By Katie Farrell Lovett
NEWBURYPORT — The city has $1,281,624 in free cash for this year, Mayor John Moak told city councilors in a message sent last week.
That is a 52 percent increase over last year and a 111 percent increase over fiscal year 2006, the mayor said.
Free cash is the amount of unspent money after the books are balanced from the previous year's budget. The money typically is used to cover unforeseen expenses or to cover the additional costs when the snow and ice budget, the one area the city is allowed to overspend, goes over its allocated amount.
Moak said yesterday the savings comes from a variety of sources — in particular, the savings the city saw in changing its health care plan. Also, two positions were not filled within the Department of Public Services and two retirements were not submitted for fiscal year 2009, Moak said. Funds remained in the free cash account from last fiscal year, and there was an "aggressive collection" of fees, taxes and revenue sources, as well as excise taxes collected later in the year.
Also, the city's budget was frozen, and all departmental budgets were cut by 1 or 2 percent, the mayor said.
"We just saw that 2010-2011 was going to be a really compromising year," the mayor said yesterday. "My objective has been to try to not reduce our labor force," he said, adding that the "worst thing" the city could do would be to add to the unemployment line.
The mayor told councilors it is his intent "to leave the city in better financial strength" than when he first entered office, particularly during the economic downturn when city services have to be sustained.
As the city continues to hear that more local aid cuts are coming from the state, with projections being set around 5 to 10 percent, it is crucial to have free cash and reserve funds, the mayor said.
As word came that the city should expect cuts in the state's local aid funding, Moak said he and his department heads looked to find everything they could to build up the free cash while keeping the city's costs "relatively flat," and the account ended up "in pretty decent shape."
Also, new growth figures for the city are higher than anticipated, reaching almost $400,000, which is about $150,000 more than the city had planned, Moak said. Personal property went up a lot, and the city was able to tax some of the telecommunication companies more than they had expected, Moak said.
The hospital's medical center and the businesses within it all have personal property taxes, the mayor said.
Besides the money in the city's free cash account, the water enterprise fund had free cash of $1,099,373, the sewer enterprise fund had $1,007,769, and the harbormaster enterprise fund had $384,082. The money in the enterprise funds can be used only for those specific purposes.
"During this administration, through the efforts of my staff, department heads and city employees, we have been able to keep costs at a sustainable level, decrease health insurance costs, increase bond rating, increase free cash, maintain a stable reserve account, minimize labor reductions, institute capital plans and land acquisition, and maintain effective city services," Moak wrote to the councilors.
More state aid cuts loom
Moak said yesterday he is hearing reports that the local aid cuts being issued this week could mean cuts between $300,000 and $500,000 for the city, but he added that he has been "out in the cold" on getting reports. He's been planning for what happens when the cuts come, the mayor said.
"Whatever the reality is, we have to be ready for it," Moak said.
"Three hundred, I think we could handle. Five hundred is really going to be compromising," Moak said. "I'm hoping the numbers I'm hearing are wrong. I'd like to have $100,000 or less."
