Janey unveils $3.75 billion operating budget for Boston

Boston's Acting Mayor Kim JaneyJessica Rinaldi/Globe Staff

Boston’s Acting Mayor Kim Janey Wednesday announced a $3.75 billion operating budget for next fiscal year that would avoid layoffs and maintain services in what will be a period of economic recovery for the city from the worst public health crisis in modern times.

The proposed budget includes a year-over-year increase of 3.9 percent, or $142 million, city officials said Tuesday.

“COVID-19 has brought on unprecedented economic and social change for our city, and this budget proposal meets the moment and makes targeted investments to ensure that as we emerge from this public health crisis we are not going back to normal, but going forward better than before,” said Janey, who is the city’s first Black and first female mayor, in a statement.

Boston’s overall revenue base is expected to grow modestly during the next fiscal year, and the operating budget will set the stage for an equitable recovery in the city, said Justin Sterritt, the city’s budget director during a roundtable discussion Tuesday.

Equity is a recurring theme for the proposed budget, which comes less than a month after Janey took the reins when Martin J. Walsh left City Hall to become US labor secretary. The city, according to Janey’s administration, worked to introduce and formalize an equity framework during this year’s budget process that included data collection on which specific groups were affected by budget proposals, if such groups had been brought into the budgetary conversation, and what any unintended consequences of the budget were.

The city’s proposed operating budget is chiefly supported through property taxes and new growth, which is an annual measure of new development, said Sterritt. For the upcoming year, property taxes are expected to account for 73 percent of the revenues for the budget. The city’s reliance on that revenue stream has somewhat insulated Boston from some of the harsher economic impacts suffered by other cities during the pandemic.

New growth, said Sterritt, will likely not reach the heights of recent years when Boston was in the midst of an economic and building boom, mainly because of economic disruption caused by COVID-19 and a construction pause implemented last year during the early stages of the pandemic.

Among city revenue sources, the pandemic most dramatically pinched excise taxes, parking fines, and hotel taxes, said Sterritt.

“Some of that will rebound, but it’s going to be a slow process,” he said.

Additionally, during a budget presentation, Sterritt said that Boston was named by Moody’s in 2019 as one of the best prepared cities to handle a national recession, and also alluded to the city having seven straight years of AAA bond ratings.

The budget will be formally introduced to the City Council on Wednesday. The council is expected to send the matter to its ways and means committee, which will host budget hearings and working sessions in the coming weeks. The council must approve the operating budget for it to take effect. The next fiscal year starts July 1.

The city is expected to receive $215 million in federal funding from the American Rescue Plan Act to help recover from COVID-19, and Janey’s administration is looking to dedicate $100 million of that to offset local revenue declines.

Janey’s proposed operating budget for the Boston Public Schools is $1.29 billion and includes $36 million in new investments for schools and classrooms. The schools budget will be supplemented by $123 million in federal coronavirus-related funding, which will pay for additional investments, according to officials.

Janey is also looking to dedicate $4 million in new funding to expand the capabilities of the Boston Public Health Commission, another $4 million for 5,000 youth summer jobs and 1,000 school year jobs, and $3 million in investments to support the equity and inclusion cabinet.

The city’s post COVID-19 budget plan includes new investments totaling $15.8 million that would be centered on “renewal and healing,” including $5 million for a housing and homelessness effort aimed at preventing displacement and expanding housing opportunities. The proposal also includes $5 million to support the “healing of racial divides” through new funding for the freshly established Office of Police Accountability and Transparency and alternative policing initiatives, among other measures.

“This budget is truly a reflection of the moment that we are in and the needs of our residents,” said Emme Handy, the city’s chief financial officer, during the roundtable discussion.

Additionally, the city’s $3.2 billion capital plan for the next five fiscal years was announced Wednesday and includes a $200 million increase, making it the largest capital plan in the city’s history, according to Janey’s administration.