HOLYOKE, MA – The City Council Tuesday voted to order a hiring freeze that will have limited reach given the mayor’s jurisdiction over hiring, but other, potentially large cost issues featuring a Fire Department miscue could pound the city.
Because of a miscalculation in the number of firefighter salaries and the expiration of a grant sooner than expected, officials learned Thursday the Fire Department had a budget shortfall of about $319,000. But that was covered by transferring money from accounts that could spare funds such as long-term debt, Mayor Alex B. Morse said by email late Tuesday.
Morse was reached for comment after council Finance Committee Chairman Todd A. McGee said during the meeting at City Hall that he spoke Friday with Fire Chief John A. Pond who told him the Fire Department had a shortfall of $300,000 to $400,000.
“What?” council President Kevin A. Jourdain and several other councilors said.
Pond couldn’t be reached for comment.
Morse said the budget hole was plugged “doing a constant budgetary analysis,” a routine step in a fluid budget. But councilors have criticized such steps as reflective of poor planning at budget-preparation time in the spring when officials are supposed to have a handle on revenues and spending.
Also, the Police Department has already outspent the $430,000 it had budgeted in this fiscal year for overtime. Police were at $500,000 spent on overtime as of Thursday and have requested $225,000 more.
And, as Ward 5 Councilor Linda L. Vacon noted during the meeting, “And it hasn’t even snowed yet.”
That was a reference to the strain such storms exert on city expenses for snow removal and public works overtime requiring additional cash transfers, as happened repeatedly last year.
Further, Jourdain said his understanding was that the School Department will need another $400,000 for transportation costs.
All of which comes with the city free cash account — the source from which such transfers usually are made — sitting at an unusually low total of only about $500,000.
McGee said such demands for the dwindling amount of cash could prompt a repeat of last month when the City Council and Morse cobbled together budget cuts and a tapping of the stabilization, or rainy-day, fund to plug a $2.9 million budget deficit.
Besides the option of mid-fiscal year budget cuts and a further raid on what is supposed to be the emergency stabilization fund, it’s possible the City Council could deny any requests for extra cash for overtime and order departments to figure out how to operate with budgeted amounts until the fiscal year ends June 30.
The council approved the call for a hiring freeze by voice vote with some, such as Councilor at Large Rebecca Lisi and Ward 4 Councilor Jossie M. Valentin, voting no.
The hiring freeze is intended to leave municipal vacancies unfilled until officials resolve how to address financial problems. The freeze wouldn’t affect the need to fill public safety jobs or those of department heads, councilors said.
A step toward dealing with the financial problems will come with a team Morse is forming that will include Jourdain and four other councilors to work on a budget reform plan. A letter from Morse about that was on Tuesday’s City Council agenda.
A City Council call for a hiring freeze lacks the power of what is commonly understood with such a move as being a ban on filling positions. That’s because the mayor has authority to hire and if money for a job exists in the budget, the City Council has little power to stop the mayor from filling the job.
What the City Council can do with its hiring freeze is reject requests for transfers to pay salaries for other positions the mayor seeks to fill that are unfunded in the budget.
“Really, what this represented was trying to address the current budget problems that we have,” McGee said.
Morse said he learned of the Fire Department budget problem Thursday. The shortfall consisted of about $169,000 to pay firefighter salaries and $150,000 for firefighter overtime, he said.
“I was informed late last week that there had been a miscalculation in the total amount that was needed to fully fund the budget line for firefighters for ‘FY16.’ This was largely due to a federal SAFER grant running out sooner than expected. This was not anticipated when the budget was prepared last spring,” Morse said.
The $8.12 million budget approved to run the Fire Department in the current fiscal year was supposed to fund 72 firefighters, but contains money for only 65, officials said.
“While certainly frustrating, my finance team was able to find excess funds in other areas of the budget, that would otherwise go unexpended, to cover the added cost,” Morse said.
“It’s important to realize that budgets are fluid. When the amount is approved in June, it doesn’t mean it will be expended. That is the main reason we end up (with) free cash in the fall. The Council is well aware of this process, and approves many transfers like this throughout the year,” he said.
“The bulk of the transfer will come from long term debt. The treasurer (Sandra A. Smith) had over-estimated the amount we needed for the year. This was done out of an a abundance (of) caution, and only after six months of the fiscal year she can confirm we will not need it,” he said.
Morse said that if the Fire Department shortfall hadn’t arisen, those unexpended funds would have been used to cover other expenses during the fiscal year or left unspent and certified as free cash for use in the next fiscal year.
“Again, councilors can be upset, but that is disingenuous, as unexpended budgetary funds make up the bulk of free cash each year. I couldn’t be happier with the (acting City Auditor Bellamy H. Schmidt) and my staff for doing a constant budgetary analysis to ensure we make it through the last couple fiscal years, even during these lean fiscal times,” Morse said.
Regarding the additional money needed for school transportation, Morse, who as mayor is School Committee chairman, said such issues were not fully known when the budget for the current fiscal year was prepared in the spring.
“It is mostly due to an increase in expenses and additional routes the School Department has requested,” Morse said.
The mayor said he has made clear to Stephen K. Zrike Jr., the state-appointed receiver who controls the city public schools, that the limited funds of the city’s free cash account is off limits for the extra school transportation costs.
“We are working with the School Department to cover the costs, as well as reviewing the terms of the (transportation) contract. Any comment otherwise is simply fear-mongering,” Morse said.