Storm clouds gather over budget, financial chaos looming for city
By JOSH RESNEK
Not enough can be predicted reliably or dreamed up about the upcoming budget making process.
This we know for sure.
The city budget and the school department will experience a big loss this coming year followed by a huge loss the next.
Those who follow closely the city budget process here have indicated the new budgets proposed by the city and the school department could be as much as 10% to 20% off from what they were this year.
Such a scenario would cause chaos in the running of the city and in the management of the public schools.
To put it in simpler terms: think about making $100,000 between a husband and wife this year. Then came the virus and the subsequent crash of the economy.
The husband and wife sit down next week to do their budget.
They add and subtract.
They will have $20,000 less income – 20% less – this year because of the shutdown.
The husband and wife look at one another.
‘What do we do? How do we make up the $20,000 we are losing?”
Well, they can’t. They need to make cuts. But what can they reasonably cut when it took every dime of the $100,000 they earned to maintain a week-to-week economic life?
Bottom line – the husband and wife are in trouble.
Whatever cuts they make will be like losing an arm or a leg.
So too will the city and the schools be faced with a similar situation.
The city can raise taxes to raise revenues to make up annual shortfalls. The city is not allowed to run at a deficit.
This is the law.
The budget must be balanced perfectly to the penny between income and expenses.
If this city is going to lose substantial revenues – which it already has – and is facing a bleak financial future – which it is – the issue is simple.
It can’t afford to raise taxes on many residents already going broke because they lost their jobs, and will shortly lose their homes and apartments.
Short and sweet, raising taxes will further cripple the wounded city.
Enough layoffs of personnel must be made to even up the deficit.
If the budget comes up short after layoffs department budgets must all be by a crippling amount to make up the deficit. Then salaries must be cut and pension benefits altered and health insurance payments changed.
It is either going to be that or the federal government pony’s up the state deficit, and the state passes on the needed income to the hungry cities and towns.
Short of this, a huge deficit looms.
The city is destined to become a far different place than it was two months ago. The school department faces the unenviable task of budget cuts causing the headquarters on Vine Street to be turned upside down.
The schools are faced with a daunting reality – having to take care of mandated responsibilities for students with special needs which cannot be cut by law whether or not the money is on hand.
Teachers and administrators are facing a brave new world tested not just by the necessities imposed on the schools by the virus but also by a dramatic cut in funding to meet the simplest everyday tasks.
Many teachers are likely to be laid off and some classroom work consolidated. Not all the administrators are going to make the cut either.
Even among the lowliest of school department employees, there will be painful job cuts, salary cuts, pension cuts and health insurance cuts… unless the federal government steps up to the plate and gives Massachusetts what it needs to fully fund its cities and towns.
Will this happen?
No on knows for sure.
One thing only is for certain, everyone in the money supply food chain needs more in a short term economic environment where nearly every state is on the verge of bankruptcy.