NEW BEDFORD — As the mayor’s chief financial officer tells it, the city could run out of money to pay its bills before spring, as the City Council has rejected a request to restore most of a budget cut approved in June. As some councilors tell it, department heads merely have to find savings in the next few months and all will be fine.
Robert Ekstrom, the new CFO, said the city was in trouble last week, when he said a council committee vote — if approved by the full council — would leave him about $2.65 million shy of the money needed to pay bills through the end of the fiscal year on June 30. Now he says the problem is $1 million deeper, as the City Council on Tuesday night amended the Finance Committee’s recommendation, cutting the allocation to restore the budget cut from $3 million to $2 million.
“I don’t have any suggestions right now,” Ekstrom said after the council voted 10-1 Tuesday night to approve the $1 million cut. “Now I estimate March 10” rather than early April as the date when the city will run out of money, he said. Asked if the danger of city services being disrupted is real, he said “definitely a threat of disruption for sure.”
Councilor at-Large Shane Burgo, who proposed the $1 million cut, dismissed Ekstrom’s warning as alarmist.
“They want to scare you,” Burgo said. “That’s the bogey man tactic that this administration” uses.
Burgo, just re-elected to his second council term, acknowledged the apparent incongruity of a councilor from the panel’s most progressive wing playing the role of budget and tax hawk. He said the impact of higher property taxes falls most heavily on low-income people, often in rent increases passed along by landlords paying those taxes.
“This administration doesn’t care about the rising cost of rents,” said Burgo, who earlier this year proposed that the November ballot include a non-binding question on allowing rent stabilization in the city. Mayor Jon Mitchell vetoed the move and the council could not muster the votes to override the veto.
“Landlords say we can’t have rent control because taxes keep going up,” Burgo said.
On Tuesday, in view of the Finance Committee’s vote on Monday, Nov. 13, and the expectation that the council — composed of all the same members as the committee — on Tuesday night would approve the committee’ recommendation without amendment, Mayor Mitchell released a statement criticizing the council’s action. He referred to the council’s main target in the budget cut approved in June: a spending category that includes a number of non-discretionary expenses, such as insurance, federal payroll taxes and city trash hauling.
“The City Council’s refusal to fully appropriate the funds needed to pay the city’s trash collection contract and other legally mandated expenses has created an entirely self-inflicted problem for city finances, which will hit in the spring when funding runs out,” Mitchell said. “The Council’s action is perplexing, as state law requires any resulting deficits simply be added to the following year’s property tax bills. The apparent goal was to create the illusion of protecting taxpayers, but the reality is quite the opposite.”
After the council approved the budget in June — the vote on general fund spending was 8-3 — Mitchell noted that the cut was higher than usual, and predicted that his administration would have to come back for more money.
Burgo said the customary answer given to low-income people struggling with rising costs is “to make more money and work harder. So our city government heads can do the same” to find ways to cut costs.
Ward 6 councilor Ryan Pereira, also just re-elected to a second term, told the council Tuesday night that if all departments made a 5% cut in two spending categories, “charges and services” and “supplies and materials,” it would come to $1.2 million.
“Department heads are going to not like me,” Pereira said in an interview on Monday. “Tough. It’s where we are now.”
Burgo told the council on Tuesday night that taxpayers are paying for services from the Police Department and other agencies that they are not receiving because so many positions are vacant. That money should be used to lower the city budget, he said.
Pereira also said that so-called “vacancy savings,” meaning money diverted from payroll allocations for departments that are understaffed, could be higher than Ekstrom’s estimate of $2.8 million.
Pereira said the Police Department alone, for instance, is now running about 50 officers shy of a full complement. With each making an average of at least $50,000, he said those vacant positions alone would be worth $2.5 million.
Police Chief Paul Oliveira confirmed on Monday that the department is budgeted for 259 positions and is about 50 officers short.
In his presentation before the Finance Committee a week ago, Ekstrom included the $2.8 million as part of $3.7 million in council budget cuts that the city would be able to manage without a new appropriation from the council. In addition to that, he said the administration needed another $5.65 million to pay bills through June 30.
That included money for the new trash-collection contract with Capitol Waste Services, Inc., which is about $2 million more than the previous agreement with another company. The Capitol contract was signed a few days after the budget was approved in June.
The Finance Committee recommended a new appropriation of $3 million, tabling several allocations the administration requested.
Burgo and Pereira said after Tuesday’s meeting that the cut of nearly $8 million voted in June represented the estimated increase in the amount that would have to be raised in taxes from last year to this year to bankroll the mayor’s proposal.
Ekstrom said in an interview last week that the $8 million was much higher than any cut made since 2017. Budget cuts in that time have ranged from $95,000 in 2019 to $2.66 million last year, according to a list compiled by Ekstrom’s office.
The lone vote against the $1 million cut on Tuesday night came from Ward 1 Councilor Brad Markey, who also dissented on the budget approval last June and the Finance Committee vote on Nov. 13.
“I am not going to vote for this,” Markey, who chairs the Finance Committee, told the council. “I don’t think it’s a wise decision.”
He said he could not see how the money the administration has said it needs to meet obligations through June 30 could be found in “5% here, 5% there. I don’t see it.”
On Monday, Markey, who was elected in 2017 and just lost his bid for re-election, in an interview said, “I don’t feel like there’s a lot of fat in that budget.”
He said he understands the need to keep a lid on taxes, but he said he thought the $8 million cut the council voted in June in approving $416 million in general fund spending was too much, especially as $7 million of it was in items the city has to cover.
“These things can’t be cut,” Markey said. “What good is a budget cut if you’re going to give it all back?”
So, what happens now?
Ekstrom said that so-called “free cash,” meaning money certified by the state as not needed to pay bills, could be used to make up part of the gap, but that sum won’t be known until nearly the spring. In most years, he said it comes to between $1 and $3 million. Some of that money is left over from previous budgets, he said.
Possible savings made by department heads also cannot be estimated now, not least because “they have the right to spend the appropriations the City Council approved for them,” Ekstrom said last week.
At worst, he said last week that the city would have to negotiate bill payment schedules with vendors, including the new trash hauling company. If vendors decline, he said, it could affect services.
Last week, when the budget gap was a million dollars smaller, Ekstrom said the moment stands out in his 22 years working in government finance, including about eight years as New Bedford’s auditor.
“This is the first time in my entire government career that I don’t see the apparent light at the end of the tunnel,” Ekstrom said last week.
On Tuesday night he said “I’m exasperated,” in part because he had no warning of the council’s change of direction. “I would have thought they would have let me know what they were thinking.”
Burgo said he spoke with Ekstrom after the Finance Committee vote on Nov. 13, reminding him that “the committee vote is not the real vote. That was my way of saying things can change.”
Asked why votes had changed, Burgo said he would like to think “I’m very persuasive … I use logic and reason. Logic and reason won tonight. The people of New Bedford won tonight.”
Email reporter Arthur Hirsch at ahirsch@newbedfordlight.org.
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The New Bedford city council is a joke, and the city councilors are absolute clowns, and the very low voter turnout in the election is a testament to that fact.
Tell me, what happens when department heads make an effort to cut 5% here and 5% there fails in some or most departments, are department employees expected to purchase supplies at their own cost? What happens when the 50 police officers are hired so city residents have the protection and law enforcement they should have in a city where crime rates are higher with a smaller police force? Where will the funds come from Councilor Pereira?
Councilor Burgo would like rent control while property taxes, water & sewer rates, property insurance, and required maintenance rise annually, are residential and commercial property owners expected to absorb those costs? Property owners aren’t non-profit organizations, and they don’t own property to provide housing to many section 8, and welfare recipients who can’t or won’t work for a living.
Why doesn’t the city council take a pay cut if they’re truly there to serve, and not to make an additional $50,000+ per year for a part time position.
The future doesn’t look bright for New Bedford, I’m sure many property owners like myself are planning to leave within the next 2 or 3 years since there’s nothing positive on the horizon.
The council as it is currently composed, is a terrible, bad joke on New Bedford residents. Incapable of communicating with the administration, constantly in fights with the city departments, grandstanding to get their names in the news. This ‘budget cut’ is pure showmanship, and will only hurt city services while providing no real tax savings for residents. Shame. Every single councilor should have been voted out.
I couldn’t agree more, and it’s why I don’t bother voting in city elections, In my opinion, I think Jon Mitchell has done a very good job as Mayor, and from what I see and hear, the NB City Council doesn’t like ceding power, wright or wrong, they want it their way, not what’s best for city residents & tax payers.
A. Usually if a department is understaffed it means those that remain rack up a ton of overtime. Often it is cheaper to fill a position than rely upon staff to work extra hours.
B. It’s terrible practice to cut an approved budget mid year baring an economic meltdown
C. You should never never use free cash to fund operating expenses
D. Right now you want more free cash than at any time in 14 years. Free cash is best used to fund capital expenses without it you rely upon borrowing and the cost of borrowing is the highest it’s been since 2008. The result is that the taxpayers will pay more not less and for a city with the size of budget as New Bedford $1-2 million in free cash is way way way below what is typically seen and a warning sign that the bottom of the barrel is already been scraped clean.
I’d like to just correct your first point/thought, I know for a fact there are departments in the city with vacancies, but there’s nobody working more hours and being compensated for it, the union doesn’t allow that, but there are non union office workers who are working longer hours, with more responsibilities, and they’re NOT being compensated for it, and the most common reason for the job vacancies is the residency requirement for department heads and managers, and it’s the most stupid rule ever.
This is New Bedford, not Cambridge, not Brookline, people aren’t going to come to work in New Bedford and take a 10% wage cut for not wanting to live in the city, and that’s why we won’t get the best and brightest people to improve, the city council is much happier opposing the Mayor instead of doing what’s in the best interest of the city.
I’m sure if inflation is around for another year, they won’t have any problem with voting themselves another hefty salary increase, they all agree on that with no problem.