As Newton emerges from the economic turmoil brought on by the pandemic, the city is continuing to face growing costs as local revenues remain below their pre-pandemic levels, according to Mayor Ruthanne Fuller, who proposed using $3 million in federal aid as part of the city’s fiscal 2023 budget.
Fuller’s proposal for new budget — which would run from July 1, 2022 through June 30, 2023 — calls for a $480 million city budget, a $17.3 million increase over the current fiscal year, she said in her budget presentation to elected leaders Tuesday night.
The city budget, which includes $262 million for public schools, also calls for $61 million in water, sewer, and stormwater enterprise funding, and another $5.6 million in Community Preservation Act funds, according to Fuller.
Fuller said the proposed budget also prioritizes initiatives that include supporting diversity, equity and inclusion, translation and interpretation services for residents, and implementing the city’s Climate Action Plan.
The city also has invested in athletic fields, arts and culture programs, and work to improve roads, according to Fuller.
The proposed budget also includes $2 million in pandemic funds to support low-income residents and residents impacted by COVID-19, Fuller said, including programs for rent and utility assistance.
“As a city budget is a reflection of our values, this budget prioritizes our people, our places, and our future,” Fuller said.
But Fuller warned that the city faces challenges, even with the budget increases and its financial strength.
“This budget balances our ambitions for Newton with our fiscal reality. Pragmatism must continue to guide us as we navigate complex economic trends,” Fuller said.
Fuller, who is working despite testing positive for COVID-19 April 10, made her budget presentation virtually. Newton’s City Council, which still must review the budget proposal, is scheduled to vote on it next month.
Fuller’s budget analysis also estimates the city’s total property tax revenue at $403.4 million in fiscal 2023, a $15 million increase over the current year. It includes a projected $5.2 million in new growth and development, as well as a 2½ percent increase in property taxes, which is the highest hike allowed under the state’s Proposition 2½ law, the analysis said.
Fuller said in her speech Tuesday the city faces increasing costs in areas such as health care, trash and recycling collection, fuel and utilities, and transportation, but local revenues haven’t kept pace.
Newton’s income from hotel and meals taxes, motor vehicle excise taxes, and collections from parking tickets and meters remain below what they were before the health crisis, according to Fuller. Projections from those revenues, along with the city’s interest income from investments and increases in state aid, are nearly $3.9 million less than the city budgeted before the health crisis, she said.
Officials will continue to carefully evaluate the “many needs within our community” and the opportunities for investing city and federal funds, she said.
“We will be judicious in our deliberations, transparent in our decision making, and relentless in our search for efficiencies. We will continue to watch every penny. Together we will decide if we need to do more or move more quickly on our initiatives, beyond the capacity of our current revenues and American Rescue Plan Act funds,” Fuller said.
In the current budget year, the city used $4.6 million from Newton’s $63 million allocation through the American Rescue Plan Act, she said.
But the city is tapering off the use of the one-time funds to shore up operating budgets, she said, and warned against relying too much on tapping that federal pandemic aid.
Otherwise, the city “would face a dangerous financial cliff of our own making,” Fuller said.
“Additionally, we are prudently holding some ARPA funds in reserve in case we experience another nasty turn from the virus and, with it, the need to make additional investments,” Fuller said.
The city also faces more than $1 billion in long-term pension and retiree health insurance obligations, the mayor said. The city’s strategy is to fully fund those obligations over the next two decades — covering pension costs by Fiscal 2030 and retiree health care by Fiscal 2045, according to Fuller.
The proposed budget allocates about $52 million toward those expenses for the coming year, an increase of 9.6 percent, she said.
“Commitment to fully funding these long-term retiree liabilities is critical for our employees and for the City of Newton’s financial sustainability,” Fuller said.
In her presentation Tuesday, Fuller did not directly reference recent public discussions about a possible Proposition 2½ override to help support the schools’ budget in fiscal 2024.
She also did not address anticipated cuts of about 20 positions from the Newton schools’ budget next year, the search for a successor for Superintendent David Fleishman — who is departing at the end of the school year — or upcoming talks with the Newton Teachers Association, which represents more than 2,200 workers.
School officials and Fuller, who is also a member of the School Committee, worked to reduce what Fleishman initially said was a $5.2 million shortfall last month. Fuller tapped about $1.5 million in federal aid to help ease the schools’ budget gap for fiscal 2023, but resisted calls to cover the entire shortfall.
Fuller has said the fiscal 2023 schools’ budget, which is $8.9 million higher than 2022, received one of the largest single-year increases in Newton’s history.
Fuller and Tamika Olszewski, School Committee chair, have indicated that a tax increase would be needed to support the schools’ budget for fiscal 2024.
“At some point soon, we are going to be looking to you 24 city councilors to be our partners in supporting an operational override,” Olszewski told colleagues during an April 13 City Council meeting.
Fuller, during a School Committee meeting a few days earlier, said she is trying to address the city’s issues.
“I, too, am trying to juggle all the needs that we are facing ... and I would say, set us up, for next year, [when] we have the confidence in the system and in our leadership to possibly go to our voters and say, ‘Hey, it’s so tight ... in lots of different areas, including our schools. Will you consider joining us [in] thinking about funding some things in the Newton Public Schools so that we’re in a better position for FY24?’ " Fuller said at the April 11 meeting.
Fleishman will be leaving at the end of the school year in June to head up Jewish Vocational Service in Boston.
Fleishman, who has served for 12 years as superintendent, is the city’s highest-paid public employee — he earned nearly $355,000 in 2021 — and plays a strong role in planning public spending in Newton.
The School Committee last week said it would identifying and selecting an interim superintendent for the 2022-23 school year over the next several months , according to a statement.
Olszewski will appoint a small working group to identify prospective interim superintendent candidates and recommend finalists to the School Committee for interview, the statement said. The interim superintendent would serve for at least one year.
“There will be a variety of opportunities for community feedback after finalist selections and prior to a vote on the interim appointment,” the statement said.
John Hilliard can be reached at email@example.com.