City has budgetary good news and bad news
Date: 4/7/2009
By G. Michael Dobbs
Managing Editor
CHICOPEE -- There's good news and bad news with the city's finances. On the plus side, the city has a healthy stabilization account and is receiving federal funds through the American Recovery and Reinvestment Act.
The bad news is there is still much uncertainty at the state level.
Chicopee has been notified of some of its federal stimulus funding from the American Recovery and Reinvestment Act, but Mayor Michael Bissonnette hopes the city will see more.
Bissonnette told Reminder Publications last week the city will receive $500,000 from the new Energy Block Grant funds; $360,000 in Community Development Block Grant funds; $182,000 for community policing; and $460,000 in Neighborhood Stabilization funds to prevent foreclosures.
The city also received almost $7 million in education funds, which he said should mean the city has filled the deficit in fiscal year 2010 (FY10) funding created by the state's level funding of education.
Bissonnette warned, though, that if that funding is decreased in the final budget -- the Legislature has not yet completed its version of the budget -- Chicopee's schools could be affected even with the infusion of the federal dollars.
Each governor has discretionary stimulus funds, Bissonnette said, and he would like to obtain some of that money to fund more projects in Chicopee.
Bissonnette expressed concern about a $6 to $7 million-revenue gap the city faces created by decreases in excise taxes, investment incomes and state local aid.
Right now the local aid the city receives from the state has been cut almost in half.
To be prepared for reductions, Bissonnette has been working with his department heads on the municipal budget and said the preliminary figure is just under $2 million less than last year, representing less than a 1.5 percent increase.
He has also instructed the department heads to construct a "doomsday" budget that would anticipate a 15 percent decrease in funding.
He has also been in discussion with the unions representing city employees on how those organizations could help to avoid layoffs. He said that every decrease of $1 million translates into about 20 jobs. A "doomsday budget" could mean laying off 300 people, he added.
"It remains to be seen what the local aid packages will be like this year [FY 2010]," he said.
If the Legislature passes Gov. Deval Patrick's proposal to increase the state's meal tax and to eliminate the tax exemption enjoyed by telecommunication companies, cities like Chicopee could benefit, Bissonnette said.
The city could see about $250,000 in revenue from the taxing of telephone poles -- Massachusetts is the last state in the country not to do this -- and about $250,000 in the increase in state meal taxes.
He said he's not counting on either sum, though.
The economic troubles have a bright side in the form of low to no interest rates for financing city projects, he said. The re-financing of the improvements made at the Fairview Middle School saved the city $310,000. He added the vehicles the city needs to buy would be at 1.01 interest rate, which is better than taking money out of the stabilization account that is currently earning the city money at a four percent interest rate.
Another bright side is that bids for city projects are very competitive -- and low, he said.
