The Mayor's Desk Carolyn Kirk
Gloucester Daily Times
---- — We celebrate a third year of across the board successful financial management of the city of Gloucester as shown by the city’s recently certified free cash from the Massachusetts Department of Revenue (DOR).
With general fund free cash certified at a healthy $4.8 million, our financial performance is a validation of the fiscal policies that have been implemented over the past few years.
The administration’s fiscal policies emphasize accurate and conservative budgeting on revenues; effective oversight of expenditures; strong tax collections; elimination of deficit spending and spending beyond our means; and aggressive pursuit of grant-funding whenever possible. We can never be too prudent for preparing for the future, and strong free cash performance allows us to be protected against future impacts — whether they be from local, state or national circumstances.
This week, I did some digging around the Mass DOR website to see how our free cash performance compares to other communities. Last year, the average free cash as a percentage of the budget for all 351 communities in the Commonwealth was 3.79 percent. For Gloucester last year, our free cash percentage of the budget was 3.13 percent, which is below the state average.
In terms of stabilization funds, the average percentage of the budget for all 351 communities in the Commonwealth was 2.9 percent. For Gloucester, the percentage of our operating budget we have socked away was 1.87 percent last year which is also below the state average.
By both these measures, Gloucester still has work to do despite our relatively strong local performance. Every outside agency that reviews or comments on a municipality’s financial performance looks at free cash and reserve levels as key indicators from our regulatory agency, the DOR, to our bond rating agencies (Moody’s, and Standard and Poor’s). Also, there are standards for performance, and we manage to those standards – not some arbitrary number someone makes up.
The city experienced a 10-year decline in free cash that included an eight-year string of negative free cash. During those years, there was no meaningful contribution to the city’s stabilization fund, and there was minimal financial flexibility to address school buildings, heating systems, sidewalks, roads, etc. The city got very far behind in those years, and we are still catching up.
It would be a mistake to tie up every last financial resource of the city in the operating budget year after year. Employee wages, benefits and debt payments make up a significant portion of the operating budget which restricts our ability to respond to other needs as they arise – unless we want to cut people.
Strong free cash allows us to make investments outside the operating budget that are necessary or important to the community. For example, with last year’s free cash we were able to fund shingles vaccine for needy residents, books, materials and furnishings for the Children’s Room in the Sawyer Free Library, long overdue repairs to the Goose Cove Causeway, and provide an additional $684,000 appropriation to the School Department. We also increased our rainy day or stabilization fund by $700,000.
This year, we will propose addressing urgent heating system needs within our school buildings. We will propose making some mid-year adjustments to departmental budgets, and, in particular, look at ways to (and the costs of) opening outskirt fire stations more frequently. We will also propose socking money away in the stabilization account, capital accounts, and funding for our pension and health benefit liabilities.
Meanwhile, we will continue to run a lean operation with a sustainable level of service delivery.
For the next budget cycle, we will again see where we can inch it up a little as we did for this budget year, but overall we will remain steadfast in our conservative financial management approach for the city of Gloucester.
Carolyn Kirk is mayor of the city of Gloucester.