City Council - Ways & Means Committee Hearing on Docket #1030

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Bread on time. Okay, good morning. For the record, my name is Ben Weber. I'm the District 6 City Councilor and the Chair of the Ways and Means Committee. Today is May 27th, 2026, and the exact time is 1019 a.m. This hearing is being recorded. It's also being livestreamed at boston.gov slash city-council-tv. and broadcasts on Xfinity Channel 8, RCN Channel 82 and Fios Channel 964. Written testimony may be sent to the committee email at ccc.wm.boston.gov and will be made part of the record and available to all Councillors. Public testimony will be taken at the end of this hearing. Individuals will be called on the order in which they've signed up. I'll have two minutes to testify. If you are interested in testifying in person, please add your name to the sign-up sheet near the entrance of the chamber.

If you're looking to testify virtually, please email our central staff liaison, Karishma Chauhan, at at karishma.chouhan at boston.gov for the link and your name will be added to the list. This morning's hearing is on docket number 1030, message and order authorizing the City of Boston to appropriate the amount of $47,120,292 For purposes of funding the snow and winter management appropriation to meet operating expenses of the fiscal year, fiscal period commencing June, July 1st, 2025 and ending June 30th, 2026. This matter was sponsored by Mayor Michelle Wu and referred to the committee on May 20th, 2026. Today I'm joined by my colleagues in order of arrival, Culpepper, Councillor Fitzgerald. I have received a letter of absence from Councillor Louijeune.

We're joined today or this morning by our Chief Financial Officer, Ashley Grafenberger. and our budget director, Jim Williamson. We're just gonna go past opening statements, wave those and if you have a presentation, we'll hear from you and then we'll get to questions.

Okay. Well, thank you, Chair Weber, and other members of the Boston City Council. My name is Jim Williamson. I'm the Budget Director here at the City of Boston, and I'm joined by the Chief Financial Officer, Ashley Raffenberger. We appreciate this opportunity to discuss the FY supplemental budget and its impact on the city's finances. We understand the administration values, the shared responsibility of the city council, to safeguard Boston's limited public resources that serve our city's residents. I'm here to review the appropriation order before you, explain the details of its financial transaction, and formally request your recommendation for approval at the next City Council meeting. So we put both dockets. We know there's a separate hearing this afternoon with BPS on docket.

0131, but just for completeness in terms of the overall change to the budget, docket 1030 is for $47.1 million, and that's for snow and winter management. and later today BPS will come in to speak to Docket 1031, a $22.8 million supplemental for public schools for health insurance and utilities. Just a little... So the funding source that supports this appropriation, these appropriations are free cash. And just for context, I think it's been communicated a few times The level of free cash that the city has on hand. We started FY26 by budgeting $40 million for OPEB, which has been our standard practice for several years now.

and with these two supplements they total 70 million dollars that will be $110 million draw on the free cash balance. And we must remember that in addition to that, there's $40 million carried forward into the FY27 budget So there'll be a draw of about $150 million through the two fiscal years, which is about 24% of the free cash balance of 601. So we... We understand that this is sort of reserved for extraordinary events and I think the way we'll get into the snow and winter management and speak to how it is sort of different from our The snow budget supplemental covers the snow and ice contractors for public works, Boston public schools, parks and recreation, and the Mayor's Office of Housing.

The city provides snow and ice removal for all the roads open to public travel, municipal parking lots, public stairways, foot bridges, paths, Bridge Pathways, and for MOH as a landlord, sort of the owner of city-owned lots, they clear the sidewalks in front of those lots. Expense items include things like contractors, Both emergency response and this year, given the accumulation of snow, several post-storm removals. There's staff overtime, public works staff, who are driving trucks, managing contractors, responding to inquiries, roadway treatment, which includes Salt and other approaches to treating the roadway to have a better response for snow removal and ice melting.

This year, given the accumulation of snow, we rented snow melters. That was sort of an unusual sort of one-time expense. Where we store our snow that we remove from sort of major thoroughfares, business districts, What we call snow farms and it's often sort of city-owned assets but other property the city has access to. So for example parking lots of golf Golf Course, Municipal and Golf Courses, things of that nature. And given that over time some of the more Other property is no longer in the city's control. The number of snow farms has reduced, so snow melters became more important to Thank you.

Thank you. Our Central Fleet is repairing equipment, retrofitting it for snow response. And also, within the snow preparation, we charge the... The debt service for like replacement of snow equipment so large you know spread snow spreaders and plow blades and and the like. And then even some of the more sort of lower level cost things like weather monitoring costs and things of that nature. So I guess snow in winter management highlights, and I know Chief Gove came down here and did a presentation in early March.

We are not alone in dealing with variable snow occurrences in the city. It's not uncommon for communities around the state to seek free cash supplementals to close a budgetary gap. So it's it's while there's a reporting deadline for the current fiscal year isn't until September 15th so communities around the state are going to their They're select boards in town meetings to get these supplementals to close the books. They don't actually officially have to report their snow and ice removal costs into the state, but that's how

and many more. Chapter 44, 31D, so it speaks to the emergency nature of snow removal and the fact that you can overspend your appropriation. This past winter, saw 61.6 inches of snow marking the coldest and snowiest winter in 11 years. So we sort of fell into a little bit of complacency and not being sort of having this thing On average, it was 2.1% below normal, reversing a 10-year trend where temperatures in the winter around here have been 3 degrees higher.

The streets team and other teams, schools and parks and MOH managed 20 different distinct winter weather events this winter, requiring almost continuous ice response during that extended cold period. And just to highlight, there was sort of two major winter storms bookend between a period of very cold weather. So the January 25th to 26th storm There's 23.2 inches of snow in a 36-hour window, and I think Those were notes taken from Chief Gove's presentation before this body, you know, talking about how the city is responding to that storm and the February storm as well, I believe it was in early March. The second storm, which was not regionally dispersed evenly, I think,

I think the southeast in Massachusetts and even into Rhode Island, they were more adversely impacted. It was a named storm, Winter Storm Hernando. In Boston, it wasn't as much accumulation as the previous storm. So it was 17.1 inches during the blizzard of 2026 or winter storm Hernando. And ultimately, once FEMA did their sort of calculation of eligibility for FEMA, Suffolk County was excluded because we didn't hit our sort of, you know, probably not doing it justice on the formula to use, but it's not a record. in their mind to unlock federal resources. And so even before the winter that we endured, we were working towards closing what we anticipated

of revenue that was not meeting the estimated amounts, and also spending that we're well acquainted with, like public safety overtime, and execution of court spending. And then, as we've just talked about, things that are not as consistent, but snow removal. So we... went through a process of doing a more controlled hiring process. So one of the things is actually, you know, working with the mayor's team communicated to Council on the status of the FY26 budget towards the end of March. And we had already sort of tried to capture within that projection to not overstate the position we were in. Some of the savings that we're achieving.

And initially it was sort of a controlled hiring approach with filling vacancies. with some other very non-discretionary, very discretionary expenses like food, travel, swag, which is sort of like city non-union required clothing and things like that. but not the biggest cost element but sort of a way to sort of manage costs without having a lot of impact on departmental operations. But continued hiring in essential roles where we where we were authorizing spending. So places like E911 call takers, lifeguards, those sort of titles continued to fill and actually would have been successful in filling those titles.

Even sort of the much loved or hated, I guess, packing enforcement officers loved in terms of regulating the curb, But, you know, no one likes to get a parking ticket when you violate the regulations. So, those are things that are continued to hire. And then, non-personal spending. We still maintain those sort of more discretionary spending controls, but also given where we were and we needed to close that and had the benefit of knowing where The direction we were heading for snow, we put on a more stringent, and I think that communication, which historically has been a transition memo for departments getting ready to close out the fiscal year and getting ready for the next fiscal year.

but also included provisions for controlling non-personal spending with sort of a way to sort of being very deliberative on how non-personal spending. So that's driven, again, You know some modest savings, but many of the savings that we achieved have been offset by We had more clarity on the security needs for World Cup soccer, had more information on the number of events, the duration of events. and other community-based events related to it. So those have been baked in with now the better understanding of grant awards. And then increasing energy costs, where we did see

We sort of put in a more accurate and more reflective of what we're seeing real time on costs related to energy. But we do feel confident that with these updated projections and some modest adjustments we can with this 47.1 million dollars for the city and the 22.8 million dollars for BPS that we will end the budget on balance. Thank you.

Okay, yeah, thank you very much. And again, so this afternoon we're having a hearing of BPS on their supplemental. So I'm going to go to my colleagues. I'm joined by Councillor Fitzgerald, if I didn't say that already. So Councillor Culpepper, we're going to, I don't know, eight minutes for a first round and for me to come back. We'll do that whenever you're ready.

Thank you, Mr. Chair.

I want to get the mic. Sorry, Councilor Culpepper.

Thank you, Mr. Chair, for eight minutes. I must say this is the first time since I... I've been at this microphone and I've been given eight minutes to talk and I probably only have two minutes worth of questions. So if I could save some of my time for later in the week when I really need that six minutes. I'd be truly grateful. You know, Jim and I talked earlier before you came in. Most of my questions he's answered already. I was asking him about the state budget and how it balanced and why we had to level funds. But Jim, just talk about that a little bit more because I think you helped me cut down on the number of questions I had when you started talking about anchorism, talking about the state law and what we had to do in order to comply with the state law.

I think Ashley sort of summarized it a bit as well. So Mass General Law Chapter 44, Section 31D Allows for municipalities to exceed their small appropriation. One caveat is that you can do it automatically without any permission by As long as you haven't reduced your prior year's appropriations. So I think that's a good rule because it's sort of you don't want to sort Artificially lower something that is a cost. Jim, talk about that a little bit, so long as you don't reduce your prior year's appropriation. So that is sort of a provision of the law that says that You don't need to seek any permission to exceed it as long as you haven't reduced the prior years. So the current year appropriation is at least as much as the prior year.

And that's why we ended up again with that. 22 million from the prior year.

Right. And it's, ideally, it's, you... The problem is with snow and winter management, we haven't really established a consistent pattern of spending. In any dollar you budget gets factored into the overall size of the budget and claims resources that may be available for any other part of the budget.

And so we're going to be at $70 million overall for the snow. And next year, we won't have a fiscal year 27 Well, the budget for fiscal year 27 is the same as it was last year. Knowing that we could have, we could be sitting here next year, same time with another 40 plus million dollar supplemental.

We certainly hope that this was like an extraordinary event that doesn't repeat itself every year.

Yeah, could be more. Jim, how much are they?

I will defer to the streets cabinet but it is based on the type of equipment so like the hourly rate for a small pickup truck versus a big ten-wheeler versus a I would defer to them on the exact rate. I know there was a contract year change in FY25 and the rates went up considerably between Fiscal Year FY24 and FY25. and so on. Contractors, building in their labor costs, all of their overhead into those rates. Labor, equipment, fuel, insurance, all of the like, which are all

You know, as everybody knows, are growing.

Could you at some point give us, through the chair, a breakdown of the contractor spending, the staff overtime, the equipment repair? And I'm really interested in the snow melter and those operations. Remember years ago there was a lot of discussion under, may he rest in peace, Mayor Menino, of buying snow melters because New York had They had snow melters long before anyone. I thought we had bought some, but I guess not, huh? I think we rented them the last time. Is there any possibility of us starting to Look at buy-ins, snow melters, because they save on salt, they save on space.

Yeah, I think a good sort of cost benefit of the utility in a municipal environment, what you'll hear anecdotally, that it's It's very challenging to operate them in an urban snow environment because it's It's, our snow is not pristine like an airport or something. It's, it's sort of got, and probably the airport is not completely pristine either, but we have furniture and, you know, all of it.

We get the same snow New York gets. Right. Don't we? Right, probably a little more. Right, but they've done so well with those snowmelters, and so it's going to save money. Right. Yeah, we can certainly work through the street schemes. It might make sense to look into them, yeah. And if you could just get those categories to me through the chair. And then... I wanted to look at the number of private contractors versus the in-house contractors or city operations. How does that measure up and how are we doing? Whether we need to beef that up for the future I just wanted to look at those numbers, then we can talk about them later. Mr. Chair? That's all I have, and I have time left.

You have one minute and 41 seconds. Thank you, Mr. Chair. Just to follow up based on what Councilor Culpepper was talking about. So first of all, I did look at Chapter 44, Section 31D. It's pretty clear. It just says that you can spend over for snow removal provided that the appropriation Thank you. We appropriated $21 million in fiscal year 27 and we went over.

I think there's an approval process that we would have to go through in order to overspend our budget whereas now based on that law you just cited we can just do it without additional authorization but if you Reduce it. There's other steps that you would need to go through in order to spend beyond that appropriation.

Okay. And then just before, sorry, Councilor Fitzgerald. It says that if you do go over, expenditures made under the authority of the section shall be certified to the Board of Assessors and included in the next annual tax rate. Can you explain that? What this appropriation does for the tax rate, I guess.

So, yes, I will do my best. This has been an education that we have gone through to this year as we've been learning more about overspending snow. Basically, if you incur a deficit in your snow spending in one fiscal year, the next fiscal year you would have to ensure that you are raising enough taxes to cover that deficit. So you have to deal with it. in the next year. And you're still capped by your levy and Prop 2.5 and all of that. So you would need to ensure that there is sufficient tax revenue that you're raising in order to cover that shortfall from the prior year.

OK. So I paused your time in 1 minute 38. So basically, can you just expand a little more? So the fiscal year 27 budget, do we then have to put in an extra $47 million?

So because we're doing the supplemental... and Hope that we'll have the Council's support in appropriating free cash. We won't be in that position, but should we, you know, if we weren't pursuing a supplemental We would have to somehow account for it in next year's budget.

Okay, that helps. Okay, thank you. Councilor Culpepper, did you have... Actually, if we weren't...

Pursuing the supplemental, you're saying that we would have to account for it next year? And so what if we weren't pursuing a supplemental? What would that look like?

Yeah, well, I mean, the big thing that Jim and I are focused on, too, is not having the city's books end in deficit this year, right? That would be not great for...

The bond rating.

The bond rating, all of that, right? So we're trying to cure that shortfall before June 30th such that we don't end in deficit.

And so, if I may, So the administration talked about using the use of free cash. I think the mayor said it was fiscally irresponsible. But we're using free cash. This year was used last year. What's the distinction in terms of when it's appropriate to use free cash and when it isn't?

Yes, so I pulled up, I anticipated that question, so I pulled up the guidance from the state on the use of free cash. Okay. from DLS, Division of Local Services. As a non-recurring revenue source, free cash should be restricted to paying one-time expenditures Funding Capital Projects, or Replenishing Other Reserves. And we do not recommend that free cash be budgeted for ongoing operational purposes. So really, the one-time kind of unique emergency nature of the expense

Well, you know, we have different interpretations of what non-recurring is because I don't think snow removal is non-recurring. Mr. Chair, my time is up.

Thank you. I knew you wouldn't let me down, Councilor Culpepper. We got eight minutes. Okay, Councilor Fitzgerald.

Thank you, Chair. Just thinking off your last comment though, it just sort of gives more credence to support the supplemental I think it's fair to say we never want to go into a fiscal year planning to pull from reserves or free cash but at the end of the year you know given any sort of circumstances that you can and that certainly I think it's a red flag for the ratings as well if the plan going into a fiscal year is pulling from free cash. So I do understand it from that regard. But I guess what's interesting, I'll start with the snow and then I have questions just about how money works after that. A lot of what I'm hearing is 2015 versus 2026, right? My interpretation is costs have gone up. You know, labor's gone up, materials have gone up, et cetera.

But what was the actual snow from 2015 to 2026 and what did we see? Was there any other difference the way we approached it I know there were more snow occurrences this year I think, but there was more snowfall in 2015. And I think just a lot of people have asked me that question of like, we did this 11 years ago and we didn't have to go 47 million over budget. So what was the purpose of that year? I think if you could explain that answer to folks.

No, it's the exact question we all have. So in 2014-15, it was 110 inches of snow. A slightly more number of occurrences or events, 27, but it's basically 10 years later. In terms of cost growth, The approach, we actually pushed a lot on asking about are you doing things differently. And maybe this year, the number of removals was probably, but it was, and many more.

and so on. And then we were compounded by the fact that we have cost growth in 10 years, and many more. The streets team had said they're not operationally, you know, on the snow fighting or emergency snow, so they're following the typical protocols.

Yeah, okay, understood.

We also had the benefit of getting a FEMA claim in that. Gotcha.

That covered, do we know how much that covered?

It covered about $3 million of our costs that didn't have to go into the general fund. It was covered by FEMA. By FEMA. So $3 million of that. Okay.

Were we over in 2015? We went past our snow budget in 2015, similar to this year, right? How much over were we then?

It was roughly $20 million over.

$20 million, $3 million covered by FEMA, so we had to absorb $17 million. And did we do a supplemental budget in 2015 as well?

We did not. We just had enough of a buffer built into the budget? To take that on?

Gotcha. So the $150 million that All together, we're using, I understand that, you know, the 110 is one's coming from snow, the other will be from BPS. And that 40 million that we, that's an annual thing, right? Can you just explain to me what that's used for and why? We pull it out to start a fiscal year. If I'm correct, and I know we just started this conversation saying, Usually starting a fiscal year by pulling from reserves, but I know that this is a consistent thing. Can you explain to me why it's a consistent thing and why it happens at the beginning of a fiscal year, pulling from reserves, just so people understand? Well, you're already pulling from there to start the year. Why not just pull more?

Yes, so we historically budget $40 million of available fund balance to fund our contribution to our retiree health Thank you. Thank you. OPEB liability as we are with our pension but it's a large liability and so we want to start you know make make some progress toward that so we we acknowledge that expense with that one-time revenue source we don't always end up needing to use that $40 million of available fund balance to fund that contribution. So should revenues come in sufficient during the year, We can cover that expense without pulling in that fund balance.

And so that happens in some years where we don't actually need to use that money to fund that particular expense.

Okay, but just so for folks to understand, well, you're already pulling from, that's what it's for. It goes to fund our OPEB, and that is just a continuous down payment as we, because it is such a large nut that we have to, we're just doing our fiscal responsibility to pay that down. Is there a percentage of that? I know you said the 150 that we're pulling is about 25% of our certified free cash. Is there a percentage that's given or guidance from the state that is sort of a tipping point that they might say, hey, you never want to pull X amount more and given... I know I think, right, there's like 1.7, 1.9 billion of free cash. 601 million of it is certified, which means that's what we can actually draw down from. If we're drawing down 150, knowing 40 of it is for the annual down payment for OPEB, and the other 110 is for snow and winter management that has happened and BPS shortfalls that have happened,

I wonder if there is a how do we repay that and then you know because you could just say oh if that's the safe amount to pull down every year we could almost say well we'll pull we'll take away 25% every year however I don't think that That takes us very far, physically, right? So how is that money then put back in and have we budgeted like at the end of the year we'll have X amount over revenue that we'll then replace it with? Is that how it works?

Yeah, so we don't necessarily It depends on how you close the fiscal year. And so your year end budgetary balance will contribute to that overall fund balance, which then is kind of the basis for the calculation of your free cash. So in the past couple of years where we've ended the year with a pretty significant surplus, I think in 23 and 24 in particular, that helped to replenish our fund balance and then therefore our free cash. And so it's really a function of how you end the year and how much of a surplus you have available to then kind of replenish that. And then also, as I have mentioned before, They start from a, you know, DLS when they're certifying our free cash starts from a point of our available fund balance and looks at our balance sheet, looks at any, you know, receivables, liabilities that we have.

If we're able to kind of cure those receivables, that helps boost our free cash as well. So it's a little bit of increasing the beginning fund balance that you're starting with, but also It's a bit of a balance sheet exercise. So between those two things, that can impact your free cash levels.

And one more question, Chair. And actually, I have to ask this. Given that a lot of our budget each year is based on new growth, and we're not seeing a lot of that. And we talk about the surplus being able to fill in what we pull from free cash over the long run. Do we have any equation laid out of the forecast of new growth and how much over revenue we might be and the other things that happen? in order to pay back the 150, well, I'll call it the 110, because I know the 40 is annual. So to pay back the 110, and how long, does that happen in one fiscal year, like at the end of the year, like we put the 110 back, or does that, come in in over several years and if you're thinking how many more how many years do you think it would take and given right now what little growth we're seeing and knowing that that's going to be a hit on the budget Will it take even longer to put this $110,000 back?

Yeah, I mean, most likely you're going to build that back over time, but I'm thinking about how we ended fiscal year 2023 with an overall budget surplus of and that was driven by interest income mostly.

That wasn't the federal, that wasn't the ARPA or anything like that?

No, that was our cash was earning a lot more money because interest rates were so high and that's really what has driven, you know, Really what drove the surpluses in 23 and 24 and now that those interest rates are starting to come down is a reason why we're sort of projecting that that revenue is going to start to moderate a bit. I don't expect that we're going to be in a high interest rate environment like we were in 23 again, but something could happen where you can replenish it in one year, but it seems unlikely. So it's probably a multi-year build back of that balance.

So I only ask that to highlight that there is risk of, if interest rates are lowering, new growth isn't occurring, it will take longer to pay back whatever we pull down, so we have to be very careful about what we pull down for. and Snow being a non-recurring, as Councillor Culpepper likes to say, a recurring thing. We hope to, yeah, you say it's recurring, right. We hope to. Well, let's just fingers crossed for no snow next year, I guess. Thank you, Chair.

I appreciate it. Okay. And I think one question, Councilor Fitzgerald, I think asked, and I have sort of an addition to that, is what the guidance from the state would be on the balance which I didn't hear an answer. And also my add-on to that is what do Moody's and the rating agencies look at? Is it the same number?

So I'm not sure if... The Division of Local Services has a particular percentage. I feel like they must. I just don't know it off the top of my head.

There is a guidance, like general accounting principles or something like that.

So I can go back to that. The city maintains a policy about overall fund balance levels and how much fund balance we should have. And that's that larger starting number, that $1.2 billion figure. Our policy is that that number should be no less than 15% of expenses. We're currently at about 24% of expenses, so we're well in excess of our own policy. and I'm sorry, the second part of your question was what the rating agencies look at. So they tend to look at that larger unassigned fund balance number. They're less interested in our free cash calculation specifically. So they tend to focus on that bigger 1.2 number. And even then they look at it differently. They include some things. They exclude other things. but they're focused on that larger number.

I'm just saying, we set 15% as where we want to be. Do the rating agencies have the same? and so on.

So, they have said to us, Moody specifically this year has said that for fund balance for a You know similarly situated AAA rated city like ourselves that we should be I think at least 25% of reserve so and based on their calculation we're at 30% so we're in excess of their Thank you.

Okay, so we've been joined by Councillors Murphy and Flynn. Councillor Murphy, you beat Flynn. and so on.

Thank you. Retirees, and just wanted to make sure I came down and just listened. So I know my colleagues have asked some questions, don't really have any specific questions, but thank you for being here.

Thank you. Okay.

It's Council Flynn's turn. I'll give my time to Culpepper. I know we always want extra minutes. I only use 30 seconds, so if you need to use some.

No, Karishma, do not. Encourage, Councilor Culpepper. Councilor Flynn, you have eight minutes. Thank you, Mr.

Chair. Thank you to Jim and to the CFO, Ashley, for being here. For the work you're doing. The administration has characterized the use of free cash as fiscally irresponsible or challenging, yet the city has regied on it. In each of the last three years, I believe. So is there a distinction that we're making specifically when is the use of free cash responsible versus irresponsible? and how should the city evaluate the administration's recent use of it, such as OPEB?

Thank you, Councillor. I, before you joined, was sharing guidance from the state, the Division of Local Services, on their recommendation for when to use free cash. And I'll repeat it. say that it is a non-recurring revenue source and so free cash should be restricted to paying for one-time expenditures. And that they do not recommend that free cash be budgeted for ongoing operational purposes. I was also... having a similar conversation with Councilor Fitzgerald about this and that each year is the city's long-standing practice to put forward an operating budget that assumes A use of $40 million of free cash to pay for our contribution to our retiree healthcare liability. That's a discretionary choice. We're not on a schedule in the same way that we are with our pension obligation to fund that liability, but historically we have made that part of our budget.

I don't think in my time here, We have actually needed to use free cash to fund that OPEB contribution. That might be a different case this year. But we have not needed to use free cash to fund that particular expense. We've had other revenue available to cover it. Lastly, I will say the last time the administration and the council appropriated free cash was January 2025 for that one-time housing accelerator appropriation.

Was that $100 million? $110.

$110 million.

Okay. The $48 million, is that all for snow and winter management? Or will it go to transfer to cover execution of courts, police overtime? What is our final snow and winter management number for FY26? We spent 36 million in FY2015 when we had 110 inches of snow. and the second coldest month in Boston history. How did we spend so much more one decade later with so much less snow?

Sure, Councilor Flynn. Yeah, it's 10 years of changes in labor costs, particularly in the contractor realm. There has been a change in dynamic on the availability, particularly in the snow removal category of places to store snow. It required... of the Emergency Procurement of Snow Melting Operations to make room for the procurement. So we also had the benefit in FY15 of a FEMA claim. One of the, we had two major storms this winter, the second of which was a named storm that unlocked sort of, there's a whole process whereby the governor Petitions declare state of emergency.

geographically that was more oriented towards southeastern Massachusetts so when they finally did the calculation Suffolk County did not is not eligible for FEMA claim this year so that's one of the point of comparisons but it's it's largely and also event-specific, very cold snap between two fairly significant storms, no melting, requiring a lot more removal. Okay, thank you, Jim.

We were given a AAA bond rating in 2014 when we had 7% of our operating budget in free cash. We're currently at 13%, and even if we draw down to $450 million, will still be at 9% of our operating budget in free cash. I guess my question is, how long can we go in free cash to keep a AAA bond rating?

That's a great question. I was mentioning that the rating agencies, as far as we know, are not necessarily focused on our free cash balance that's certified by the state. They're interested in our overall available fund balance, which is that 1.2 billion dollar figure that we've mentioned before. And so they've said to us, Moody's in particular, that similarly situated AAA rated municipalities should have at least 25% in Reserves. And according to their calculation, we're at 30%. So we're in excess of their policy. It's obviously something we look at really closely and evaluate as we're getting ready to be rated and making these types of spending decisions.

Thank you. I have two more minutes left. Does the overspending in snow in FY2026 change the amount that we need to set aside by law for snow and winter management?

No, one of the provisions in Council Weber sort of read the National General Law that speaks to the ability to automatically overspend. The requirements of that automatic ability to overspend is that you maintain the same appropriation as the prior year at a minimum. Snow, appropriating for snow is not an exact science. We try to look at a good, reasonable estimate of what we can expect for spending. This year obviously did not meet the same pattern that we've achieved in the last five or six years. I think we've set off five of the last six years had been with a surplus. So, but I think, you know, it's, It's a reasonable estimate to have for the coming year for snow removal costs.

Okay. Do we have any revenue numbers through May 1st?

For the current fiscal year, revenue numbers, I think we have them through March 31st.

Okay. Are you able to provide those?

We can. Yeah, I think we can provide them to the committee. For the chair? Yeah.

Are they publicly available?

Yes, we will get those. Okay. Then maybe my final question is, Over the last several years, excluding last year, but when the city doesn't use all of this snow budget, Tell me where physically that money goes into and how much money has gone into that pot of money based on just say the last four years or the exception of last year, how much money Did we put back into the city coffers?

It's... So... One year, FY22, which was that fairly large, that was the winter storm, Keenan that it hit. So if you net that out, I mean, we were returning, you know, One or two million dollars every year. And then in FY22 we spent about seven million dollars and that was with a FEMA claim that we were eligible for that major effort. Calendia 2022 Storm.

Okay. Mr. Chair, may I ask one more question? Yes. Okay. Many of the people that plow the snow, move the snow are contractors that the city pays. Have we paid all the contractors to date?

I believe Streets is going through a process there. It did require some contracts to be amended, so I think the vast majority of the contractors have been paid, but there may be instances where they have to formalize a contract change in order to make those funds.

Are you just talking like one or two?

I would defer to Street Spice in that,

But for millions of dollars or for?

I think it's within the small millions of dollars, not multi-millions.

Well, that's an important information that I should know, though. is if there's basically outstanding bills that we haven't paid yet.

We've capped in this projection all of the- That's projected in? Yes, yes. Yes.

Okay. Well, through the Chair, could I get a list of the unpaid bills that we haven't processed yet? Okay.

Okay. Yes. Thank you, Mr. Chair. Is that it? Okay. Thanks. A couple questions from the Chair, then we can go to public testimony. Is anyone? Here to give public testimony. Okay. So I guess just in terms of the year-to-year stuff, is it possible to do a revolving fund for this? Because it seems like we need the money every... Five, six, seven years. Have we looked into that?

Yes, and this is something that the mayor has expressed interest in exploring the possibility of doing a snow reserve. So there are municipalities do have the option to create a special purpose stabilization fund. So we are exploring kind of what it would take to both establish that and how it would operate. It would probably require the mayor and the city council to make a choice to appropriate money into it, a choice to appropriate money out of it. There's some kind of pros and cons of doing it that way. So it's possible and we're exploring it.

Okay. Is there state reimbursement for like a snow emergency?

No.

Okay, has that ever been?

Not unless they, you know, were, you know, Jim talked about the FEMA, which we've gotten in the past. Unless the state were to appropriate money for it, there's not any kind of recurring pot of funds made available.

Okay, let's see, comparing to 2015, is there, was there any change in the way we've contracted? More Contractors is more competitive in 2015?

Yeah, it's a three-year cycle on re-procurement, and it's sort of priced out on the type of equipment, an hourly rate on the type of equipment. The vast majority of the public works vendors. Schools and parks in the NOH might have a slightly different model, but probably similar in nature. Those rates have obviously grown. The amount of city workforce, just because of challenges in hiring folks with CDL licenses and having them. Our internal workforce is not exactly the same as it was in 2015 to be able to man city-owned vehicles. The goal would be to try to...

There is a strategic approach of storm response to activate city resources before you call in contractors, but I would defer to streets on the exact approach.

Okay. and then I just I think nearly the last thing for me so we spent time talking about DLS and you know non-recurring versus recurring so I think I think I differ with Councilor Culpepper on the snow being a recurring thing, but can you just distinguish between, so using the free cash for Snow removal appropriation, like looking at the DLS guidance, distinguish between snow removal, the housing accelerator, and youth jobs, and help us understand or help me understand How that rule would apply to each of those or what your thinking is on those?

Sure. So, you know, after the councilor asked the question, I was thinking, well, yes, we do acknowledge that snow is a recurring expense, which is why we Thank you. Thank you. and many more. More or less appropriately covering the recurring cost of snow within our operating budget and so this kind of one-time extraordinary amount over and above that would be appropriate use of free cash because it is truly and many more.

The other example of a one-time program where it is intended to be Thank you. Thank you. Thank you. and then the youth school year jobs that has been a program that has been continuously funded in the city's annual operating budget for the last couple of years. And there's an ongoing expectation that that you know that those recurring costs will continue to be funded and so if you were to fund that with a one-time source that should not materialize in the following year you would create Thank you.

Thank you.

Okay, thank you. Let me see. And just in terms of, I guess we talked a little bit about the snow melters and I thought, I that there was a debate between like buying them and having them maybe sit around for the last eight or nine years as opposed to leasing them like what's the how do you how do you like is it If you add in, can you do the math? Do we save money by leasing?

I don't have that sort of cost-benefit analysis, but that is the... The rent versus buy analysis that you would do. Yeah, because I think... In frequent use sometimes probably is not a good sort of maintenance model. So, you know, if you didn't use them for seven years that, you know, The reliability of them actually being workable might be a challenge.

Okay. Okay, I guess last question. So after, I think you identified it was $150 million that's coming that is currently or budgeted if we pass these appropriations. Coming Out of Free Cash and Next Year's OPED. How do you anticipate that impacting the review of our reserves? What are the percentages are going to be? based on our revenue projections?

We haven't done the calculation of our reserves. I think we would wait until year end because there's, again, a lot of and other inputs into that. But that is definitely something that we will be monitoring as we close fiscal year 26 to get a sense of what our reserve balances will be and then be thinking ahead Next spring when we go out for ratings, kind of how we're being viewed.

Okay, thank you. We've been joined by Madam President, Councilor Breadon. I'm giving people eight minutes, so. Do you want eight minutes to gather your thoughts? How about this? We're going to take public testimony, and then if you have any questions, we'll come to you. OK, after hearing from about 100 folks last night, I'm relieved to say there's One person on the list. So Mr. Maynard, You don't get eight minutes. I'm going to give you two minutes, and whenever you're ready, introduce yourself, and then I'll start the clock.

Thank you. My name is Gregory Maynard, and I'm the co-founder and executive director of the Boston Policy Institute. Snow and police overtime are perennial sources of overspending in Boston's budget, so why does Boston have this extraordinary FY26 deficit? The answer is overspending on health insurance. This isn't BPI's analysis. In the letter introducing the very supplemental appropriation that is the subject of this hearing, Mayor Wu wrote, quote, the spike in health insurance costs for city employees was a current year issue. That raises the question, why was Boston's FY26 health insurance spending forecast so inaccurate? This is a question that the City Hall officials at this hearing, Budget Director Williamson and CFO Grafenberger, should be able to answer. According to municipal health care experts, for a self-insured city like Boston, the process to make the following year's health insurance forecasts starts in the fall.

Outside vendors work with city officials to analyze the last two years of medical and prescription cost data, then add the current trends. Those projections are provided around Christmas, and then numbers are picked by February. This work is well documented, with slide decks and memos, and often includes presentations to bodies like the Public Employee Committee. Unfortunately, even with all that careful preparation and analysis, FY26 wasn't the only healthcare spending estimate that was wrong. Something also went wrong in FY27. The reason we know that is because BPS was forced to add $16 million to its health insurance spending on March 25th. March 25th, for those who don't know, was the day the school committee voted on the BPS FY27 budget, almost two months after BPS first issued its budget on February 4th.

That last-minute addition, especially given the FY26 deficit, should be a flashing red light for this council. Unfortunately, this council does not seem to agree. The council did not hold an FY27 budget hearing on either health insurance costs or the People Operations Cabinet, which oversees the city's health insurance program and has a $337 million budget. Something seems to be wrong with Boston's health care spending, and this council needs to figure out what it is. Thank you.

Okay, Councillor Breadon.

Good to see you both. Sorry for my lateness, I was out in the district. I'm just wondering, the snow supplemental request for snow removal is 47 million. Does that mean we went over our budgeted amount of what was What did we budget? And then is that 47 over and above what we had budgeted? So does that mean we spent 67 million on snow removal? Yes. And do we have a breakdown? Is anyone... And looking at that, like really getting into the weeds on that one because it seems, and I know it was, what was it? 40 inches of snow? 50 inches of snow? And I think the problem was we didn't, nothing melted, so it stayed around for a long time, but 67 million for two storms seems pretty excessive. Any thoughts on that?

Yes, so we are definitely working very, very closely with streets to understand the drivers there. In our presentation earlier, we talked about how those two major winter storms were, of course, a huge driver. You mentioned nothing melted. But aside from those, there's 20 other winter weather events, right? Like little things, you know, Thank you. Thank you. The big difference this winter, too, is it was much colder than expected, so nothing was melting. We got no assist from the weather. Yes, I think there's a huge opportunity going into next winter to work closely with streets to understand the drivers there and it is work we intend to do.

Okay. And then You know, we underspent our snow budget for several years in a row. This is the unpredictability of climate change. We underspent, is there a way that, The money that we underspend, do we have a snow day fund or how do we manage that unpredictability of it?

we don't but it is something under state law a municipality can create a special purpose stabilization fund and that's something that the mayor has talked about and so Jim's team and myself are exploring what it would take to create one, how we would administer it, how many would go in, how many could come out. So it's a possibility that we are exploring.

I know we're going to talk about the BPS supplemental this afternoon, is that correct? And then I'm just curious about in terms of the breakdown of the cost for snow removal and much of it is City Labour versus Contracted Services. Is there a breakdown on that?

Yes, and I think we've... And I'm sorry, you may have... No, it's okay. I think it might have been Councilor Culpepper asked for a similar breakdown, and so we committed to following up with that.

Excellent. Did any, was there sort of a, any vendors increase their cost or their charges if you went above a certain amount of snow? Was there any sort of?

Yes, Councillor, it's, Largely, the biggest contract is an hourly rate plus on the type of equipment. So it's been on a three-year cycle. So FY25 was a contract year change. And the streets did say the rates for those A similar piece of equipment went up significantly with the contract change. So it's different rates per type of equipment The smaller truck to a big 10-wheeler, removal equipment, front-end loaders, all of that have different price points.

Do we have any lessons to learn from other places like, I know Montreal gets a lot more snow than we do, it's a lot colder, I've been there in April and it frees you to death, but do we have any lessons to learn from other places that obviously get Places like Buffalo or Montreal or places that get more snow. I think in order to invest in equipment that you would only use every five years is probably not the best investment, but any thoughts on that?

Yeah, it's a good question. I think, you know, Jim and I might defer to the streets cabinet and the team that actually does the operations on that, but certainly something we can talk about with them and bring back to this body.

And in the letter from the administration, it was described as a one-time cost, an extraordinary one-time cost. Is it actually extraordinary? Extraordinary might be something that happens once in 20 years, but I don't know, the unpredictability of our climate is really a challenge, but do we have, what sort of, What understanding do we have of an extraordinary one-time cost?

Yes, I mean, if you look at our snow expenditures over the last, you know, five, ten years, This is definitely an outlier year. Jim was mentioning earlier, we typically return You know, one to two, you know, with the exception of, you know, FY22, which was a major winter storm as well. We're typically returning one to two million a year. Just left over at the end. Yes, exactly. So that's kind of been our recent experience. So this, you know, relative to those years is extraordinary to have such a high expense and, you know, and it's not our expectation that that continues but should that be our you know We have a very unpredictable reality these days.

And just in terms of supplemental, I know we have to Draw from free cash to balance the budget at the end of the year. And then it's like a one-off. What are we doing to make sure that we don't have to draw on, pull on supplementals again next year?

Yeah. I think this conversation about revenue forecasting is part of it as well. I think we have... for 27, you know, really were thoughtful about our revenue forecast to make sure it was sufficiently, you know, there was sufficient revenue to balance the budget, but also, you know, conservative enough so that we have some flexibility to absorb any extraordinary I mean, of course, there's going to be things that you just can't foresee, right? So we want to make sure that we're being thoughtful in our revenue projections such that we have some flexibility to absorb this. and we think we've struck that right balance, but we'll see what the next year brings. And we're really fortunate that we've had many good years and we've been able to build reserves so that we're in a position to be able to do this. Many municipalities in Massachusetts is a much more dire choice.

Their reserve levels, their free cash levels are running really low. So we're fortunate that we're in a good place to be able to deal with this in this year.

In a situation where we have extraordinary weather events like this, like I know further south in Taunton and the South Shore got hammered, like they got 50 inches of snow in one storm. Does the state have any help for municipalities in those sort of circumstances?

Nothing normal and recurring. They could make a choice to appropriate funds in their budget to cover these costs, but there's no recurring program. Sometimes there's FEMA reimbursement available and some of those south coast towns were eligible for FEMA reimbursement for the February snowstorm, but we unfortunately missed the Thank you.

Okay, thank you. Councillor Flynn, if you have some follow-ups, just for the record, anyone watching online, we did hold a pre-budget hearing on healthcare spending with Chief Grafenberger, I think Mr. Williamson is here as well as Alex Lawrence to talk about healthcare spending and generally we don't hold a hearing just with human resources in our budget process because they're Their budget pays for the health insurance and they're basically paying the payroll of all the departments that were coming before us. Flynn, just if anyone wants to know what our thought process on that was. Can you just clarify before we get to Councilor Flynn? So I know there's some negotiations with the PEC about GLP-1s and things. Do we have to revisit that? Going into next year, what's the plan?

Yes, so we are in the middle of a seven-year contract for health plans with our public employee unions. and we are in the process of negotiating the successor the next successor five-year successor agreement which will go into place for FY28 so we are in the process of I guess my question, I thought something had been negotiated

Thank you.

Thank you. The unions to essentially reopen the contract that we're in currently to provide for that utilization management, which yielded savings.

Okay, thank you very much. Councilor Flynn, four minutes.

Ashley, the negotiation with the unions on that issue, who is the lead point person for the city?

It's a group of us. It's a shared negotiation with the Finance Cabinet and the People Operations Cabinet in close collaboration with The Labor Relations Team.

Lou Mandarini.

Renee.

Is Lou part of that?

He's part of the team, but yeah, it's a large group between finance and people office.

I asked a question. I don't think I received the answers at that hearing you mentioned about health care for city employees, the month-to-month spending in FY26. Are you going to provide that to me? That's the information I request to see how much it increased each month.

Yeah, I can pull up. I think we did get your request, Councilor Flynn. I believe we responded, but I'm happy to pull it up.

Okay. So how much did we spend on health insurance for city employees in FY26?

For health insurance, the FY26 appropriation is $250,307,372. Is that including BPS? Actually, BPS budgets for their own health insurance.

Well, yeah, but add that in, Jim.

How much is, how much is BPS? I don't have BPS as health insurance. Hold on one second.

And then part of that, Jim, how much did we overspend? I think that caught us off guard, the weight loss drug. But if we were looking at the month-to-month spending closely, we would have noticed the price increase going up significantly. Is that accurate?

Yeah, so BPS's FY26 health insurance budget was $134 million. Okay. And part of the supplemental that you'll be discussing this afternoon It helps cover the overage amount for that account.

But were you looking at each month and seeing how it went up? So you knew right away that it was going up, right?

I think it's for schools, they actually do their own projection and Their payrolls are not necessarily as even as a city department, given the summer payrolls and the like. But through the fall, they were identifying Thank you. Thank you. Shortfall, were they enacted spending controls in November, new to December? Okay.

But you're able to get me that.

Thank you very much. Thank you.

Sorry, I believe we got the month-to-month spending. It was shared with your office. I'm just, when we received it, I'm still waiting for that to come through. Do you have any follow-ups?

Yeah, wasn't there an opportunity maybe for, and this is something I've recommended, but having BPS Coordinate and stay with the City of Boston as part of some of the streamlining process of health insurance so we're all kind of under the same system that might Save money. I know that's something the teachers union wouldn't likely support. I think it seems likely the mayor's office would support something I've recommended. Isn't that an opportunity for us to save money?

So the way we budget for health insurance each year and we you know between the city and BPS it's really formulaic where we take how many expected members we have, and then the expected rate. And so it's really, there's not necessarily any economies of scale to be gained by combining them, because they are sort of We just put the budget for BPS health insurance in that overall BPS budget. From what we can tell on the finance side, there's really no Thank you. Thank you.

That's not something I support. I want us to combine them. I think it does save the city money if we put it all under one umbrella instead of doing two separate separate systems. I think the teachers union that's always been supportive of the mayor supported and I thought the mayor supports it as well. But you're saying we can't get that done?

It's not that we can't get it done. I'm just saying that from what we've been able to look at, there's really no savings to be gained by combining them because they are currently the same system. We just split the appropriation into two places. So there's not There's not two systems. There's not two different, you know, health plans that, you know, people are being managed under. It's really just taking a central appropriation and budgeting it across two locations.

And my final question, I was downstairs. Testifying in support of city retirees and advocating for a little bit of dignity and justice for retirees. They're not making a lot in their pension. They work hard. They're not getting wealthy. They're struggling to make ends meet. Is the city going to support them in their advocacy for a COLA increase of 3% and also the The extra support that they're requesting as well.

So we will review the request but what I will share is that As it relates to the COLA base, I think the ask has been to increase it by $3,000. Yeah, I believe so, yeah. And so the impact of that would be a $90 million increase to the unfunded liability. Thank you. Thank you.

that didn't this did at the city um 2028 didn't wasn't it um didn't they readjust that recently no no funding schedule is still to be funded by 2028 but didn't the mayor support um Support the caller base and the caller increase. That's what the retirees told me that they they got a commitment from the mayor that the mayor would support them and in the city administration now is doesn't seem like they're

I'm not sure about what the mayor has said to the retirees directly, but I know that we have supported the cola increase over the last couple of years at 3%. And in fact, I think it was in 2023, we voluntarily increased it by 5%. So we went above and beyond. I think it was 2023, and have supported the 3% COLA in other years. But the COLA base, given, again, the significant increase to that, speaking as a CFO, significant increase to the unfunded liability and the very limited window by which we would have to actually I understand that.

I'm asking for a little bit of dignity for City retirees. I've seen them. They've been in the city. They've been working since the 1970s. They weren't getting paid much back then, and they were Plowing our streets, they were educating our children, putting out fires, helping the elderly, and they didn't have big salaries. I look at them now, and they're barely making ends meet. The high cost of housing, the high cost of food, they're telling me that they're barely making it and many of them that own their own homes are struggling to pay their tax bill as well. I'm just asking for a little bit of consideration for them. I'm not asking for them to be wealthy. I'm just asking for dignity and retirement. I guess that's a conversation for another day. Thank you, Mr. Chairman.

Okay, thank you. Just looking at the information requests from the The request we have down for you, and there was no month-to-month, it was year-over-year spending. No, mine was month-to-month. I'm just so based on our question to them for on your behalf was year to year. So we have that. We can get month to month.

Mr. Chair, that's inaccurate. I specifically ask month to month. If it's month to month, that's how you will know if the cost is going up significantly. Year to year, it's too late then now. You need to look at one month and the next month and see how much the percent increased or decreased. And that's how you factor things in. But I specifically asked month to month. Okay, well, we will get the month-to-month. That's a big difference, month-to-month and year-to-year. I agree. I just want to be on the record that I specifically asked for that night. and I'm still waiting, Mr. Chair.

Okay. Well, they responded to our request for year to year and we got that information.

But that's not what I asked, Mr.

Chair. Yes. I apologize for the miscommunication. We will get the month-to-month data. Okay. Councilor Breadon, do you have a follow-up?

I'm just curious about the healthcare budget for BPS. How many million did you say it was?

134 million.

134? and technically it's like a split, it's the same program as we have and it's split into two pieces so Bringing that into the city to put it all in one bucket would mean that you would take that $134 million out of the BPS budget and it wouldn't really... It wouldn't really move the numbers because you'd have to take the money out of the BPS budget. Correct. Yeah. Okay. That's good. Thank you.

Okay. Thank you very much. If that's all, Councillor Flynn. Okay, well, I just want to thank you very much for all this information. I guess my question is when does this have to be approved to prevent further harm?

By the end of the fiscal year, June 30th.

Okay. Okay. Well, thank you very much. This morning's hearing, and I look forward to seeing my colleagues this afternoon for BPS, so this morning's hearing is now adjourned.