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Morse trims budget for next fiscal year

Date: 5/10/2013

By G. Michael Dobbs

HOLYOKE — Almost on the eve of his announcement to seek re-election Mayor Alex Morse has released his fiscal year 2014 budget, which he told Reminder Publications "walks the fine line" between cutting expenses and preserving essential services.

In a letter Morse released to the press and members of the City Council, he wrote, "After much due diligence and an eye towards fiscal stability, I'm pleased to present you with a $123,614,715 budget for fiscal year 2014, which is $561,863 less than the fiscal year 2013 (FY13) budget. Reducing the budget was no easy task, as any mayor is seldom able to present a reduced budged over the previous fiscal year. I present you a budget that preserves essential city services without any layoffs or furloughs. My proposed budget is lean and conservative, as many departments will see no increases over FY13, and many will see decreases. In this budget, there are no new positions being funded, and I've instructed department heads to control spending until the end of the fiscal year in the hope of having a positive impact on next year's free cash."

Morse said that he has asked his department heads to "reel in spending."

One of Morse's concerns is state aid. He explained that according to the budget prepared by Gov. Deval Patrick and what is being discussed in the Legislature, there isn't much difference between the funding for the non-school side of state funding.

The school side may be a different matter. Morse hopes the current House Ways & Means budget proposal is adopted, which would mean a $64,494, 872, an increase of $277,586 over FY13. The problem, Morse related, is if the House cuts school funding. He said if there are substantial cuts to the school funding the city receives, there could be layoff and other repercussions.

He said that transferring money from the city side of the budget to the school side wouldn't be possible.

"There is only so money raised in taxes, he said. "We have to be resourceful with the money we do have."

When asked how the Holyoke schools could accomplish the goals it had set for improvement with decreased funding, Morse said the city must have the best teachers possible, involve families into the educational process and move forward with its literacy campaign to bring all third graders to reading at grade level.

He is hoping Dr. Sergio Paez, the new school superintendent, will bring "a new spirit" and new ideas to the city.

In Morse's letter he stated he was able to work with members of his administration in reducing health insurance costs to the city and that "nearly all budget increases proposed for FY14 are fixed costs contractual obligations to employees, and an increase in the city's contribution to retirement in the amount of $382,036, and other claims benefits."

He added, "Given current projections from the state, I anticipate there being a general fund deficit in the amount of $851,156 — 100 percent of which exists due to the property tax overlay payments the city is obligated to provide to both Macy's and Verizon that weren't previously anticipated or budgeted for. Absent this expense, there would be no general fund deficit.

"In order to eliminate such a deficit, I expect to work with the Council in the fall to use free cash to balance the budget. Currently, free cash is hovering around $700,000. As you know, I have been careful not to substantially reduce this number, as I believe the best option to balance the budget will be to utilize free cash once it's certified later this year."

Morse proposed creating a "centralized Water & Sewer Authority that would have the jurisdiction to adjust rates and aggressively collect unpaid bills" to a projected sewer fund deficit of $967,786.

Overall, Morse said the city is in "good financial shape," with an $11.9 million stabilization fund and an A1 bond rating from Moody's.