News Column

Peabody officials project tax hike of $189

June 20, 2014

By John Castelluccio, The Salem News, Beverly, Mass.

June 20--PEABODY -- The city budget is increasing by $6 million in fiscal 2015, and officials anticipate that will mean a $189 tax hike on an average home in the city.

The bulk of the new spending covers Peabody's share in the new regional vocational school slated to open this fall, increases in water and sewer assessments, and a larger payment for retirement benefits to maintain the city's funding schedule. The vocational school assessment is $2.9 million, $960,000 is due to water and sewer, and $492,000 is for retiree benefits.

The budget also includes 2 percent pay raises for all full-time employees -- about $2 million between city and school employees -- and a modest increase in education spending unrelated to the new school.

The new operating budget approved by the City Council Thursday totals just over $152 million, a 4.1 percent increase. The vote was 8-1 with City Councilor Barry Sinewitz opposed and councilors Anne Manning-Martin and Mike Garabedian absent. Sinewitz, joined by Joel Saslaw, also voted against approving the vocational school assessment.

"I believe this represents a fiscally appropriate budget that addresses the needs of our city operations and our ongoing commitment to maintaining Peabody's affordability and keeps our taxes among the lowest in Essex County," Mayor Ted Bettencourt said in a previous interview. In most cases, raises account for small increases to departmental budgets he said. He had asked everyone to submit level-funded budgets.

Bettencourt said Thursday that he would have liked to give more to the schools, but some tough decisions were made to cover contractual obligations and the looming school assessment.

"I think the budget is a fair budget to our schools ...and keeps the forward momentum going," Bettencourt said.

School officials had to restructure their budget last month and cut some programs, supplies and other accounts. Some positions were trimmed, as well, but in most cases, those employees are sliding into other jobs.

Bettencourt said the vocational school assessment, which was initially $3.8 million, is responsible for more than half the projected tax increase. He said the city decided to join the Essex Tech project and that bill is coming due.

"I can hear your angst when it comes to the vocational school. I can see it in your face," Sinewitz told Superintendent Joe Mastrocola Thursday. Sinewitz said he still sees many "inequities" with the new school, especially because it's forcing the city to tighten spending on its own schools. He questioned who was standing up for the city's interests in that regard.

Councilor Barry Osborne said he shared concerns about spending at the school, but the city decided several years ago against building a new high school and new vocational facilities. "Right now, I think it's the best option around ... If there are savings there, we need someone to go out and find those savings for us."

The projected tax hike would be the largest increase in several years, but Bettencourt believes that Peabody's taxes will still be among the lowest in the area once new rates are set in the fall. The average bill is expected to be $3,757. While that may be a bitter pill for many homeowners, there's small comfort, perhaps, in the fact that the calculation reflects a 10 percent gain in average home values.

Finance Director Patricia Schaffer said that based on January 2014 data, the value for average owner-occupied homes in Peabody increased from $287,700 to $316,000. Commercial values saw a 5 percent gain.

Schaffer also noted that the city's excess taxing capacity should be $6.4 million at that point, meaning the city could increase the levy by that much without worrying about Proposition 21/2 limits.

In regard to water and sewer, the additional $420,000 to the Mass. Water Resource Authority and $540,000 to the South Essex Sewerage District reflect increased usage, Bettencourt said. He plans to ask the council this fall to increase water and sewer rates to help absorb the cost. Those rates haven't increased since 2007, but demand for services has grown.

Bettencourt has also pledged $1.1 million from city reserves to offset the new budget's burden on taxpayers with state aid expected to decline by about $300,000. Local revenues are anticipated to grow by $2.6 million.

Two new jobs were added to the budget for the city: an Internet technology civilian position at the police department and a third assistant manager at Brooksby Farm. Those two jobs will cost about $90,000 in salaries but are offset by decreases in overtime accounts for both departments.

One factor noticeably absent from driving budget decisions this year is health insurance. Since striking a deal with the city's unions and entering the state Group Insurance Commission two years ago, the city has saved millions by averting those 10 and 12 percent insurance cost hikes under Blue Cross Blue Shield.

Schaffer said the overall cost has increased from $26.7 million to $27.2 million in that time and is actually expected to drop by $200,000 in 2015. The city is also now insured on a premium basis instead of on claims.

City councilors also approved separate budgets for the city's skating rink and golf course, which are self-sustaining operations.

You can reach John Castelluccio at 978-338-2527, or via Twitter at @SNjcastelluccio.


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Source: Salem News (MA)

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