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City of Holyoke, MA - FY25 Budget Talking Points
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REVENUE:
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LevyThe City has experienced several adjustments in the tax levy ceiling due to market value changes. The City does not have a history of overrides or debt exclusions. Tax levy increases at a lower rate than expenditures. However, increases in the levy are considered higher than desired and the increase fluctuates between 2-7% during the forecast.
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State AidHolyoke receives the 2nd largest amount of State Aid in Hampden County. The largest amount is for education. The City allocates the full share of this segment to Education. Increases in Education need to be monitored closely. Fluctuations occur due to changes in State Aid and Offsets.
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Local ReceiptsHolyoke takes advantage of local option receipts for meals tax, room tax, and most recently cannabis sales. City is losing $2M in non-recurring receipts as early as FY24 due to elimination of ARPA funds. This loss will generate a large increase in the tax levy in FY2024.
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Available Funds/ Other Financing ResourcesCherry Sheet Offsets currently removed (5/10/24)
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The gas & electric operation - do we want this shown on the Summary Table?
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Enterprise ReceiptsEnterprise Fund for Waste Water Treatment is
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EXPENDITURES:
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Personal ServicesForecasting flat 3% across the board for now. Contractual increases aside, most organizations are experiencing larger than COLA increases due to steps. Need to examine this spread for the City. Increases could be higher than 3%.
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ExpensesForecasting flat 2% across the board for now. Will need to review current contractual obligations and possibly set limits for discretionary spending.
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EducationDirect education costs represent approximately 53% of all general fund appropriations. The schools receive a full share of State Aid Chapter 70.
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Debt ServiceFY24 includes debt service for $8.4M current authorizations. Increasing debt service at $5M for rolling stock program and $20M for new school building. Increasing debt service to $7M by FY28.
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Capital PlanIn progress. Suggest combined spending $7.5M per year on capital within 5-years. New debt for rolling stock program at $5M in FY2025. New School Building estimated in FY2028 at $20M. Remaining cash capital comes from Free Cash & Enterprise Reserves.
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Risk ManagementCity to review these types of expenses and policies to mitigate.
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Employee BenefitsCity to review Pension, OPEB & Healthcare costs. Starting assumptions are made per line item or grouping, as needed.
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State AssessmentsThe largest assessments are for retired teachers' healthcare costs and non-district tuitions (e.g. school choice, etc.). School to provide impact for assessments and their budget.
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Other Financing UsesSuggest using Free Cash to supplement capital spending. However, this means cash capital will fluctuate based on available funds. Consider more conservative approach to revenues to bolster Free Cash.
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Enterprise FundsHolyoke has one Enterprise Fund for Waste Water Treatment. As of FY22, the enterprise is self-sufficient without any subsidy from the General fund. However, the enterprise is not charged any indirect costs.
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OTHER NOTES:
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Town Meeting Articles and ActionsThe City enacted CPA in 2018. This provides approximately $750K in annual revenues. Currently most of this revenue is going to bolster reserves for future projects.
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