First thing you need to understand is that the city budget needs to be a break-even budget.  In other words you need to budget enough revenues to meet the expenses in the budget, you can not budget for a surplus.   Obviously it is impossible for a budget the size of Worcester to actually break-even, but that is the intent.

In fact, you may even budget some of your revenues a little on the conservative side to ensure that your cover your expenses and you hopefully end up with a surplus at the end of the year, which is called “free cash”.  Ex City Manager O’Brien even came up with a “5 Point Plan” to deal with this “free cash” at the end of each fiscal year, which included:

  • 50% of free cash to Bond Stabilization
  • 30% of free cash to OPEB Trust
  • 20% on one time expenses

We saw this executed last week, although we disagreed on how all the money was spent on one time expenses in particular the $100,00 for the WPD mounted unit.

In the case of Worcester there are two main local revenue numbers:

  1. Property taxes
  2. Local Receipts

Last year, the number for Local Receipts was estimated at $40,800,00 when in reality the number was $46,200,000.   The question is what would you budget for this year for Local Receipts.  Maybe you would not budget $46,200,00, but would you budget $39,600,00???    What if I were to tell you a budgeted number of $42,100,000, does that seem unreasonable?

That is exactly what Councilor Gaffney is recommended to increase the Local Receipts budget estimate by $2,500,000 from $39,600,000 to $42,100,000, which will lower the amount we would need to raise from the taxes by the same amount ($2,500,000).    I would not refer to this as a “maneuver”, but as conservative budgeting especially when the current number collected this past year from Local Receipts was $46,200,000.

I am not saying that we should not put money into Bond Stabilization or OPEB, but we need to put them into the budget if that is what you want to do.  You do not plan for items like this by underestimate the Local Receipts number to artificially inflate the “free cash” number to fund these two very important funds at the end of the year.

Councilor Gaffney idea to increase the Local Receipts estimate by $2,500,000 and thereby cutting the number to raise from property taxes by $2,500,000 is sound conservative municipal budgeting.




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