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From gas to groceries, everything’s getting more expensive. But one number caught the residents of New Bedford off guard.
$32 million.
That’s what Mayor Jon Mitchell said was the difference between the projected cost of city government next year and its revenue. In a budget address to city councilors May 13, Mitchell outlined that closing that gap would mean both higher taxes and service cutbacks, including layoffs. Notably, Mitchell proposed closing Fire Station 9 — though the closure could be temporarily delayed and Mitchell has said he prefers reducing the staffing on fire engines across the city instead.
Residents and officials were surprised by the size of New Bedford’s deficit. Mitchell himself projected a $13 million deficit in the weeks before his budget address. And last year New Bedford came in under budget. Even in the current fiscal year, recent auditor’s reports show that New Bedford had spent 49.8% of its funds through the first two quarters, keeping the city basically on track. (Projected overages in police and healthcare spending may lead to a 0.5% deficit by year’s end, the same report found.)
“The City Council received the [proposed] budget when the public did, and while I was aware there was a budget deficit, the figures presented by the Mayor have fluctuated significantly over the past few weeks,” said Councilor James Roy, in an online post.
But for residents and officials seeking to understand the budget, the $32 million deficit figure may be less informative than a deeper dive into what costs are actually going up.
In fact, the $32 million figure captures the scale of decisions that the administration made to balance the budget — including denying $8 million worth of spending increase requests and proposing position eliminations and layoffs worth close to $4 million — but the figure does not actually appear in the budget proposal itself.
Instead, understanding how New Bedford’s $535 million budget works can help people understand their taxes, their local government, and advocate to officials for their needs.
What does it mean to have a deficit?
The budget that Mayor Mitchell presented was balanced: total revenue exactly matched total spending (both were $535,185,600 and zero cents in the general fund).
When Mitchell talks about facing a $32 million deficit, he’s figuring in decisions that don’t appear in the budget book.
For example, the administration said that city departments requested $8 million in spending increases. These could be requests from the library, police, zoo, cemeteries, or health department to hire more staff or purchase new equipment. This year, those requests were denied wholesale.
So, $8 million of the total $32 million will not result in immediate staffing reductions or significant service reductions.
Instead of adding services, Mitchell proposes eliminating positions. That includes many empty positions in city government — 58 positions in total, including dozens of police officers the city hopes to hire. The city usually calculates its budget for fully-staffed departments, and eliminating empty positions can have big impacts on the budget without needing to lay off employees. However, these eliminations can affect the long-term growth and capacity of a department.
Other decisions could have immediate consequences. Thirty-four people would be laid off in the mayor’s proposal, and the Fire Department would bear the brunt, with 26 people slated to lose their jobs. Fire Station 9 could close.
In total, these eliminations and layoffs would amount to roughly $4 million of the $32 million figure.
Half of the $32 million figure — $16 million — would be offset by tax increases.
So, talking about a “$32 million deficit” is a way to capture the size and scope of decisions that went into creating the budget. While there’s some usefulness in understanding how Mitchell and his team arrived at the $32 million figure, city residents may benefit from an even simpler question.
What costs are actually increasing?
More important than the $32 million deficit figure is the actual cost of New Bedford’s general fund: $535 million. What’s inside this number and how does the city pay for it?
The education budget, at $290 million, is more than half of all city spending. But New Bedford residents overwhelmingly do not pay for this school budget with their property taxes. Only $13 million of the $290 million education budget — or about 4% — comes from property taxes.
State aid for education totals $277 million, and has increased $17 million since last year. So while the education budget is significantly bigger — and pushing up the whole city’s budget, too — it only adds $1.4 million to the local property taxes, and is not a significant cost driver. Aid for education is more than half of New Bedford’s revenue. And all state aid coming from Boston, at $311 million, accounts for nearly 60 percent of New Bedford’s revenue.
Meanwhile, all other departmental spending in New Bedford City Hall is projected to have its costs decrease next year, according to Mitchell’s proposal. The biggest chunk of the decrease in City Hall would come from two main sources: consolidating departments and eliminating positions.
Community services, health, licensing, parks & recreation, and veterans services all would consolidate into one department named, “Health and Human Services.” Through this consolidation the city would spend $1.2 million less, a roughly 20% decrease.
Across all departments, the city would eliminate 58 vacant positions and lay off 36 employees. Most layoffs and eliminations would come from the two largest departments: fire and police. All told, eliminations and layoffs could save the city close to $4 million, according to the Office of the Chief Financial Officer.
The main costs going up are healthcare, pensions, and a trash contract.
“I have explicitly warned that our ability to operate city government effectively and affordably was being suffocated by diminished state aid and growing non-discretionary costs such as pension and healthcare obligations,” said Mitchell in his May 13 budget address.
Healthcare alone is projected to increase more than $4 million next year, the largest increase in the budget. Meanwhile the cost of city pensions is now $47 million — that’s about $18 million more expensive than the entire Police Department ($29 million) and more than twice as expensive as the entire Fire Department ($21 million).
A new waste contract could be one of the largest percentage increases of any budget line, increasing close to 40 percent. “We’ll see cutbacks in things like yard waste,” Mitchell said, and said that further cost savings could come from eliminating other services, like mattress pickup, electronic waste services, and others.
“The cost of waste hauling has gone up significantly,” Mitchell said. The city’s current contract expires this year, but Mitchell said the city has not signed a new contract yet. The city is currently engaged in a bidding process, and these costs could come down if the city bids for fewer services in its new contract.
Because pensions and healthcare are increasing, and negotiations with employees and retirees to change these benefits have not happened, “the only way to save on those items otherwise is to reduce the number of employees slated to receive those benefits,” Mitchell said.
“The reality is that the budget has reached a boiling point. The tough decisions cannot be avoided any longer,” Mitchell said.
Email Colin Hogan at chogan@newbedfordlight.org
