in Western Massachusetts are being forced to pay for disposal of recycled materials. The City of Holyoke, led by the Superintendent of Public Works, partnered with the Mayor's Office and Conservation Department, were able to avoid being locked into a costly 5-year contract with Waste Management for use of the Springfield Recycling Facility. The City was able to negotiate a 1-year contract with Waste Management for receipt of our plastics, bottles, and cans, while separately working with Sonoco Paper, a local manufacturing company, to accept our recycled paper products. These efforts led to an approximately 40% reduction in the overall cost to the city compared to surrounding communities and provides us with the flexibility to develop long-term sustainable solutions over the course of the next year. In addition to the new recycling contract the City is in the midst of reviewing our capacity to reduce our expenditure on yard waste by relocating our facility to a new location which would allow for on-site composting. Such a facility would expand our capacity to collect yard-waste while reducing the cost burden of shipping the waste out of town.
Additional Construction Activities - There is a significant amount of active construction throughout the city, but with a reduction in vehicle traffic and the positive public health impact of outdoor activities, the City is re-allocating previous CDBG funding to enhance infrastructure development for safety and recreation. New funds will be allocated to sidewalk repair and improvements to Springdale Park, and the City is actively working to develop enhanced pedestrian and cycle friendly streets and corridors.
FY21 will be a challenging year for our community, and one where partnership and collaboration will be needed more than ever. I am grateful for the continued support and advocacy of our City Council and look forward to working with you to approve and oversee this budget. Lastly, I want to thank all of our city staff and frontline workers in Holyoke who have responded to this crisis with extraordinary resolve. Our responsibilities as a local government have never been greater and more impactful than they are at this time.
Alex B. Morse, Mayor