[Zac Bears]: Committee of the Whole, meeting notice, Tuesday, June 7th, 5.30 p.m. There will be a meeting of the Medford City Council Committee of the Whole on Tuesday, June 7th, 2022 at 5.30 p.m. The purpose of this meeting is to discuss the fiscal year 2023 city budget. City Council has invited Mayor Breanna Lungo-Koehn, Chief of Staff Nina Nazarian, and Finance Director Robert Dickinson to attend. City council may move to enter executive session if discussion is required regarding topics outlined in mass general law chapter 38, chapter section 21A1, 21A2 and or 21A3. If such a motion is approved, the chair shall, as required by mass general law, state the purpose of the executive session and announce whether open session will reconvene at the conclusion of executive session. For further information, aids and accommodations, contact the city clerk at 781-393-2425. Mr. Clerk, please call the roll.
[Adam Hurtubise]: Councilor Karygiela? Present. Councilor Collins?
[Kit Collins]: Present.
[Adam Hurtubise]: Councilor Knight? Present. Councilor Scarpelli? Present. Councilor Tseng? Present. President Morell called me to meet, she's running late. Vice President Bears?
[Zac Bears]: Present. Six present, one absent. The meeting is called to order. So we are here today to discuss kind of the top line numbers around the fiscal year 2023 budget, which is due by June 30th. We've invited the city administration to make a presentation. We are joined by Mayor Loco Kern via Zoom, as well as Chief of Staff Nazarian and Finance Director Dickinson here in the chambers. I'm happy to defer to the administration to make a presentation before we ask questions as a council. Perhaps if we want to go to the mayor first or hear from the mayor.
[Breanna Lungo-Koehn]: Thank you. Thank you. Sorry, I was just trying to unmute. Thank you, Vice President Bears. As you said, we have Nina Nazarian, Chief of Staff, Bob Dickerson, our new CFO that I'd like to introduce you to and welcome tonight. I also wanna just point out we have Sean Goldrick from CLA, as well as I thought I saw pop on Molly Kivy, who is our federal funds manager on the call. I have a three to five minute just update for you, and then I'm gonna turn it over to the experts that I've been working through this last week, especially with. So thank you for your patience. President Morell and city councilors, thanks for the opportunity tonight to discuss the fiscal year 23 budget. As it stands now, I wanna provide the council and members of the public with some important updates about our ongoing fiscal year 23 budget preparations. I hope to be able to return soon and provide further clarity and some additional information about our final budget proposal. This year marks the third city budget we have submitted for the city council's consideration. I'm proud that we've been able to completely overhaul the budget and how it's presented. I'm proud that despite an economic downturn and a global pandemic, we have presented budgets that protect the city's long-term financial health. So much so that our bond rating agencies continue to hold Medford's financial outlook as stable and with strong ratings. At this time last year, we had just received more than 40 million in federal ARPA funds and we're in the process of evaluating how those funds could be used to help offset costs and replace lost revenue. Based on the interim guidance and on our revenue loss projections, we were able to use $12 million in revenue replacement with APRA funds for our fiscal 22 budget. Our expectation was obviously that we would have to wean off this revenue replacement gradually over the next three years. The unfortunate reality, however, is that the city has been calculating and checking its ARPA allocations, and as recently as last week, received updates that impact our fiscal year 23 outlook and planning. As of last week, based on ARPA guidance and on our revenue projections, our deficit for the fiscal year 23 budget was over $8 million, because we can only use 4 million this year, fiscal year 23, for revenue replacement. In planning for fiscal year 23 our expectation was to be able to use about 8 million from opera for revenue replacement, however we recently learned that a $3.4 million donation to the library is being categorized as a revenue source and ultimately what we can use in revenue replacement to approximately $4 million. As an example, other cities that have recently done a debt exclusion or override are having to calculate that as revenue replacement and are in the same boat as we are. With only 4 million in ARPA funds available for revenue replacement, we have to be strategic and very conservative to present a financially unstable budget. I have asked department heads to reduce their requests for increases to the operating budgets as much as financially possible and to the best of their abilities without impacting services. We've also made the difficult but necessary decision to cut vacant, some, almost most of vacant positions from our budget, which you will hear about in more detail during the budget hearings. Next, with regard to our schools, we will be able to provide 69 million, which is represents a 2.5% increase over fiscal year 22. Finally, in order to present a fiscally appropriate budget, we will need to use approximately $3.5 million from free cash. This is not a consideration we make lightly, nor is this a practice we can become accustomed to. This is in line with what our revenue replacement number would be, but for the large donation. Relying too much on free cash will jeopardize our bond rating and negatively impact our ability to borrow for future projects like a new fire station. Fortunately, our free cash number has been built up. This means we can use some free cash to support the fiscal year 23 budget, but we need to be conservative doing so as we will need to also rely on it next year. Over the last three budgets, we have been strategic in our practices to provide necessary services that counteract the negative impacts of the global pandemic and charts the city on a course towards long-term financial stability. We built up our reserves through careful planning by creating the city's first ever capital improvement plan and to track larger capital items. And much of our reserves are also based on the city's ability to have shift costs to cares in FEMA over fiscal year 21 and 22. Despite economic interruptions and uncertainty, we were able to significantly build up the city's free cash, providing a significant and necessary increase to our schools and add or restore positions on the city side in our fiscal year 22 budget. While this makes our ability to use free cash for this budget feasible, I wanna be extremely clear that we are anticipating at least two more years of significant challenges when it comes to the city's budget. We cannot utilize more funds from free cash to deepen the city's budget deficit. We anticipate that the next two fiscal years will be just as challenging, if not even more challenging than fiscal year 23. We project revenue replacement from ARPA will only allow us to use anywhere from zero to $4 million next year. And again, we cannot jeopardize the financial health of our bond rating by spending down free cash too much. Nor can the city afford to build its operations in a way that exacerbate the fiscal challenges we are presently facing. I know we are late in the process to be presenting this information to you. In light of the updates we continue to receive, I wanted to come before you tonight to be as open and honest as I could, and we'll continue to do so. Through all of this, I ask that you keep in mind that this is the first time we have been through a global pandemic. This is the first time we've had 48 million allocated to the city, and have had to navigate initially with a lack of federal guidance, then an interim final rule, and now hundreds of pages of federal guidance. This pandemic is the first time we've had to calculate revenue replacement figures. Through all of this, we have prioritized spending in the areas where it has been most needed. We made a huge investment in our schools, thankfully in fiscal year 22, because our teachers and our students needed that investment the most. We made an investment in restoring positions on the city side to continue to ensure and grow our central service delivery. This is certainly not the scenario I had anticipated putting before you, but it's the reality we are faced with and the reality we are preparing for. We always hope and plan to increase budgets to advance new goals and ideas. While we need to significantly tighten in our budget this year, know that this will not stop the city from making progress. We are and will continue to do all we can to protect our city's financial health while moving the city forward. Thank you. I'm gonna turn it over to our chief of staff, our CFO, and I'm not sure if Molly's on, but Sean from CLA.
[Nicole Morell]: Thank you, Madam Mayor. It's my understanding we only have you for a short amount of time. So are there any questions from the council for the mayor as we have her?
[Breanna Lungo-Koehn]: Thank you, Madam President.
[Nicole Morell]: Thank you, Madam Mayor.
[Bob Dickinson]: Okay, you can do that. Okay, microphone.
[Nicole Morell]: Yep, it's on.
[Bob Dickinson]: It's on, that's good. So, we've got fiscal year 2023 budget.
[Nicole Morell]: Would you mind, could I just ask you to, it's probably for a lot of folks watching, it's their first time seeing you, if you could just briefly introduce yourself.
[Bob Dickinson]: Hi, my name's Bob Dickinson, I am the newly appointed finance director for the city of Medford. So fiscal year 2023 budget. I have this in front of you. I don't actually. Oh, I don't think this will work. I'm more used to Shure SM58. Anyway. No, it apparently doesn't like me. All right, I'll try to get up on it as much as I can. All righty. So as we can see, it's much better. To begin with, we had a $71.8 million request from the school department, which is a significant rise over fiscal 22. The city departments were looking for another $2.6 million in spending. And of course there's fixed costs that go into this we had 3.165 million that increase that's. The total of the increases actually some of the workers comp for instance actually we managed to decrease that budget slightly. Based on. things that were actually settled in the prior fiscal year, but insurance, pensions, and MWRA charges all went up this year. We can't do anything about those. Those are fixed. Then use of one-time funds. We've been basically covering a lot of this stuff for the last two years with funds that aren't necessarily going to continue. So that's the basic problem that we're facing right now. If we could move to the next slide, please. You asked for a revenue summary. This is where all the money is, should be coming from. And that's what we're looking at. So, another copy of this. I can't actually see the screen.
[SPEAKER_02]: You gave them all away.
[Bob Dickinson]: So, the top numbers come directly from our former assessor. She's fairly confident in them, 132,910 property taxes. The local receipt number, when I looked at all this stuff, it was much lower for fiscal 2022. We have some new revenue sources such as parking revenue should be dramatically increased this year. Hopefully motor vehicle will rebound somewhat. I'm still massaging these numbers trying to figure out exactly where we will be. For this $18.5 million when Ellen, the assessor, sent me this stuff, she was predicting more like 17.5. I think I can probably justify to the state $18.5 million that's in our calculations for the budget deficit that we're facing. I'm not comfortable going any higher than that. I've done a basic recap, filling numbers based on what I have, and that's pretty much where I'm standing on that. State aid, that's directly off the cherry sheet estimates. Enterprise funds, that comes from the budget. Sale of lots, we've been doing that every year. That's the updated number for this year. And we put in ARPA revenue recovery for $4 million. Total revenue, 212. Then you take out the state assessments and the overlay, and we're looking at $198 million, roughly. So this is just, in the face of this, we asked all of the departments to basically level fund, cut anything that they possibly could. Right now, we're at $1.6 million off of their original requests.
[Nicole Morell]: Mr. Dickinson, if I could, just in case I'm embarrassed.
[Zac Bears]: Thank you. Sorry to interrupt. Just the $198,676, that is not inclusive of the free cash allocation, correct? No. OK, thank you. Sorry to interrupt. I just wanted to make sure.
[Bob Dickinson]: Oh, no. Interrupt away.
[Nicole Morell]: And as I have you pause, are you able to send, or Nina, could you send this presentation to the clerk so we can include it in the minutes? Thank you. Please proceed.
[Bob Dickinson]: So, I mean, this slide is simply, this is what we have done so far in hurried meetings with department heads. There are many positions that were unfilled that we said, okay, well, we can't fill them. Given the budget constraints, if you don't have those bodies, then we're not gonna be able to hire them. That significantly affects the police department and the fire department. But there you have it. If we don't have the money, we can't pay the payroll. So here's a sort of expense summary and what we're looking at from these numbers. Obviously, the sewer water budget, that's a separate thing from the general fund and will be funded through water rates. You don't want those to go up too much and there's not a lot you can do about it because the MWRA decides how much they're gonna charge us for all the water we're gonna consume. And that's it, pensions, compensation, insurance, debt service. Those are all numbers that are pretty much set in stone. And then we have the mayor's recommendation for the Medford Public Schools that gives us roughly $200.8 million. So the reason for a lot of this and a lot of the problem that I coming in as an outsider looked at and also talking to our consultants, the people who have helped me put together the state reporting for this year, In the past, looking at prior recaps, the city has been spending roughly, you know, in the $2 million range out of free cash to cover the budgets. Going forward, fiscal 21 was actually, the total was actually nearly $6 million. That's a significant increase. That was about 5.2 in base budget, then 700 was taken out, but then at the end of the year, there were budget deficits and we needed to cover the snow and ice deficit. That was $1.1 million coming back in. That's the 5.96. Last year to make ends meet, we used $12.3 million in revenue replacement from ARPA. This year with free cash at 3.5 and revenue replacement at $4 million, That's $7.5 million. These are funds that are going to run out. The problem is, this creates a structural deficit. Right now, free cash is pretty good, we think. The state should be working on that shortly, and we should have a final number soon, I hope. The problem is with free cash is that the way you get that, obviously, is making more revenue than you thought, spending less money than you thought. Looking at years prior to this, this problem is compounded by the fact that during the COVID years, during the pandemic, a fair amount of expenses, police overtime, for instance, could be paid for by FEMA and CARES Act money. Were all those expenses actually due to the pandemic? Well, you can, well, right. That's the real problem with, and this is something that I want to look into more, but if those expenses, there's a lot of things that can be classified as FEMA CARES ARPA expenses. So we can use the money to cover them, or we can shift expenses out of the general fund into those special revenue funds. The problem is, are those really things that once the pandemic disappears and we all can take off our masks forever, will those expenses suddenly go away? Some of them obviously will, but others may not. So if we're moving money out of the general fund and putting it against FEMA CARES and ARPA, then that creates a turn back in the general fund that adds to free cash, but that's why our free cash number is going up. We can't expect that to continue. So that's what we're facing right now. So in talking to the mayor and talking to the chief of staff, looking at what I can actually put on the recap next fall, that's where we come up with this budget deficit and looking at the future, We want to make sure that we're actually tackling this problem now, because if we don't, it will only compound itself, and three years from now, we'll be in a serious state. Now, hopefully, revenue will be robust. Hopefully, everybody's going out to dinner and staying in the hotels, and those numbers will come up. People are going to buy new cars, hopefully. But right now, looking at what I'm looking at, I can't predict that. It's also very difficult if you have, when you're a numbers guy like me, if you're looking at revenue for the past five or six years, and two of those years are complete outliers because of the pandemic, it's very hard to predict, to make a good prediction on the numbers that I can look at. So, want to be reasonably conservative, as I said, that $18.5 million in local receipts, I think I can probably justify that come this fall. But I don't see that there's any more leeway to increase the revenue side. And that's the point we're trying to get across. If we don't have the money, we should be looking at making these cuts now so that when ARPA money runs out, when free cash, we certainly don't want to compact free cash too much because that will affect our bond rating going forward. We want to keep a large amount of money still in free cash. Looking at Medford's finances, Medford doesn't have any stabilization funds or anything like that. So basically the number of the free cash is the emergency fund. That's what you would use, say, if something floods and the schools all get flooded out, if the Mystic River floods, you need to keep that money there, not only for bond rating, but for emergencies. And so that's the picture I'm seeing right now. Looking at spreadsheet errors, okay. Total available for budget is,
[Nina Nazarian]: I don't know if it's an issue with enterprise or if it's an issue.
[Bob Dickinson]: It's an issue with enterprise. This is why when I'm presenting this next year, I want to take the enterprise. There's a slight spreadsheet confusion because of the enterprise fund money on the recap slide. So that's where it's coming from.
[Nicole Morell]: Thank you, Mr. Chair. Does that conclude the slides you have for us tonight? Does that conclude the slides you have for us tonight? I just know it's counted as a question, so I just want to get to that. Vice President Bears, and then Councilor Caraviello.
[Zac Bears]: Thank you, Madam President. I have several questions. First off, kind of go from clarifying to bigger picture. I'm seeing a total FY23 expense summary of $200.89 million. revenue at $198.67. So that averages out to about $2.2 million. The mayor mentioned $3.5 million in free cash. Is it really $2.2 million?
[Bob Dickinson]: This is exactly what Nina just brought up. The revenue I put in for the Enterprise Fund is slightly inflated because of the Enterprise Fund will be The enterprise fund will be actually funding indirect costs for their pension workers comp and indirect costs for the services that the general fund actually is paid for. It was about a million dollars last year, maybe a little more than that. Right, it was 1.55 last year. That is calculated, and when I do the summary spreadsheet and look at the numbers I can put in for the recap, that's all calculated through that, which is where that shortfall number comes from.
[Zac Bears]: OK, so if we add those indirect costs, that would pull the revenue down, and then we're looking more at the $3.5 million number? Sorry. basically 2.2 million, the difference on here, plus those indirect costs is going to give us 3.5 million. Yes. Um, second question. I know you said that we're waiting on the state for expected free cash. Do you have an expectation on end of year transfers?
[Bob Dickinson]: Um, as of yet, we do not. Um, I know that's a priority and I will definitely be working on that, but I, we don't have a number for that yet.
[Zac Bears]: Do we know, um, Do we expect that we're going to have to go into free cash to cover deficits at the end of this fiscal year?
[Bob Dickinson]: Well, one of the things that I did put on this, we have a snow and ice deficit of $905,000, which would have to be covered either by free cash or has to be raised on the recap. I know that. Whether or not we would have to cover other things, I haven't had the chance to actually scrutinize what the expenditures summaries are understood.
[Zac Bears]: It's just that there have been a significant number of vacancies for large portions of the fiscal year. And, you know, it may be a little bit of help in the at the end of the day but if our end of year transfers could at least cover potential FY 22 deficits if not maybe there's some leftover that could go into free cash that would obviously be
[Bob Dickinson]: Yeah, that's an important. Yeah, I'm looking at turn backs for this year preliminary capital calculations. This is just very rough on my on my end. Would say that probably a significant there's probably enough money there to cover things. and actually add some to free cash. And I believe because the revenue estimates for the 2021 recap were so conservative, hopefully we've exceeded our revenue numbers. But I have to go through 2022 and really look at those. Because there was a substantial amount of cleanup that needed to be done just to get the audit underway. which incidentally, hopefully we'll have everything into the auditors this Thursday. And obviously the state reporting too, so we could get our free cash numbers. So then I'm going to have to clean up 2022. So it's going to be a lot of sitting in front of spreadsheets for me in the next couple of months.
[Zac Bears]: Got it. Are we going to have a relatively clear picture by June 21st?
[Bob Dickinson]: I would say yes.
[Adam Hurtubise]: Okay. Definitely.
[Bob Dickinson]: That's a high priority, I know.
[Adam Hurtubise]: Yeah. It's June.
[SPEAKER_02]: I know it's June. I'm sure you know. Everybody here knows it's June.
[Zac Bears]: In terms of linkage, do we know the balance in our linkage accounts? Is that included in local receipts? Is that factored into this in any way?
[Bob Dickinson]: No, it's not.
[Zac Bears]: Okay. On the education budget, I'm seeing the 69 million figure. Last year, I think the appropriation or the total amount was 68.1, but only 63,724 came from the general fund. Yes, I have two questions on that of the 69 million recommended for this year, how much of that is general fund.
[Bob Dickinson]: That's all general fund.
[Zac Bears]: So we're moving from having, you know, I guess this last year, it was the general fund was 63724 but the total amount was somewhere in the 68. Was that balance covered by ARPA funding last fiscal year in fiscal 22. Yes.
[Bob Dickinson]: Okay, because we significant amount of it was covered by ARPA funding.
[Zac Bears]: So we're moving, so we're moving all of all of that 69 million is now going to be general fund. Yes. I guess my question, that leads into my question about ARPA. So last fiscal year, we approved 8.6 in ARPA revenue recovery.
[Bob Dickinson]: And then the additional to bring it up to the 12.3 was the money that we gave to the school.
[Zac Bears]: Okay, so how much ARPA money have we expended so far at the total allocation?
[Bob Dickinson]: That I, is Molly on there? She's not. Okay. I'd have to get back to you on that. Okay. You know, there's a significant amount of ARPA money left. I know, but... Any ideas on that? We did the 12-3 and then we had to move, moved a bunch of... I'm kind of looping it all into... not only ARPA, but FEMA and CARES, which we're still trying to clean up from the prior two years so that all that's recorded and recorded correctly.
[Zac Bears]: And I guess the question really is, part of this question for me is, I don't believe that we ever approved the appropriation of 4.2 million to the schools. We just approved this 8.6 here. And it may be a question for the chief of staff. I don't know if the mayor is still on. Is it the position of the administration that all ARPA funds must be appropriated by the mayor and then approved by the council or not?
[Nina Nazarian]: I need to look into that question to get back to you, but I do recall seeing the paper that was approved by the city council back in June of 2021, which did include the 8.6 million as well as the 3.7 million.
[Zac Bears]: Okay. I'd have to see that just because I was looking at the records from those meetings and the three, the 8.6 was certainly in there, but I had not seen anything around the additional money for ARPA. And my understanding was it was just a 63,724 that was approved in the general fund for the schools.
[Nina Nazarian]: So it would obviously be the opinion of this Councilor that
[Zac Bears]: we would think that the ARPA funding should be approved by the council, appropriated by the mayor and approved by the council, no matter what it's spent on.
[Nina Nazarian]: I'm happy to ask that question of council.
[Zac Bears]: Thank you. I heard something prior to this meeting about that debt exclusions and overrides are counting towards revenue in the ARPA revenue replacement calculation.
[Bob Dickinson]: Yes, I believe they are. I'm not sure about, The debt exclusions, yes, they would be. So yes, if there was an override, then that would increase your revenue. That's a one-to-one against your, whatever you can use for revenue replacement.
[Zac Bears]: Right. So, I mean, we wouldn't lose the money, but we wouldn't be able to use it for revenue replacement. Right. So if we were to try to take that approach to avoid large cuts, we would need to basically do whatever we were going to lose in our revenue replacement plus the deficit. Right. Yes. Okay. That's helpful to know. And my last two points. Mr. Mr. Dickinson are really not nothing you could have done about it. This council has been asking for more regular communication on a number of financial issues on really the entire financial picture of the city for certainly since January and if not for the past two and a half years, we've passed a number of resolutions. requesting Warren articles quarterly updates, really just making sure that this council with its duty to, you know, approve amend or reject a city budget. is informed and through us that the people of the city are informed and we have not received the response that we've needed. And now it's, as you noted, everybody knows it's June. We're at the 11th hour of a budget finding out about a number of issues that, you know, we've been trying to communicate about for months. I understand that you're new to your position. You weren't here when we passed those resolutions, but on a going forward basis, I believe this council needs a lot more communication on a much more regular basis about the financial health of this community, given the position that we now find ourselves in, which is very difficult one. And I'll also add that if you look at neighboring communities with the property value increases and the level of demand for building. If you look at the work of this council to create a new zoning ordinance that creates a lot more opportunities for smart development in this community. we could be two and a half years ahead on a lot of development in this community that could have raised a lot of money that we could have much higher new growth numbers. And we could be seeing a much better picture right now. And instead we don't have marijuana shops licensed. We have multiple large developments held up in court cases that are really unlikely to succeed. And beyond that, we have a zoning board of appeals that is not approving which seemed to me to be no brainer projects across the city that would bring a lot of new growth in a smart way to this community. And I think from the lack of us getting the communication we need to the lack of action there, those are major reasons that we're in the budget position that we're in. There are 351 communities across this Commonwealth that have experienced a pandemic, 351 communities that are dealing with ARPA revenue replacement calculations. And I haven't heard of many of them that are in the position that we are in here today, at least not in this, at least if they were in this position, they knew about it significantly before June 7th. So I find myself deeply frustrated with the state of affairs. And I think that the people of our community deserve a lot better. So that's just where I'm coming from. Those are my questions. Thank you for answering them. I'm sorry that our first time meeting is under these difficult circumstances, but that's a real frustration for me. So thank you, Mr. Dickinson. Thank you, Madam Chief of Staff. Thank you, Madam Mayor.
[Bob Dickinson]: If I may, I'm a numbers guy. As far as I'm concerned, the numbers that flow through my office, that's public record. If you want to know them, call me, and I will get them to you. If we want to set up something more formal where we have quarterly reports, we can do that. You should be informed. I don't feel like hiding information like this does nobody any good. We want quarterly reports, revenue expenditures, where everything is, what we're seeing, then you should have that.
[Zac Bears]: I appreciate that. And again, these were resolutions that we sent out in January. You were not here to hear them. I don't know if you received them after you were brought on board. And I appreciate the collaborative and communicative approach that you just outlined. Thank you.
[Nina Nazarian]: Chief Sack? I just want to clarify one thing. I appreciate finance director Dickinson for bringing that up. I think that's, you know, I certainly agree with that. I just want to clarify one thing. The city hasn't had the, hasn't had the finance. I know the city council knows this, but hasn't had the finance director position filled for some time. We've not been hiding anything. I just want to make that clear. So in, in, alignment with the finance director. Obviously, we want to make sure the city council is getting that information and happy to chart that course through Bob. Thank you.
[Bob Dickinson]: And I appreciate that. I should have brought that up. That's obviously true.
[Zac Bears]: No, I appreciate that. But the position was empty for 10 months. And I think we're seeing some of the impacts of that. And then it has nothing to do with you, Mr. Dickinson coming in at the time that you did. And it seems that you've done to quote a former member of this council Yeoman's work in the short time that you've been here to get things in order. But there was a significant gap in staffing and I think we're seeing an impact of that.
[Nicole Morell]: Councilor Caraviello.
[Richard Caraviello]: Thank you, Madam President. Maybe not so much question for you, but maybe Nina. So we have a number of unfilled positions in this building, in the municipal center. Are we planning on filling those under this budget?
[Nina Nazarian]: I'm attempting, Councilor, Madam President, through you to Councilor Caraviello, I'm attempting to reconcile in my head which positions specifically.
[Richard Caraviello]: Well, we have a veteran service director, you have an IT director, we have an assessor.
[Nicole Morell]: Yeah, there's a number of director level positions.
[Richard Caraviello]: Yeah, so facility manager. So are those positions included in this or are we gonna go through the year without filling those positions?
[Nina Nazarian]: No, I mean, so this is true of, other municipal communities. This is true of other employers, obviously, but in particular, in the municipal sphere, there are specific shortages in specific positions as far as qualified candidates. That is largely why it's taken the city as long as it has to find a qualified finance director. That is the same case in some ways, but we're interviewing for all the positions you mentioned. I'm happy to say that I anticipate that we'll actually have a veteran services director beginning next week. Um, I'm happy to say that we have, I believe all of the jobs that you have cited that are posted and we're in the process of interviewing. Those are high level department head positions. Obviously we need that leadership in those departments. It's critical for our organization. There's no two ways about it. Um, and the same goes for a number of, if we have vacancies and other positions we've done.
[Richard Caraviello]: Well, my question is, is the intent to fill those positions under this budget?
[Nina Nazarian]: Absolutely. We have, I really don't think there's a scenario where we can't, we don't do that.
[Richard Caraviello]: And are we, will we be hiring policemen and firemen? Are we holding back on them?
[Nina Nazarian]: At this point in time, based on the adjustments we've made, we have had to make some reductions to positions that have been vacant. Yeah. But at this point in time, we have not. We have not proposed any reductions in existing staff. And we hope that that's where we stand.
[Richard Caraviello]: I mean, I think we, I think we can all agree in this room that this, uh, the municipal, I mean, the government is pretty much working on the skeleton group. I don't disagree. So, uh, you know, when people talk about cutting on, on this end, I don't, I don't know, I don't know where you can think you can cut anything on, on, on, on, on, on the municipal end of the budget. But that being said, and I want to expound on what Vice President Baez talked about. We're on a third year under this administration, and we don't have a shovel in the ground. And Councilor Bears talked about how other cities, Baldwin is under COVID developed. Somerville is developed. So we're like the last game in town, but people don't want to develop. Like I said, we're on our third year. We don't have a shovel in the ground on any project. And as the vice president said, we've got a board that's fighting projects when we should be embracing it. I mean, if some of the projects that were proposed that are in court had gone through, they'd be up and built now and our deficit is pretty much wiped out. considering what they pay in taxes now and what they'll pay when the building is up. We sat around on the marijuana thing, long after it was approved to get it up and going. We still have two more licenses we haven't given out yet. Other cities are getting two and $3 million just on cannabis revenues. And we haven't gotten a penny yet. I mean, that's really, This city has done nothing to look for ways to increase our property taxes or taxes in general. I mean, we sit around, we talk, we talk, we talk, but there's nothing happening. And I'd say all around us have developed, they're prospering, and we're sitting here with all these empty parcels of land or buildings that are looking to be sold. And again, nothing is happening here, which really is really what the problem is. That's why we don't have any extra money to spend. If we had any kind of half-decent developments over the last three years, we wouldn't be in this situation.
[Nina Nazarian]: President Morell, if I may. Madam Chair. Through you to Councilor Caraviello, with all due respect, I disagree. This administration has been in office for about two years and several months, not to be confused with three years. Also, I will say that the mayor had presented a budget proposal with an economic development director. I'm not sure exactly when that position started, but I don't think it's been throughout that entire time. So it took some time to get that position in place. I will also point out that the Cannabis Advisory Committee took a portion of the time that has I have seen been attributed to the mayor, which is not really attributed to the mayor. So with all due respect, I just want to kind of point out- We still have two more licenses we haven't given out that could be generating revenue. Those are actively being negotiated with all due respect. So I just want to point out a few different details from a different perspective.
[Richard Caraviello]: I don't understand why other cities around us have done stuff during the pandemic and we've really done nothing.
[Zac Bears]: Point of information.
[Nicole Morell]: Point of information, vices and mayors.
[Zac Bears]: Did the mayor appoint the current chair of the Zoning Board of Appeals?
[Nina Nazarian]: Admittedly, I don't have that off the top of my head.
[Zac Bears]: The answer is yes. And are we going to, is there, I don't even know how to ask this question. How long are we going to continue with the legal challenges to the 340B developments in Lane Court? Are we just going to continue those until we get a negative outcome? Or do we expect, is there any expectation from legal counsel that we are going to win those cases?
[Nina Nazarian]: President Merle, through you to Vice President Bears, I'm never going to stand here and tell you something I don't have the answer to. And I'm not prepared with that answer. There are areas of my work that I focus on specifically, because obviously there is a lot to be done. And so I'm happy to go back and find any answers for you, but I will never stand before you and state something I don't know the answer to.
[Richard Caraviello]: Thank you. I just think, you know. My concern is that the building wave is going to end and pass us by, and we're going to be left with nothing. Instead of embracing this hot market, we haven't embraced it. Again, I think that's part of the problem too. Why, you know, why, you know, say, that's where we get our extra money from, you know, to do these things and say I don't think I said they come to visit, you know, even if you did those those three that were fighting relentlessly in court. I know one of them is, is through the court now just waiting for a decision, and most of the time they don't go in the city's favor. They say, especially when the state is already ruled in favor of the developer. I don't see the state changing their mind and going in a different direction. But that's where my disclaimer is. We had avenues to get money, and we didn't take advantage of them. And again, that's not your fault. It's not your fault. But again, just the way it is.
[Nicole Morell]: Thank you, Councilor Caraviello. We have a number of Councilors who want to speak. I just have one housekeeping question before we get to that. When can we expect a full schedule of availability of the department heads? I know that's been promised to me for a number of days. I have residents asking when we're scheduling these meetings. You know, we've got part of a, you know, a few sheets of a budget in front of us. I think for us to continue this process in earnest and allow the public the engagement they deserve, we need to know this information.
[Nina Nazarian]: Absolutely. Thank you, President Morell. It's certainly a fair question. Plenty of fair questions around today. We understand that you've shared some dates with the mayor. We're going to reconcile those dates tomorrow. We're going to have an email to President Morell tomorrow.
[Nicole Morell]: Okay, just, yeah, and what I, you know, what I had spoken to the mayor about is making sure that we're scheduling meetings at a time at which the public will be awake, you know, can engage. I understand there are scheduling limits of our department heads, but we want to make sure that the public can engage with these, you know, the most important departments that they want to hear from. So thank you for that. I have Councilor Knight, Councilor Collins, and we'll go back to Vice President Bears.
[Adam Knight]: Madam President, thank you very much. So, in fiscal year 21 we use $5.6 billion to balance the budget, and one time expected one time revenues. And I warned the council about our reliance on reserves, express the need for us to not be this reliant on using reserves and one time revenues to balance the budget, express the need to expand upon our public-private partnerships and to expand upon non-tax-based revenue sources here in the community. In FY22, we have a budget that's presented to us that asks us to expend $12.3 million in one-time revenues. At that time, I warned about our reliance on the need to use one-time revenue sources to balance the budget. I expressed the desire to see us increase our public-private partnerships. And I asked for us to come up with ways to expand our non-tax revenues. At that time, I questioned the city's ability as to whether or not we'd be able to climb out of a structural deficit this large. And I voted against the budget because I felt it was fiscally irresponsible. Here we are three fiscal years later, and we're looking at using $26 million in one-time revenues over a three-year period to balance the budget. We can't mortgage the future of this community. We don't know what our free cash is going to be. We need to take a look at that. One month ago, we had seven people from the administration begging us to bond a million dollars for sidewalk repairs and street repairs. And today we're broke. And today we're broke. So when I think about this and I think about the fancy budget book that we had, it was a very fancy, it was a very pretty budget book, but there was no money in the checkbook. There was nothing there. The presentation was great. It was lipstick on a pig. We talk about the budget award. That was a budget presentation award. That wasn't a fiscal management award. Let's be clear. So here we are three years later, and we're looking at $7.5 million in the hole. Councilor Bears hit the nail on the head. He took the words right out of my mouth. I've been calling for quarterly meetings with the administration to go over the fiscal health of this community. I've been asking as to where we are on a quarterly basis with revenue collections based upon forecasted revenues. How many times has it happened in the past year? I know how many. One. Once. One time. One time. And that has nothing to do with this gentleman here. This gentleman is a fixture of the administration. If he wasn't able to do it, the administration should have put somebody here to do it. Because now we're in a position where they're asking us to hold our nose and approve a budget that we haven't seen yet, but that's going to ask us to spend $7.5 million in reserves. Gentleman in his presentation mentioned something so we're going to see revenue increases we're going to see a lot more revenue through a parking program. I don't think the intent of a parking program was to be punitive and I hate to see this budget balance on the backs of the residents in this community that happen to drive motor vehicles parking lot of public works. So I don't think we need the parking managers jumping out of the sky to generate 7, 8, 9, 10 million dollars of revenue like it was a neighbor communities like some of the Cambridge. All right, I think we were doing just fine, and we're doing just fine right now. So I don't wanna see that be used as a tool for us to balance the budget by saying, just ramp up enforcement. Let's just get some more tickets out there on people, and we'll be able to balance the budget. I don't think that's right. I don't think that's what the intent of a government budget is, right? We're here to provide services. So when the question's asked upon us as to whether or not we wanna spend the $7.5 million in one time revenues, right? That's what we're gonna have to ask ourselves. Government's here to provide services. I'd prefer to see a balanced budget, a budget that doesn't rely on $7.5 million of reserves, a budget that would rely on the more historic levels of $2 to $3 million of reserves, and then a supplemental spending package as the year goes on based upon forecasted revenues. But I'm just one member of this body. But I will say this. When we discussed the fiscal year 21 budget, I made these points. I predicted this. I don't want to sound like ConAp. But I said, this is something we need to be aware of. We're creating a fiscal, a structural deficit, and we're going to put ourselves in a fiscal crisis as years come forward. And the gentleman said it right. He said that is going to happen. He's right. We don't have a stabilization fund. We've always used our free cash and our reserves and our water and sewer enterprise fund as our stabilization accounts. And we've always said that we need to keep the levels in those accounts at a certain rate, at a certain rate, so that we can maintain viability with the rating agencies. So we're going to have a long discussion when this budget comes out. I appreciate the gentleman's presentation this evening. It certainly paints a harrowing picture. I'm not looking forward to the decisions that we're going to have to make over the next couple of weeks, because it's not going to be all lollipops and roses. And I think that that's something that we need to make very clear to the general public, that there are some hard decisions that are going to have to be made. And if we want to continue down this path with roads, they're in the condition that they're in, A DPW that's so significantly understaffed, you have two highway department members for each ward of the city. We want to keep increasing administrative salaries in the school department. We're not investing in the classroom where the money belongs. Then, this is the city we're going to have. But it's time for us to really sit down and take a look at this, because I think our spending priorities are way up. I think they have been. And I think that we need to use a little bit more fiscal constraints. I always feel as though it comes to a point when these budget debates start where the city council has to act like the adult in the room and say, all right, it's time to tighten our belts and make the hard decisions here. And this is not going to be any different based upon what I'm seeing there before us this evening. So thank you very much to the administration for the presentation this evening. And I do look forward to working with them to provide something that's going to provide the level of services that the taxpayers in this community deserve.
[Nicole Morell]: Thank you, Councilor Knight. Councilor Collins.
[Kit Collins]: Thank you, President Morell. And I want to echo the comments of all my fellow councilors who have spoken so far. And also thank you very much, Director Dickinson, Chief of Staff, for being here and for this presentation. I'm struggling to find the words for how it feels to look at the scenario that we're looking at. And I think that's something that's shared by everybody involved in this process, not just the councilors. But I'm so struck by how I feel that our city is so rich in plans, rich in plans for everything except for how to fund the things that we need to fund to keep this a livable community that people can afford to stay in, that people want to move to and stay in. comprehensive plan that I cannot wait to review and implement. We have a climate action adaptation plan. I cannot wait to review and implement a housing production plan. I cannot wait to review and implement. We have designs for a second phase of our zoning recodification that I cannot wait to begin. And this is a budget and a budget forecast that says austerity is in the future for the next conservatively three years. I feel like this has been on my mind since I began this term, wondering what is the plan for getting us to a place where we can start talking, where we can start talking about doing the things that we talk about, that all of us in every branch talks about when we campaign for leadership in this community. And I haven't seen that plan. And I also think that, you know, to Councilor Knight and others and the points of others, It's difficult to be getting this picture so late in the month, not only because it's not really enough time to, especially for myself, it's the first time sitting in this chair, to digest, to do my homework, to research, to figure out what to do, but also because this budget process should be more meaningfully shared flow between the executive branch, the legislative and the community. Every week I hear from constituents who say, I genuinely don't know. Why is it that our roads are like this? Why is it that we don't have an office of housing stability like Somerville does? Why haven't we redone the high school yet? And it strikes me that there are these major barriers in knowledge of the city's finances within this building. And that affects our ability to communicate to our residents, to the people that we represent, why things are the way that they are and really what it will take to get there. And I think that there are some revenue improvement strategies that the community needs to be extremely meaningfully involved with that I would be a strong advocate for. And I'm talking about prop two and a half. And that's because I wanna be a community where people are genuinely supported and where they're seeing around them the things that they wanna see. And this isn't a conversation about prop two and a half, but I bring that up in that I feel that We have so many outlines at our disposal for prioritizing the things that need to happen in the city, except for that roadmap for after we implement these budget cuts this year and the next year and the year after that, what next? That's my question, what next? And I know that this month is all about knuckling down and figuring out how to fund the next fiscal year. But after that and during that, and I know this is a priority that's been the priority of this council for many years preceding me, has got to be prioritizing getting a plan for figuring out how we can implement and legislate the changes to our community that we really need to see and that constituents ask for every day. Thank you.
[Nicole Morell]: Thank you, Councilor Collins. Vice President Bears. Councilor Tseng.
[Zac Bears]: Thank you, Madam President. Something I found incredibly shocking that illustrates I think the point that Councilor Collins made. And again, it would take us time and other communities certainly have a head start. But Somerville has 73 planning staff and 33 housing staff. That's 106 people addressing those key areas and key crises. Medford has five. So if we wanna start talking about providing the level of service that people in this community demand, I think we just need to start putting those out there when we hear them. I have two more sets of questions. One just regarding layoffs or potential for layoffs and the other regarding the council's budget priorities that were set up. Regarding layoffs. We've seen from Medford public schools that basically their minimum to avoid any layoffs is 70.5 million. And that was 69 million they're likely to see layoffs in fiscal 21 we also saw that the only part of the city that actually laid off current staff was the Medford public schools. Does the 57 million. Obviously there's a lot of vacancies removed but do we actually expect any layoffs on the city side with the $57 million appropriation for the city departments I believe it was 57 57 731. Yeah. At this point now, at this point now so if there are layoffs they're likely only to be on the school side of the budget not the city side of the budget. I'm just saying it's, you know, every time, every time we're in this situation the schools are laying people off. I'm, you know, I don't even know that we eliminated vacancies and FY 21 I can see that we're doing it now but at certain point, you know, I'm just saying people are going to notice that. And people have noticed that. So, just want to make that clear that that likely no layoffs on the city side with this appropriation but there is a potential for layoffs from public schools. The city set up five budget requests. Number one was in the law department, I'm seeing here a top line cut of about $, does this budget include an assistant city solicitor full time. No, it does not know assistant city solicitor Okay. We requested 50,000 to do phase two of the planning and zoning in concert with the comprehensive plan that's coming out as well as potentially the housing production plan. But I saw legislative top line cut of 2000 so is there no, there's no funding for the city council to do a zoning phase two.
[Bob Dickinson]: No, there is not.
[Zac Bears]: Okay, so that's two, three. Nina you just mentioned that need for department heads the value of our department heads the need for qualified leaders for a variety of reasons for the benefit of this community the city council took action to create an election department. But I see a top line cut of 54,000 in the election department is this budget include a fully funded department director in the elections department and at a department level calf I believe we requested calf 16.
[Nina Nazarian]: It does include a department level position but at this point in time, like many of our other budgets, where the city had priorities the mayor had priorities. based on my work and my recommendations, I had priorities that I was recommending to the mayor. We've not been able to produce or provide for any of those. You'll see tomorrow evening during discussions, we've been putting notations, and I think one of the notations dropped off, but There are a number of different priorities that we have for compensation that we had to also remove from our budgets. And I'm not speaking directly on the elections CAF, because I feel strongly that all CAFs need to be evaluated in conjunction with one another. That's my professional opinion more than it is anything. But I will say, of course, that we do have a department head level position there. Any adjustments would probably need to be considered at some later stage, because everything at this point has been funded at its as level possible numbers, considering the fact that we, the position, the financial position that we're in.
[Zac Bears]: So is the administration willing to potentially lose an elections department head two months before a state election by not appropriately funding that position?
[Nina Nazarian]: I don't I don't know that there's a there's an answer to that but I can provide at this point in time I seems like the answer is yes because the money is not included in the budget.
[Zac Bears]: Fourth was the building department there's an increase in the top line of $120,000. Does that include additional code enforcement stuff.
[Nina Nazarian]: No, that's based on tentative agreements that were agreed on by prior administration that are costing the city, a number of dollars that.
[Adam Knight]: When you say sustainable, you mean if you mean a collective bargaining agreement with the union.
[Zac Bears]: And our fifth request was the change of the head kind of dpw there's a top line increase overall 510,000. Is there any increase in the head kind of dpw in this budget, we have not increased any head. you know, less than $300,000 in recommendations that we sent up. The answer is none of them are funded at any amount.
[Nina Nazarian]: The reality of the circumstances through you, President Morell, the reality of the circumstances is we're trying to maintain the level service that the city budget has. In order to do that, we had to make some difficult decisions. Obviously, those included city council priorities, priorities of the mayor. None of those were incorporated into these budgets, including priorities of the department heads. I wish that wasn't the case, but that is the reality.
[Zac Bears]: Well, some of this is not about finding money or losing money. Some of it is just about reallocating money. And I can tell you that at least two of these priorities, even likely at the top line numbers here, could be funded within the existing top line. So it's not actually about the money in some of these cases. It's about where you want to spend the money as the administration versus what the council had priorities for. Now, we didn't come to you and say, we want to reallocate 20 million of the budget. 300,000 is what we asked for we asked for it. I think five reasonable things. Yes, we sent this to you before we heard about the budget issue, and so I can understand we're not gonna be able to increase the headcount and DPW, or we're not going to be able to add a code enforcement officer, but the law budget, the money's there for an assistant city solicitor, it's just that you want to spend it on something else. So, is that, you know, the elections department, you know, I mean actually there's a real cut here I don't know why. given the fact that elections are getting more complicated to administer. And the fact that we just got a bunch of new election material, you know, election supplies. I can't really see how we're going to do more with less there. But, you know, we have staff leaving that department, there's going to be vacancies there. Can we just saying we can't find the money to pay the department head in that department at a fair level?
[Nina Nazarian]: All I'm saying is, through you, President Morell, to Vice President Bears, what I'm saying is we have a finite amount of funds, we need to taper down the use of one-time funds, and we're trying to do- That's not an issue for either of these two.
[Zac Bears]: I'm saying that within the tapered amount, you could adjust some of the ordinarity expenses in the law department to provide the salary that we had in FY20 for an assistant city solicitor.
[Nina Nazarian]: As I've said before this council previously, I don't think that the city council is gonna get the level of support, the level of knowledge. And I can tell you that based on information I've received from the mayor, the city council body in years past has put forward one ordinance a year.
[Adam Knight]: I believe that at this present time- Point of information, that is absolutely, totally 150 times over false.
[Nina Nazarian]: I'm just, I'm just stating President Morell if I may continue. It's not factual sure that information can be checked, though we don't have to, we don't need anecdotal evidence but just to finish up my point at this present time. We have about 15 ordinances before the city council that are being contemplated. I just don't think you're gonna get that staff support with two full-time equivalents in the law department. That's just the position that we see from the perspective we're standing in.
[Nicole Morell]: And vice-president Bears, I understand. We have about 15 minutes left and councilors saying councilors have not spoken yet, so.
[Zac Bears]: Yeah, I'll wrap up and just say, this council presented five reasonable requests even in the fiscal picture that we're in now, to have none of them included in the budget, I think is going to present significant challenges as we move through this process. Thank you.
[Justin Tseng]: Thank you so much. Look, this conversation is not easy for anyone in this room. I know the mood is not amazing and it's always difficult to have these conversations. This council has, tried its best and is trying its best to be a partner with the city administration, as we try to advance shared priorities that we were all elected on when it comes to climate when it comes to the comprehensive plan when it comes to zoning, housing production, and the list goes on. And yet, we are trying our best, these, these priorities that we, that Councilor Bears, Vice President Bears was just mentioning a lot of these priorities are things that we need either politically or functionally in order to advance the mayor's priorities, to be quite honest, and yet we in and we've tried to keep these requests really reasonable, knowing that budgets are never easy and knowing that this mayor right now is not going to seek an override. Even, even though a lot of it is feasible. We're not seeing. We're not seeing a lot of it in this reflected in this budget, so bear with us as I hope you understand our frustration as a city council. And to add on to that frustration I think without quarterly meetings and without an open channel communication, frankly feels like we're being set up to fail here. I'm not having a budget book, not having detailed numbers within departments, except for the ones that we've gotten last on Friday, you know, it's difficult for us it's truly frustrating. And, you know, with this lack of transparency, you know, people are asking, asking, and the eggs on our faces, you know, all of ours, you know, they're asking if this is incompetence or if this is just disrespect to the voters and their constituents of the city. And, you know, it's hard to go out there and tell them, you know, we're trying our best and we're doing our best. And It's hard to tell them that when we, we don't as a council, even have a full picture of the situation. You know, I think for a lot of us, I can't speak for everyone here but for a lot of us, we only found out about the library donation problem last night at the city at the school committee meeting. And, you know, we would have appreciated if we had, if we were on the same page as you guys because we are one team we're, we're here to work together on this. To learn about it last night on a zoom call or on public access TV you know that's frankly disappointing and frankly very frustrating for someone who has been here and who has tried to work with this, you know, advance this mayor's priorities in the last few months, even to the chagrin of many of my colleagues here. But with that being said, I did have some quick questions. We've talked about layoffs and we've talked about not filling certain unfilled positions. We haven't really talked about a third dimension of the situation, which is losing existing staff. And over the last few weeks and increasingly over the last few days, I've received a lot of calls from people who want to keep working for the city of Medford, particularly in the school's department. talking about how they're outside of the district a contemplating career changes. Now, this is an effect that isn't a one-year problem. This is a multi-year problem, and this is something that will affect our children for a very, very long time. And so, has the city done any type of survey to see where that morale is, where the attitude is, what we need to be doing to to reconcile some of the concerns that they have as teachers working for our district.
[Nina Nazarian]: President Morell, through you to Councilor Tseng. At this point in time, I mean, by and large, I'd have to defer to school committee or school administration in particular on the question that you're asking. But obviously on the city side, we are trying to do work where we're about to kick off a classification and compensation study. And that's the extent of my comments there. And I want to just, if I may, comment just broadly on some of the comments you've made, Councilor Tseng, and on the comments that Councilor Bears made, if it's acceptable. I don't, this isn't a position that any of us want to be in, and I don't, I certainly, I'm not here to I'm not here to direct any frustrations to this council. I am frustrated by this just as equally as probably you all are. I mean, this is a community you've been elected to so I certainly respect that and I'm not in that position. But I, this isn't, this isn't something I'm happy to come before you to speak on this isn't something I in any, I really believe that the city does need more resources, I do think we need to find sustainable ways to provide those resources, I do believe that we've taken action, concrete action to make those steps. These things don't change overnight. And these problems also don't come up overnight. They do get exacerbated by pandemics. And that's the scenario that we are in. So, I appreciate your commenting on the mood I think it's important to call out important things that are that are realities. I'm not, I'm not, I'm not delighted to be here before you. I would prefer to be before you proposing all of the initiatives, the city council before all the initiatives that the department has put forward, and all the initiatives that the mayor before because I do believe that the city desperately needs it but I do believe we need a sustainable source to do those things, and I can't come to you, and I can't represent the mayor properly without coming to you all with the realities. I understand the timing and I know that's awful. We are certainly working hard to move forward. And if there are further comments, I'm happy to hear them. I'm happy to take them. I hope at some point after tonight, we can move forward because obviously that's the goal to a successful month of budget discussions.
[Nicole Morell]: Thank you, Councilor Scarpellilli.
[Justin Tseng]: I have a few questions, but I wanna make sure you have a chance to speak first. So feel free to speak first and after you, I'll ask some questions.
[George Scarpelli]: I think expressing my frustration doesn't come just from me. It comes from the constituents. And I think that I'm not going to be redundant. One of my fellow council said it, what we've asked for, what we're doing, but what's frustration is that we talked and we talked about sharing in the successes and sharing in the failures. And I don't think you've done that. I don't think the mayor has done that. I think if I will, I will be truly honest with you for my constituents they speak to every single day, especially in the last week we found out that we're $8.8 million in the hole, when they said if you if it's so It's so frustrating to hear that's pandemic. Please don't use the pandemic again, because to be honest with you, every neighborhood in the Commonwealth has the pandemic as an issue, but they've moved forward. $1.5 million of growth is unacceptable. Lack of a master plan that we've been asking for is unacceptable. Transparency with what's going on with ARPA money or what we've been doing, we don't know. So when you say that might be a question that we're questioning where the monies are going, what the money's being used for, we don't know. These are our constituents that are asking us. 43 million, that's what we've heard. 43 million, we used 12 million. So everybody is coming to me and saying, George, it's so easy. How can we be $8 million in the hole? How can we be asking for free cash? And the question that keeps coming back to me is, I don't know. And the reason why I don't know, because I haven't been educated from my administration. That's what's frustrating. This is why I'm sitting up here frustrated. Sure, this is bad, but this is something we should have been sharing months ago. But even the smallest of things, Mrs. Nazarian, this council has been asking for a meeting with Eversource. I'm gonna give you an example. For weeks, last Tuesday, we come into this meeting, our meeting, and we find out the mayor is having a meeting with the neighbors and Eversource. Wouldn't it have been nice for this administration to talk to us, something simple as a meeting with Eversource about concerns that constituents brought to us? But no, we couldn't even go because we already scheduled the meeting that day. So I can see your frustration, but I'm gonna be honest with you, I'm frustrated. I'm frustrated for every single community member that's reached out to me and said, George, the streets are terrible. The sidewalks are terrible. The parks are terrible. Kids are moving away from our schools. Our teachers are leaving in droves. And now we get hit with an $8 million kick in the pants. So when we talk about concerns and issues, well, maybe council president, vice president, wouldn't be asking questions when we talk about legal services, when we've been asking, where has our money been going? People have been asking, what have we been doing? What are we paying these lawyers that are representing the city and all these 40B projects that we know we're not gonna win? We know this. It's frustrating. So I know everybody was kind. I don't wanna be kind tonight. I'm upset. I've had 55 phone calls in the last 24 hours for people that trusted me that I'm supposed to know this. So when parents call me and tell me, well, George, what are we gonna do with the afterschool program now? I don't know. I don't know. What are we going to do with the streets and sidewalks that are deplorable? I don't know. Because no one's shared in this plan, positively or negatively. And so, yes, I'm frustrated. I'm frustrated. Council Kavya has been sitting here preaching for years about lack of growth. Everybody here has been approached by developers. We push developers away. It's not our privy. But I work in a community where developers are coming in, enhancing communities, bringing revenue. So they're not sitting in this plan. Everett's hiring 60 new teachers. I'm putting together teen centers all over the city of Somerville in my capacity. And we're talking about cutting everything. So yeah, I'm frustrated and I apologize that I've made this with this temperament because this doesn't feel right, doesn't feel good. But this is what my neighbors, my constituents, the city of residents have been calling me and asking me what's going on, what's happening. And my answer, I know Councilor Tseng put it politely, we don't know. We're city Councilors that are supposed to be given the information so we're educated to work together with the administration, to work with our community members, to make sure we can enhance what's best and what's great about our community. Instead, we're sitting here looking at an $8 million deficit, and the answer is we can't do anything about it. So the answer tomorrow when people call me, the answer's gonna be simple. Please don't move. Why? We love Medford, but we need to move because the basic services aren't there. It's frustrating. It's frustrating. And I'm gonna say it again. I talked to the administration and I sat with the administration and I said, please, please, what I see with other administrations, is that you work together, so you share in your successes, and you also share in your failures, and you work together to find that bond to make our city as great as it deserves to be. But we see over and over again, the simplest of tasks, the simplest of invitations, the simplest of knowledge of what's going on, outside, inside of that office, then outside, we don't know. So when people call me again and say, There's a meeting with Eversource, and I say, I've never heard a meeting with Eversource, and it's as simplistic as it can be. That's what's frustrating to me. That's the simplest simplicity, the simplest example, what happened last week. And now we're here today with $8 million. And I will tell you, my vote for free cash, if there's anything I can do about it, I will not support anything because I still don't have the knowledge. that the understanding of this budget to make an educated decision, an educated vote for the people that put me into the seat, that's gonna allow me to give them the best vote that they were asking of me, because I don't know. So I apologize, this isn't on you. I know it isn't, it's not, but I'm just frustrated. I'm frustrated for every community member that has kicked me in the pants in the last 20, 48 hours. It's frustrating.
[Nicole Morell]: So yeah, I'll summarize and just make it quick. Um, I think
[Justin Tseng]: Um, Councilors can probably put it very passionately, but these are the types of conversations that I've been having all day today. And even, even before we found out about the library donation problem. Um, I mean, it's genuinely frustrating when it feels like we're, we're the ones who have to share the bad news all the time and take on the burden. But, um, my, I guess I had two quick questions. One, one is, reflecting on everything and what should we have done differently, what can we do differently going forward. And the second question is going forward, what is the plan to grow a revenue base? Is it, I mean, are we gonna stop fighting these 40 Bs? Are we gonna welcome developments? Are we going to find a way to increase our commercial tax base? I mean, that would require us to have a zoning consultant to pass zoning laws. Is it through talking, having an honest community conversation about having votes on overrides or debt exclusions? Is it about, Is our plan to bond more? I mean, what can, can you give us, can, can, can we have a general picture of what the plan is going forward?
[Nicole Morell]: Thank you. Councilor Tseng. Would anyone like to answer that? Thank you.
[Nina Nazarian]: economic development is a core element to the work that we are doing, that we've charted a course for. We have a very capable and knowledgeable economic development director, Victor Schrader, whom I know that the city council knows. He continues to work on these priorities with, obviously, our director of planning, development, and sustainability. We have another staff member in the office, Yvette, I'm not going to get her last name right at this point, who's also working in conjunction with our economic development director. Obviously, we have a vested interest in looking at our past expenditures, looking at where there can be Revenues brought back up to pre-pandemic levels. Obviously, further areas pertaining to zoning and other planning matters, obviously. There is life sciences that is being discussed. I'm less familiar with these topics, but I have been a part of discussions when the mayor has met with the economic development director, the planning director as well. There are life sciences as well as obviously the marijuana that we've discussed. and there's, I'm sure, more areas. Those are areas I don't focus on because my focus is in specific other areas in the organization. That being said, I don't think that there's particularly anything I can say to really comment on some of the comments that were made by Councilor Scarapelli, but I do want to at least comment on the point that Councilor Tseng made and one comment on Councilor Scarapelli's statements. Councilor Tseng, I agree that it would be best, certainly been helpful to have shared the information relative to the revenue loss on a prior evening. The reality of the situation is we confirmed that information with 100% certainty yesterday afternoon on a call. Secondly, I also would like to point out, as it relates to Councilor Scarapelli's statements in general, that we are in a position where as soon as we had information in front of us, we emailed the City Council. I realize that, again, I can't say this any other way. I realize the timing of this is not ideal. And again, all I can ask for is that if there are frustrations, share them this evening. I certainly felt that I was being, I'm not even going to go there. I'm just going to pause and I'm going to step back and I'm going to let that go. I sat down because I felt I needed to, um, in any event, we do want to work together. I apologize for the frustrations you feel. Um, I'm, I'm frustrated as well. And I, I'm, I'm, I'm trying to do my best. We're all trying to do our best. This is a community with limited resources. That's all I can say at this point. Thank you. There are limited qualified, um, qualified people for work at this point in time, there are. We all know that, whether we want to agree with it or not, whether we want to see it or not, at times, there are resource constraints that have been have resulted in the past couple years. And that's just the reality of the situation. Thank you for your attention.
[Justin Tseng]: Ms. Nazarian, I do want to apologize if any of my comments may make you feel felt targeted or pointed. I just want to make it very clear. There are frustrations with the administration and I do actually feel bad for you because I feel like You're even forced to come up here and, you know, bear the brunt of our frustrations. Really, they're not directed at you personally or your job. You know, they're directed at how this whole process is going.
[Zac Bears]: Thank you, Madam President. I respect, need to be brief. I also just think this is a very central, I'll just say this. And then I have a question. We constantly hear, we agree that we need to do more. We agree that we need more resources. We agree that we're not providing the level of service that the community deserves. And then the answer to how are we going to close that gap? There's never an answer. Never an answer for two and a half years. My last question is on the donation that apparently has caused a bunch of this kerfuffle. I know we were talking about it in advance of this meeting, but I think it should be brought up here. I certainly have not read the entire final rule around ARPA, but my understanding is that there's an issue where we received monies as donation for the library in calendar year 21 that are now being counted as revenue, meaning we can't use revenue replacement for ARPA in the same way. My most sincere and deepest suggestion, since we know that that may affect us going forward as well, or I don't know how the calculation works, but we're saying we can only look at 4 million in ARPA next year maybe, would be to look at asking our partner, the Medford Public Library Foundation, if they can retain those donations for the period in which we are using ARPA revenue replacement, In order so that those donations don't have a completely unintended secondary effect of making, essentially we're saying we're going to accept this money for the library. And because of that we're going to cut schools. And we're going to cut the city that was never what was intended through this process we're basically losing that whole donation would basically this whole campaign. That we brought in that it's going to go to the library and the bond will be fine right but we're just losing it somewhere else. And I understand that was unintended, but we need to do everything we can't just say we're going to eat back. We need to do everything we possibly can to avoid it, and and I think that needs to be pushing the boundaries, quite frankly, and saying. Yes, it was calendar year 21, but we're giving it back. We want it off calendar year 121, and we want to use that ARPA money this year. And if that means you have to go somewhere and say that we need a special dispensation, we have a special circumstance relative to this rule, which cannot possibly uniformly apply across every municipality and agency that received ARPA money across the whole country. That's what needs to be done. 3.66 million dollars is dozens of jobs. It's all the priorities we talked about. It's a bunch of the priorities you talked about. It's a huge issue. I don't think we should just say oops. It's unintended. There's nothing we can do about it. I think that everyone involved certainly the Medford Public Library Foundation I'm sure would go above and beyond to assist us on that. So I really hope that we can find a resolution of that um and whatever this council can do. I don't know if, is it, is it just the treasury department that we would maybe potentially make an appeal to? Is there any state agency that is overseeing ARPA funding? Is there someone we can say, you know, we had no idea this was going to happen and we can get it, we can fix it. We can take it off and say, it's not revenue. I mean, is there anyone that we can go to at the state or federal level around that?
[Nina Nazarian]: President Morell, please. Our expert on the subject matter is actually on Zoom, Sean McGuldrick from CLA. I would defer to him on that. I would also state that just as informational, in the end, why I understand that this is less than ideal. The reality of the situation in my view, and I think in the view of my colleague and the view of the mayor, is even if those dollars came in, all that would change is the use of free cash. In the end, we would just, it would be one for one. So if we did have that ARPA revenue replacement, we wouldn't be having to use the free cash. Agreed, totally great. But in the end, we wouldn't add that to the use of free cash, obviously. So in the end, our position from an expenditure standpoint would still be the same.
[Zac Bears]: Except that we'd have $3.5 million more in free cash.
[Nina Nazarian]: Agreed. Don't disagree with that. And if I just want to point that out, it wouldn't solve our budgetary problems in terms of the need for more resources.
[Zac Bears]: Well, I mean, if we're willing to spend 3.5 million in free cash today and this problem were to change, I'm not advocating for it. I'm just saying you could propose that we not make the cuts that we're making.
[Nina Nazarian]: This is something that we learned over the course of the issue.
[Richard Caraviello]: I think we should have known about this before. It should have been researched or there should have been something to let us know that we were going to be put in this predicament by accepting the money.
[Nina Nazarian]: President Morell, through you, I think this is important to note. I appreciate bringing that up. When the city accepted these funds, There was three payments that were made. The first two payments that came in were before ARPA was even signed legislation. I've asked these questions. The last payment that came in was right around when there was an interim final rule. This happened long before ARPA could have been taken into consideration. And there certainly wasn't a final rule. You can ask those questions of Sean McGoldrick, who's on the line from CLA.
[Zac Bears]: Could we ask Mr. McGoldrick- Mr. McGoldrick, are you able to, would you like to speak on that?
[Jared Powell]: Thank you very much, and through the chair, thank you for having me today. So just a brief description of who I am and what I do. My name is Shama Goldrick. I'm a manager at CLA. I specifically do state and local government work here in Massachusetts. And for the city of Medford, I've been brought on roughly about a year ago to help with some of their federal funds in terms of CARES, ARPA, FEMA, you name it. So I think there's been a lot of good discussion tonight about what ARPA is, budgeting concerns, fiscal cliffs, funding, all that good stuff. And I just wanna make a few things clear. When this revenue came in from the library, which is being discussed, that obviously helped you pay for the library, it's gonna help you pay for the library. It's a donation, it's a private donation, it count towards ARPA. You still have the 40 whatever million dollars in ARPA to use. You just can't use it for revenue loss replacement. Since the city of Medford received over $10 million in ARPA funds, they elected to do the calculation. Most communities that received less than $10 million took the standard allowance. Think of your taxes. You can take the standard deduction or you can itemize. So the city is fortunate enough to actually be able to calculate a revenue loss higher than the standard $10 million deduction. And I believe that calendar year 12-31-2020, that revenue loss calculates about 13 million, of which you use the vast majority to balance your budget last year. Coming into the next year's calculation, taking us through 12-31-2021, we compare the baseline revenue, which was as of 6-30-19, expedite that out times a 5.2% counterfactual, which was defined in the final rule, and you compare that against your base revenue. So the good news is that the city is making more money than expected. It is generating more money than perhaps the average was. The bad news is that yes, for a revenue loss calculation, it lessens that amount you can specifically use for that bucket. ARPA has over 80 subcategories of expenditure uses. Revenue loss is one of those 83. So even though it sounds like the city is losing money, that money is still in the coffers, that money can still be used. You just have to use it on eligible uses. And that's what we're trying to get through right now. So if those donations did not occur, then certainly your revenue loss calculation, which I'm gonna round here, which was about $4 million as of 12, 31, 2021. Yes, it would have been north of 7 million, but that doesn't take away that the funds were actually still received and to be used for a good purpose for the city of Medford. So I just wanted to make sure that that was clear and, I can certainly answer any questions that the council has right now on ARPA in general, revenue loss calculations, et cetera. One last point, though. I looked at the calculation. My boss looked at the calculation. Your federal manager of grants looked at the calculation along with your external auditors. So we are very comfortable, and I know Nina did her due diligence of getting all of our opinions, making sure that, yes, this donation is counted as part of your calculation. It's hard for me to pinpoint who was talking, but one of the council members talked about redirecting it. I'm certainly not a lawyer. I don't know how that would work. All I can tell you is that we have to go by what is recorded in the general ledger through 1-121 through 1231-21. And that's when we saw those three payments. Thank you.
[Nicole Morell]: Thank you, Mr. McGoldrick. I'm so embarrassed.
[Zac Bears]: Thanks, Mr. McGoldrick. A couple of questions there. Number one, because that was counted in the calendar year 21 general ledger, does that also mean that that's going to affect the revenue calculation for this current calendar year?
[Jared Powell]: It will not. So you're gonna compare your baseline revenue as a 630-19, and then when the next year is calculated, it's 1231-22. So anything received during that calendar timeframe will count, excluding a few items, as your revenue loss base for that year.
[Zac Bears]: Is there any, I mean, I hear what you're saying that functionally, we're not losing any money and that yes, we can spend the ARPA money that's, you know, we're gonna have a 3.6, whatever additional balance, and we can spend that on a good cause. I mean, the issue with that is, right, because of this unintended consequence, we're either going to spend down a basically that equivalent money from our reserves. That's basically what's gonna happen here. And maybe if we didn't have to do that, if we had the additional ARPA money, we wouldn't be talking about the other cuts that are gonna be made. Is there no opportunity for appeal or potential special dispensation due to the unique nature of the revenue that was brought in on the general ledger through these donations?
[Jared Powell]: Yep, through the chair. So ARPA is governed by the final rule, which was released by the federal government. State government has no control over these funds. It is simply a federal mandate, if you will. I've been part of other communities and other groups, if you will, in trying to get things changed that did not fit what a particular district, city, county, town, whatever you may, to get something changed. Because as you pointed out, not every city and town is the same. Not every county is the same throughout Massachusetts, throughout the country. That has been to no avail. from my understanding, they have had members of their delegation, House, Senate, et cetera, make phone calls, write letters, have meetings. That has not changed. That doesn't mean you can't try it. I just don't know if the, I don't know if it's worth the fight considering what I've heard over the past few months.
[Zac Bears]: Well, that's certainly disappointing because I think we're gonna basically go to these people who did a good thing for our community and tell them, well, thank you so much for your donation. we're gonna be taking it out of the free cash reserve and laying off teachers. I appreciate your expert knowledge and your answers. There's a lot of things that have been fought that probably aren't worth the fight recently. I think this one ranks in a higher priority than those.
[Jared Powell]: And if I may, through the chair, just one last thing. So we talk about use of reserves and we talk about the use of free cash. The way I look at your free cash over the past few years and the way I look at your budget to actual specifically regarding the local receipts, those local receipts were conservatively or estimated so conservatively over the past few years due to the pandemic that has actually helped generate more free cash than you probably would have in any other normal year. So when finance gets their free cash certified from DOR, you may see a greater amount than is normally expected for free cash. And that is a result from conservative budgeting. So the argument could be made, let's use some of those excess free cash funds you would have not normally generated and help plug this budget, which I think was Bob and Nina's point earlier, too.
[Nicole Morell]: Thank you, Mr. Goldrick. Thank you, Vice President Bears. As we wrap up, I want to thank my Councilors for their questions and their points as we continue into budget season. I do want to note two things, I think to Chief of Staff Nazarian's point. I think we're all, we very much appreciate the work of the economic development director, of the planning director, but the reality is we're seeing them bring in a lot of projects that on the other side, the ZBA is voting against. So the mayor appointed ZBA is voting against projects that are being brought in by our own administration. And that's the truth. I also just want to note that budget seasons are contentious. This happens in a lot of communities, but for example, the city of Newton just voted no on their budget that was presented to them in April. We're here on June 7th. We still don't have a budget. I understand there's a lot of unusual circumstances, we'll say. I understand that we haven't had a CFO for 10 months, but the budget happens and the vote is needed every single year at the same time. It's not a surprise. The administration has shown a willingness to hire consultants for so many things. Why did we not have someone who could have helped us out in the finance position for 10 months so that we aren't in this position on June 7th, where I have residents asking me, asking my fellow Councilors, when is this department coming forward? When is that department coming forward? And not only do we feel silly that we don't have answers, that shakes residents to the core that we can't answer them. We have no idea when these meetings are gonna happen and we don't know the outcome. So I think we've all expressed our frustration here tonight. I think we're unified in our frustration, but again, the budget happens at the same time every year. The budget process isn't a surprise. It doesn't have to be this way. It doesn't have to be this type of crisis every single year. I thank you for indulging me. I know as chair, I keep my comments to a minimum. So I thank you. If there's anything else from our councilors before we get to our regular meeting. On the motion of Councilor Knight to adjourn, second by Councilor Caraviello. All those in favour? All those opposed? Meeting is adjourned.
[Bob Dickinson]: Nice to meet you.
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