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November 7, 2012

City's free cash set at $4.8M

The city has rung up its highest “free cash” surplus in four years.

And while Mayor Carolyn Kirk and some city officials say the numbers show that Kirk’s conservative budgeting approach is working, some city councilors say that running a record surplus when city services aren’t at full capacity shows its time to take another look at budget priorities.

Gloucester posted a $4,849,638 municipal or “free cash,” surplus from its Fiscal Year 2012 budget. The Department of Revenue certified the 2012 free cash on Monday; the free cash surplus amounts to roughly 5 percent of the city’s $87.5 million fiscal 2012 expense budget.

City Chief Financial Officer Jeff Towne said maintaining a solid “free cash” places the city back on solid financial footing. Once there, Towne said, the city can invest back into services and infrastructure.

But Paul McGeary, the council’s Budget and Finance Subcommittee chairman, said he would rather not make cuts only to restore positions when the city runs a surplus.

This is the third straight year Gloucester has certified “free cash,” after a period of running deficits. The fiscal 2010 budget had $1.9 million in “free cash,” while the fiscal 2011 budget ran a $3.2 million surplus. Over the past three fiscal years, Gloucester has seen nearly $10 million in “free cash.”

According to the new certifications, Gloucester ran a $1.7 million surplus in its Water Enterprise Fund, a $1.9 million surplus in its Sewer Enterprise Fund, a $518,891 surplus in the Waterways enterprise fund, and a $118,856 surplus in the Talbot Rink enterprise fund.

Kirk did not return a call or email seeking comment Wednesday. In a memo announcing the “free cash” numbers, Kirk said the city would plan to use the surplus funding to invest in infrastructure, reduce pension and health care liabilities, and make mid year budget adjustments. She said the lion’s share of the surplus will go in the stabilization fund.

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