AMESBURY — Mayor Thatcher Kezer last night urged the Municipal Council to pass a motion to cut the town's operating budget by $125,000 and warned department heads that another $500,000 in cuts was imminent.
Numbers certified last week by the Department of Revenue show Amesbury has overestimated its income, leaving it with a $278,698 debt on its "free cash" balance sheet.
Kezer said the good news has been the town was able to control its expenses last year, turning back $149,278 in unexpended funds. The bad news is local receipts ended this year $305,872 under estimates.
"I'm asking the council to cut $125,000 and adjust the current operating budget to balance our accounts," Kezer said yesterday afternoon, before the council meeting. "This is purely a revenue issue because our projected revenue for fiscal year 2008 — which we set in January of 2007 — was overestimated."
At last night's Municipal Council meeting, Kezer spoke during public comment, addressing the challenges that lay before the town and asking the council to approve the budget cut.
"The economic meltdown is being felt on Wall Street and Friend Street," Kezer said. "We are taking early action to lessen the impact down the line."
Kezer said any announcements by Gov. Deval Patrick today regarding local aid would likely increase the original number to well more than a half-million dollars. In addition to the cut of $125,000 from the operating budget, Kezer said he will be meeting with the heads of all departments in town in the coming week to find an additional $500,000 to cut.
"It's a half-million today but tomorrow it could be much, much bigger," Kezer said yesterday. "For the half-million dollars, I don't know where we will get that and I don't want to speculate. I want to sit with the heads (of the departments) and identify $500,000 to be pulled back."
Kezer said the money would be put toward contingencies such as the snow and ice budget.
Free cash results from money left over from a fiscal year, beginning July 1 and ending June 30. It typically includes excess money resulting from underestimated revenue or unspent amounts in departmental budget line-items from that year.
Of the 123 municipalities that have had their accounts certified by the state, just four show a deficit in free cash, with Amesbury's the largest. The change marks a more than $1 million difference from last year's free cash balance, which was recorded as $853,751 in the black.
"Licenses and permits dropped, Medicare reimbursements were a $62,000 hit, vehicle excise tax numbers were down $42,000 because no one is buying new cars," Kezer said.
Asked why Amesbury's free cash slipped so deep into the red compared to other cities and towns, Kezer wasn't sure.
"I don't know why," Kezer said. "Tax receivables have gone up everywhere. With AmesStat we operate close to budget, which (for those cities and towns not watching their budget), there is a wider swing ... I don't know."
AmesStat is a computerized system Kezer implemented to track and analyze the town's budget on an ongoing basis. He has spoken on behalf of the program across the state.
Kezer said the factor that wasn't built into his budget was the economy.
"If I could go back and predict the current economic downturn, I would be making a lot more money," Kezer said. "It's hard to predict free cash because you don't get your revenue numbers until well after the fact and it's so driven by the economy."
Kezer downplayed the negative free cash amounts yesterday, saying the DOR data was incomplete and the cities and towns who do not submit their free cash amounts are those in the most "dire straits and can't close their books."
He said the $500,000 cut will be felt by local residents in an already tight budget year, but he noted his continued focus on budgeting money to fix crumbling town buildings, such as the police station.
The cuts before the council included $100,000 from the trash and recycling program, a savings from the trash contract currently being negotiated with Newburyport and $25,000 from the insurance liability line item. He noted the stabilization fund, which he has been "squirreling money" away into, will not be touched.
"I want to look toward the future," Kezer said. "A significant challenge is facilities; we still need to do something about that. As for figuring out how to offer municipal services and fix facilities, that's my job."
The council voted to approve the budget cut and send the proposal to the Finance Committee.
Council President Roger Benson applauded Kezer for his quick reaction.
"I want to thank the mayor for his plan to keep us from bleeding," Benson said.
