City Council

Recording in progress.

Calling this meeting to order. This is a meeting of the City Council. It is a special meeting of the City Council. It is Tuesday, April 14th. I am Lance Davis, presiding. I use he, him pronouns. Williams. Please note that video and audio of this meeting is being recorded and may be shown live on local access government channels and on the City of Somerville website and will be available for future review. Clerk, please call the roll.

This is roll call. Councillor Ewen-Campen. Here. Scott.

Present.

Councilor Clingan.

Present.

Councilor Strezo. Present. Councilor Sait. Councilor Wheeler.

Here.

Councilor Hardt. Here. McLaughlin, Councillor Mbah, Councillor Davis, with eight Councillors present, we have quorum.

Thank you. Councillor Link, I know, is traveling outside of the country, so he and I chatted today, and I suggested he can watch this afterwards to catch up. Councillor McLaughlin is going to be a little bit late, and hopefully Councillor Sait will be able to join us as well. Pursuant to Rule 32, let it be known that the City Council salutes the flag of the United States and let us recall our oath to uphold the Constitution and the laws of the Commonwealth to the best of our abilities and understanding. This is a joint meeting with the school committee, so the City Council will now stand in a brief recess while the school committee meeting is called to order.

Um, okay. Pursuant to Chapter 2 of the Acts of 2025, this meeting of the school committee will be conducted via remote participation. We will post an audio recording, audio-video recording, transcript, or other comprehensive record of these proceedings as soon as possible after the meeting. on the City of Somerville website and local cable access government channels. Separately call the school committee portion of this to order at 6.05 p.m. Superintendent, will you call the roll?

Through the chair, Laura Piton. Mitchell Lippens, Aldridge, Green, Stellman, Biton, Mayor Wilson? Present. President Davis? Here. Emily Ackman?

Present.

We have quorum.

All right, now calling the City Council meeting back to order. And just for extra fun, we get to call roll on that just to make sure no one's left their seat in a two-minute time.

Roll call to reestablish quorum after recess. Councilor Ewen-Campen?

Here.

Link is absent. Councilor Scott?

Oh, yeah.

Councilor Clingan?

Present.

Councilor Strezo? Present. Councilor Sait?

Here.

Hardt. Here. Councilor McLaughlin. Councilor Mbah.

Aye.

Davis. Here. Eight councillors present. We have quorum.

All right. Thank you. So there is one item on the agenda this evening. Madam Clerk, would you please read that into the record?

Agenda item 8.1, an officer's communication from the finance director pursuant to section 2-47 of the code of ordinances and section 6-3 of the city charter. reviewing the financial condition of the city with revenue and expenditure forecasts prior to the commencement of the FY2027 budget process.

All right. Director Bean, are you leading us off here? Are you testing? Can you hear me? I can hear you.

Okay, very good. Thank you very much, Mr. President, Madam Chair. I appreciate your...

If you wouldn't mind, just to start, for the folks who are watching at home, introduce yourself and the folks you have with us.

Yes, of course. I'm Ed Bean, Finance Director, City Auditor. Joining me is also Chief Assessor Frank Golden and Budget Director Mike Mastroboni, who will chime in as needed as we walk through the presentation. Assistant City Clerk will be helping manipulate the presentation with the slides tonight. We have about 45 slides here and we'll cover a number of different topics. Charges to take a look at the financial condition and macroeconomic factors that will affect the fiscal 2027 budget submittal. I always want to stress at this time that these are only estimates. These estimates are going to change. There are still unresolved matters, state aid. is unresolved. Health insurance costs unresolved. We're in the open enrollment period right now. Final debt service numbers we will be borrowing in May.

and the numbers tend to get a little bit better as we move along during the spring so these are estimates that we have at this particular point in time we don't know the parameters of the city budget at this time We're constantly working now to mitigate the situation and try to get to a balanced budget here in the spring. This is a general overview, so individual department heads during the budget process will talk about specifics, but we're covering sort of the major topics in a summary fashion. Next slide, please, Mattie.

And if the records reflect that Councilor Link has joined us remotely from across the seas. Thank you for joining us, Councilor Link.

So I thought we would take a look at what's going on throughout the Commonwealth right now. This has been an extraordinary year. Next slide, please. extraordinary year that we're seeing the headlines almost daily about the mounting fiscal pressures for municipalities. Most municipalities are navigating this perfect storm of fiscal pressures. We've got skyrocketing operational costs colliding with the very rigid revenue limits of Proposition 2.5. Health Insurance, state mandated tuition for out of district special ed placements, big budget drivers, pension assessments. All of these things are growing at a rate far exceeding inflation.

We note that several communities are facing significant layoffs and staff reductions due to these budget shortfalls, notably Boston, eliminating 262 teacher positions. But also what's sobering is that some top-ranked school systems like Winchester, Brookline, Lexington, they are cutting positions as well. Next slide, please. What this has led to is an unprecedented number of Proposition 2.5 overrides throughout the Commonwealth this year. In this fiscal year alone, 54 municipalities placed 74 override questions on local ballots seeking more than $158 million in additional tax revenue. A decade ago, the numbers were far smaller. In 2017, 21 communities placed 26 override questions on the ballot statewide.

Municipalities are forced to go this route given the difficulties of funding municipal government under Proposition 2 1⁄2. Of the overrides, In the entirety, in the history, 254 of 305 Massachusetts cities have passed overrides. Somerville has never needed an override. We won't need one this year. We're not in the same position as some of these other communities. We've had two debt exclusions in Somerville, one passed, one failed, the one, of course, to build our new high school. and the second one in the 80s was to build the vocational wing onto the high school. That failed, but that was later funded with state legislation coming from Beacon Hill. Next slide. Perkle to reflect that Councillor SAIT has joined us.

Okay, this is an important piece of scholarship that I hope all officials will read and take a look at. And this is the report put out by the Mass Municipal Association. That is, of course, the key advocacy group that represents the state's 351 cities and towns. This describes the financial crisis facing cities and towns brought on by inflation and limited revenue raising options. The association followed with a series of recommendations that I'd like to just run by you right now because these are important lobbying points. Next slide, please. The first one is that state aid in Massachusetts is less generous than the United States average. Nationwide, cities and towns get about 31% of their revenue via state aid here in Massachusetts. It's 26%. We're far behind other states, not even at the average.

A problem here, of course, in Massachusetts also is we have limited taxing ability on the municipal level. and that is other states are able to infuse sales tax or commuter taxes or whatnot here in Massachusetts that's not possible the two major local aid accounts unrestricted general government aid and chapter 70 educational aid next slide please

Thank you.

And the key account is unrestricted general government aid. This has fallen dramatically over the years. It's fallen 25% overall since fiscal 2002. You note the trough there during the Great Recession. There were cuts in the early 2000s. Unrestricted general government aid has not kept place with inflation since the Great Recession 2009-2010. But I think the next slide will show you something. This one always stuns me, this next one, because I was here back when this was happening. State Aid to Somerville remains below the fiscal 2002 levels in real dollars. State Aid receipts to Somerville in fiscal 2002 was 61.8 million.

Twenty-five years later, our state aid receipts total 55.8 million. You can see, you know, in terms of the history here in the 2004, 2003, that happened during the administration of Mitt Romney when he was governor who in my view punished a lot of the urban cities with reduction state aid and you can see the big drop in 2010. The city lost nine million dollars in state aid in one year in fiscal year 2010. and you can see that there's a further decline in 2011-2012 before it started to peak up again but we are still far below where we were many many years ago. Next slide. What does that mean? Well, I liken the three funding sources, taxes, state aid, and local receipts to say the three legs of a stool. If one leg gets weakened, the other two have to pick up the pressure here.

So you can see way back in fiscal 2002 to 2002, State aid constituted 38.2% of our revenue base. Taxes, 42.68%. Here in 2026, that's dropped to 14.60%. That meant property taxes had to pick up the slack. We are lucky in that we've been able to do that given our tremendous economic growth going over time. Next slide. So the other finding of the MMA is clearly proposition two and a half doesn't work for us. Between 2010 and 2022, real inflation adjusted spending on current operations in Massachusetts municipalities grew at just 0.6% per year.

That's slower than the US average for local spending growth. It's also slower than the growth in real spending in the state budget, which grew at a pace of 2.8% a year. Bottom line is that the overrides that are being sought, they're really stopgap measures. They're not a long-term solution. Next slide. So what does the MMA recommend? Number one, We need to prioritize key accounts. Sorry, I'm missing my slide here. My apologies. Let me grab that. We need to restore adequate and reliable state aid, and that's in the unrestricted general government funding. So the MMA is lobbying the legislation to provide $351 million in new and Restricted General Agreement Funding, an increase of 26.5% upon fiscal 2026 levels. Secondly, we need flexibility on the proposition, two and a half.

So the MMA is not recommending the elimination of two and a half, but they are recommending that it be tied to say an economic indicator like the CPI. and to permit multi-year overrides allowing voters to authorize an override that phases in over multiple years. Next slide. Prioritize key accounts. Support the continued investment in Chapter 70 school aid and reforms to minimum new aid levels for districts. We're giving $75 per student, chapter 70, as minimum aid. Fully fund the special education circuit breaker. Trotter Mitigation Funding, we have a Trotter School here that draws from Chapter 70, and all school transportation accounts. The next one is something I've spoken about here in the last couple of years, the Municipal Empowerment Act, which the governor

is filed with the legislature we're not seeing any action right now i would hope there would be some action by the end of the session but that that piece of legislation will allow us to raise the meals tax ceiling Currently, we get three-quarters of 1% of sales. The legislation would raise that to 1%. Increase the hotel-motel lodging tax from 6% to 7%. introduce the local options surcharge and motor vehicle excise bills. All these three we had calculated would raise us an additional $1.8 million in revenue that we would sorely, of course, need in the next fiscal year. And finally, something that we have long sought here in Somerville is a real estate transfer fee Dedicated to local affordable housing trusts linking property market activity to housing affordability investments. These are the key lobbying efforts of the MMA which I think we all should be aware of and

Be supporting as best we can. Next. Okay, so we're not in the same dire situation as other communities right now. We are not experiencing the same level of distress. We do have a budget gap. But I do believe we can contain that with limited disruption of our services as we move along into fiscal 2027. In Somerville, despite these two and a half limits, residents continue to ask for more services, and the city has responded in kind historically, as you can see. Our budget has grown tremendously and this is really a result of the expansion of the commercial property tax base. Tremendous and unprecedented economic development and prudent management over time.

So the general fund budget has grown from $211 million 10 years ago, fiscal 2016, to $381.5 in fiscal 26, an increase of 80.8%. and so actually it's accelerated during the after the pandemic where our budget growth was 7.78 percent and the school budget has increased over the last 10 years by 6.2 percent but over the last five years By 7.88%, including that 10% increase in fiscal 2023 to deal with the effects of the pandemic on students and education. So this year we had to tighten our belts quite a bit here in fiscal 2026 because our, and we'll get into that, our commercial property tax growth has declined. The budget increase of the general fund this year was only 5.54%, which is a lower increase than we've seen in recent years. Next.

But all this activity over time is important. Investments in families, youth, and our schools are found throughout the budget. These programs and facilities are essential to our work and as a community. And our goal, of course, always is to try to maintain these services as best we can. Next. Section 2, where we stand now at fiscal. So just a brief recap before we get into the fiscal 2027. Next, please. Quick performance review. By the way, most of these stats are on my website, on the Auditing Finance Department website. We can always see where we stand. In terms of appropriations throughout the fiscal year once the months are closed, so basically we are through 77% of the fiscal year. and we have expended 74.58% of the general fund appropriation.

We're in no danger of overexpending the appropriation either city or school. It appears looking at last year at this time both city and school are spending at a faster clip so the amount of money that will be unexpended at year end will be less. and which means probably a lower free cash certification from the state. Next. I'll mention revenue. I didn't include a revenue slide. Revenue is on target right now here in fiscal 2026. We'll probably exceed our revenue budget, but by less than 1%. The revenue items that are not coming in at budget We'll get into this more 2027 meals tax.

Building permits and investment income are not going to meet the budget, but we will still probably have a revenue surplus at year end. Snow and ice deficits. So we should be able to contain any problems in the general fund budget with transfers. which will be presented to the council before the end of the fiscal year of course our big issue as as we all know we've had a a difficult year with snow removal Based on current projections, the deficit's about $3.5 million. That might be a little bit lower when we close out requisitions or encumbrances. So our expenditures are 5.2 million, roughly appropriations 1.7. This is the only account where you can legally run a deficit in municipal government, but we always want to get that cleaned up by June 30th. Otherwise, it goes to next year's tax rate. We can't have that happen.

So DPW is now looking at any leg monies in their budget plus free cash. So we will appropriate free cash in DPW leg monies to eradicate this $3.51 million deficit. Next one, please. Unemployment compensation. That would be the only other category that I think might require supplementation from free cash. And this is not uncommon when we change administrations and people leave or whatnot. We're expecting a deficit, according to the budget director here, of $288,000, which we will deal with through free cash. So moving on to fiscal 27, next.

Okay, so here are my revenue projections at this point in time. The goal is to get these numbers up before budget time. Property taxes. The assessor is estimating that new growth will decline from the $7.8 million this year to $5 million next year. We'll get into that in a bit. and we will tax of course to the prop two and a half levy limit so that will bring in 11.9 million dollars overall including the money the tax money needed for the debt exclusion on the high school the state revenue in here is the governor's proposal I am I'm optimistic that that will go up as the legislature, the House and the Senate start to look at these revenue accounts. It generally goes up.

Fines and forfeits. They're down because parking enforcement people are obeying the law in terms of traffic violations in the parking department. I think the installation of the cameras and the bus stops, people are not violating the law now, so that's a good thing. But parking fines are going to be going down from a budget perspective of $400,000, but that's the $375,000. We are intending to increase fees where we can. We'll get into that in a bit. So the sanitation fees. We are upping the commercial trash fee in DPW because it's not meeting costs, so that will bring in another $200,000. Electricity usage, these are the charging stations. They will be expanded in fiscal 2027. That will raise us a little bit more revenue.

Other financing sources, we use parking meter receipts to net down the tax rate. Given the installation of parklets and some of the construction going on on streets, the parking director tells me that parking meter receipts are probably going to drop by about $200,000. Investment income is going to be down because interest rates are going down. So interest rates were at sort of a bid 4%, maybe 4.25%. The Treasurer is projecting that they will be in the high twos or low threes. So this is the revenue projection right now. We can raise an additional $12.7 million in fiscal year 2007. The next slide. There's a graphical slide basically showing the proportion of revenues.

As you can see, property taxes is overwhelming. funding source and again it is limited by proposition two and a half. Next. So I'll run you through the calculation of the tax levy and how we project the property tax revenue. So you start with this year's property tax levy, 272,660,166. Now I just want to stress unused levy. This is not by design. When we set the tax rate, the assessor and I are required to use the DOR gateway system. I think we spent about half a morning trying to manipulate the number to get us to the levy limit and we couldn't under DOR regulations. So there's 198,806 of unused levy. That will equal, adding those two up equals the 2026 levy limit.

So we take that, we take the fiscal 2026 levy limit, multiply that by 2.5%. Plus the $5 million in estimated new growth that the assessor is estimating will equal our 2027 levy limit, which we can fund the general fund operations with up to that amount. We add on the fiscal 2027 debt exclusion, and so our 2027 projected levy is 291,342. So we can raise a potential $11.9 million for the entire, including debt exclusion, in fiscal 2027. That's how the calculation works. We are limited to that. Next slide please. and you know the assessor is going to chime in here to talk a little bit about this but our biggest financial issue right now is the decline in the commercial property tax

This shows the history. Our peak was in 2004 where 17.7 million in new growth was realized. These are by the big developments. That then dropped to 14.1 in fiscal 2025. And then we saw a very steep decline this year in 2026 to 7.8. So this creates a real strain on our budget going forward. And the assessor is projecting $5 million new growth in 2027. We frankly don't think that the economy is going to turn around soon, so we're going to pencil in $5 million for The next three years now five million dollars most communities would envy getting five million dollars in new growth so it's a dramatic drop for us but it's still a very very good number.

So what's happening here is development has stalled. Inflation, construction costs, high interest rates. That's made financing for new development projects more expensive, causing many planned commercial projects to be delayed or canceled. The assessor and I and Mr. Gallagherti and his team spent some time last week just Walking through the city on the GIS system and it was sobering that we're not seeing a lot of activity taking place. You've probably read this situation in Boston with its declining commercial property values because of the vacant office buildings. For us, it's going to be the lab office buildings. Next slide. I'm going to ask the assessor to maybe comment on the new growth situation. He's got this one.

President Davis, through you, as we know, we've had 10 life science buildings built in the city. Five are stabilized. We're looking at a vacancy currently of 1.9 million in Squiffy. I'd like to point out that 188 Assembly, we've secured a TIF at this property with Transmedics, a company that in a short period of time will occupy this building in two phases. So you'll be removing roughly 500,000 square feet from that 1.9 vacancy, which is exciting. However, that growth will be captured over a 10-year period starting in year three. So it's encouraging. We'll get our growth, but it'll be slow. The hope is that the other four buildings will follow suit, whether or not they're TIFs.

if we could get some life science interest in the city that'd be phenomenal for all of us but at the moment there's just a lot of conversations going on with the other four buildings in terms of tenants so This is what's causing a lot of the growth declining when you have five buildings of this size that are vacant. The values drop because the vacancy, the cap rates, the interest in the market is saturated. There's 15 million square feet of vacant life science in the greater Boston area. The appetite at the moment is about 2 million square feet a year. We predict that it's going to depreciate again, hopefully not as much as it has in the last two years.

There's very little growth to capture until 188 assembly gets going. It looks like it's going to be fiscal year 27 permits. Last I heard, we were hoping for 26, but they're trying to get organized to do this as quickly as possible, and we feel it's coming very shortly that you'll see some permits get pulled over there.

So, Mr. President, that's important. Speaking with Mr. Gallaghani and his team today, they're going to attempt to meet with the company executives at Transmedics. The building permits are important to us in terms of our fiscal 2027 budget. So we got to get a clear sense when they're going to get pulled. and what the schedule's gonna be. So that will be a major factor. And if we can get some updated information soon, then we can adjust the numbers that are in front of you for building permits and revenue. There was an agreement to waive some of the building permit revenue. Even with the waiver that we get $1.8 million in building permit revenue from Transmedic. So that's going to be a key discussion and that will be a key factor as we move forward here in the spring in terms of the budget. Next slide, please.

So I just ran through the year increases for property tax, revenue. With taking out the debt exclusion here. So you can see the drop 23.7 in fiscal 24 additional property tax revenue we could raise. Coming down to 12 on the general fund outside of the debt exclusion. When you factor the debt exclusion, it's 11, but we can use 12 for our general fund operations. So that's a big decline. Next please. So I mentioned building permit revenue. This has been a core revenue source. It is an economically sensitive revenue. And again, the decline in development means a decline in building permit revenues. Big developments generated the bulk of the money.

The highest amount, 2022, was $25.1 million. It dropped to $18.7 million. in 2023, 11.1, and in 2025, 5.4. Now, one question that gets raised occasionally, you always build a budget based on McClelland, and many more. 25.1 is part of our budget if we did then we'd have massive cutbacks in the succeeding fiscal year so we've tried to budget the building permit revenue at 8.5 and then drop it to 5.5 Excess revenue flows to free cash. And then we appropriate that to stabilization funds for a lot of our capital projects that are upcoming. Now, in terms of this fiscal year, we dropped the budget to 5.1.

What ISD is telling me is that we see a decline in the small building permits. That's developments of 100K or less. And of course, we don't have big projects. So we're going to be about 500,000 short this year. The 2026 budget and building permit revenues. But next year actually will be higher. We're going to budget $5.8 million, so that's roughly a $700,000 increase, because several mid-sized developments are expected to file building permits. 299 Broadway, 108 Prospect, 501 Mystic, 24 Webster, 37 Allen, according to the ISD department. So we will be able to raise more building permit revenue I mentioned transmedics. So the number of 5.8 does not include any building permit revenue from transmedics. So we get some clarity on that.

And as long as they pull building permits before, let's say, November of this year, when we set the tax rate, we can include that in our budget projections. So that's very, very important. Next. Excise tax revenue. This has been a valuable part of our revenue base, about $13 million a year. Excise taxes, meals tax, hotel, motel, Motor Vehicle Excise, Retail Marijuana. So just briefly, the hotel motel excise continues to grow. The hotel motels are charged 6% of sales for municipalities. That also includes the short-term rentals. The BNB situation takes place. It's about 35% of the revenue base.

I'm expecting this source to exceed budget in this fiscal year. By about $57,000. Looking at the economic indicators in the Boston-Cambridge area, Metro Boston area, Expecting a 3.5% revenue per room increase. So factoring that in. Plus the good news is that we've heard of the new hotel opening up on Beacon Street that's coming online. That's 35 key. So we're going to add all of that in. So I'm expecting to raise that excise motel motel by $268,000 increase in budget $3.5 million. Retail marijuana is also growing. We don't get specifics from DOR. DOR doesn't tell us exactly where this revenue is coming from. They claim it's taxpayer confidentiality.

We had a projection of $440,000. My projection is $440,000 will come in this year. We budgeted $393,000, so we're going to exceed budget there. I'm going to increase that by three percent so we're looking at um about 453 000 project that's an increase 453 000 uh 752 will be the budget for retail marijuana those two are doing very well Unfortunately, the meals tax is flat. I mean, we had tremendous growth in meals tax over the years. The last two, three years we do not see growth. The growth from 2023 to 2024 was 0.73% and from 2024 to 2025, 0.01%.

I don't know perhaps you know with the economy maybe people are not eating out as much I don't really know but uh you will try to we're gonna have to level fund that one in terms of revenue projections in the next fiscal year Motor vehicle excise is a huge number. This one is very hard to project because the motor vehicle excise commitments come out in the spring. We just sent one out in April. There's going to be one in May. Question is, will new car sales deteriorate because of the cost of new cars and the interest rates? That's a part of it. So I'm going to raise that one by $252,699 on budget and I will come up with better numbers before the budget on that one. So those are the excise tax revenues. Next one, please. All right, so now we get to state aid, which is the governor's proposal.

Again, what we face at budget time is the... The legislation doesn't work on our budget schedule, so the House apparently will release their budget later this month, the Senate in May. In general, we get better numbers. So the governor's proposal And I just want to make a distinction here for new public officials. These are the cherry sheet revenues that fund our core services, schools, public works, police. There's a distinction between this and any of the categorical grants we get from the state that do not flow to the general fund. So the main local aid account unrestricted general government aid was increased by 2.5%. Over the fiscal year of 2026 number.

The state revenue growth, by the way, is 2.9%, but this is 2.5%, so that's an increase of $782,309. The governor proposed a minimum aid figure for chapter 70 is $75 per pupil. So as you can see, that comes up to $381,000. You remember last year that the legislature intervened and it was $150 per pupil. I'm hoping that will happen again. I think that's more probable than not, so that we'll be able to get a little bit more money in. And of course, these are blunted by the Chartered Tuition Reimbursement, which has been reduced by $510,730. That's a very variable number. That number may very well change when the House and the Senate weigh in. So increased receipts of $739,102. Next, please.

and of course we have triaged assessments you can see the assessments here the big assessments are going to be the MBTA and the charter school tuition so what you do and then next next slide please You net them out, receipts minus assessments, so that increases state aid by 2.3% or $935,743. Okay, so we anxiously await what the House and the Senate will do in the hope that we can get a little bit more money from the state. All right, next please. So let's look ahead to fiscal 2027. Next. Well, needless to say, public schools continue to be our number one investment. That has been the case historically in terms of budget increases and money. I knew Mayor Jake Wilson considers public schools to be the number one investment.

We're going to continue to fund and replicate our successes going forward. Next slide, please. and this is just shows you the proportion the schools are 30 percent public safety number two public works number three Just gives you an idea of the budget composition here that in terms of the level funded budgets here in fiscal 2027. and into some specifics. One slide that we use in these presentations just to remind folks that Fixed costs are an overwhelming percentage of the municipal budget. Salaries, 53% of the budget. Health insurance, 9.7%. The city funds 80% of premiums. and that's for current employees and retirees.

4.8 cents of the budget for pensions. adding them all up comes to 67.5 percent of the budget these are recurring costs and they magnify year by year and if they get out of control then it gives us very little and others. Next slide, please. operational costs, maintenance to keep our city infrastructure, parks, and public spaces in top shape, and investing in them to mitigate long-term costs. The base budget will increase, fixed costs increase, and we need to keep a close eye on this because we are under the Prop 2.5 levy limit.

If we don't have legislative relief here, we're going to be in a situation coming forward in terms of how we're going to fund our essential services and the services that we have built up over the last 10 years or so. McLaughlin. And that's my point in the next slide. Higher base exposes us to... Director, could you just pause a moment if the clerk could recognize Councilor McLaughlin as joining us. Go ahead. Thank you. Higher base exposures to myriad pressures, Prop 2 1⁄2, long-term costs on the base of adding new positions. You need to be careful about, at this point, adding a lot of new positions on the budget. Inflationary pressures on contract values and insuring capacity for unexpected situations. So a major cost driver, I think, this year is health insurance.

We've spoken about this last couple of years. The city moved to the group insurance commission back in 2012. We saved $7.5 million that year. By doing so. And most of those increases from the GIC have been modest. They're probably between 3% and 5% a year. But the last few years, premiums have skyrocketed. Of course, one major reason which you've all seen is the increased costs resulting from the GLP-1 weight loss drugs. and the increased utilization of them. that has significantly driven up claims, high provider prices, high cost of hospital and provider services with specialty care, rising utilization of medical services,

and Market Consolidation, a small number of major provider systems and insurers along with hospital price variation consolidating in the health insurance industry. So the legislature backstopped some of the costs in the GIC. We were looking at Probably a much higher budget increase earlier in the year. The projected increase is $2.8 million on the budget in fiscal 2027. The average increase per plan is 8%, but we note here that the Harvard Pilgrim employer is the city's most common plan, and that is going up 14.7% on a family plan. Current caseload is 2,987. That includes retirees, all city and school employees. That's up 17 from the prior year. which is actually not bad. I thought it would go up a little bit higher than that.

If we add new positions to the fiscal 2027 budget, that will increase that amount. The city contributes 80% of the premium, 20% to the employees. We're going through the open enrollment period now. The hope is that some folks move to lower-cost plans, and if so, that may change the number, but that's what we're looking at right now. Next slide. Most important cost is labor. The city settled a number of collective bargaining agreements in fiscal 2026. We always want to plan for money for our collective bargaining and non-union employees. We set up years ago. A stabilization fund, a salary stabilization fund. This year we drew down $7.7 million from that stabilization fund. For police, school custodians, and for the teachers settlement back in July.

And of course, we want to use free cash to continue to build up that stabilization fund. So we budget on the city side. For fiscal 2027 projected expenses on a salary contingency account on the general fund. So we always want to be very cognizant that we fully fund these things. I think there may be one more settlement that might happen this fiscal year. And if that's the case, we will have to build that into our projections for next year. Next please. Pension. So the pension appropriation will increase by $451,030 to fiscal 2027. We did have a very good

Investment year last year for the pension system, well over 12% investment earnings, and that kept the pension appropriation down. I serve on the Retirement Board. I chair the Retirement Board, Mr. Mastroboni. also sits with me on the Retirement Board. Long-term liability is $114.6 million. We will pay off that liability in fiscal year 2033. Next one is debt. So what you see here is our amortized debt for fiscal 2027. That's debt we've already borrowed for and we're required to pay. We're going out to market in May for our current capital projects. My estimation right now is $1.8 million increase for those projects. That's assuming a long-term bond rate of 3.8%.

Last year at this time, we got a rate of 3.9%. We're a AAA-rated city. I'm hoping that we can... Do better than the 3.8. If so, the number is going to go down. That will reduce the appropriation. the high school debt exclusion will be a little bit less this year 6.6 million so the general total general fund debt is 23.4 When we get to mitigation, this is an area that I think we can mitigate in terms of our budget deficit. But we'll go forward, talk about, I think we're going to mitigation now. Next one. All right, so this is where we stand right now. We're looking at a $4.5 million gap between the revenue projection and the level service projection for all the budgets school and city at this particular point in time.

At this time last year, we had a $3 million deficit which we were able to deal with. First of all with better numbers that came in both on the debt service and state aid as well as cuts on the on the city side primarily to get us down. So we need to work on this between now and budget time. And there's a number of tactics that we will employ that we're going to look at before we even look at cutting budgets. Next one. So I look at this as a revenue problem compounded by Prop 2 1⁄2. So we want to initially, number one strategy, of course, is to enhance revenue as best we can.

That means the city is now looking at evaluating all fees, fines, and permits right now with all of department heads to a cost recovery lens to charge appropriately. Every little bit helps. Revenue should be reevaluated, these fees, on a regular basis. It's been a while for some of them. So that would be our first tactic is to try to raise more revenue. We've already got a few commitments in terms of increases. So that is going to be important. Secondly, I will be Coming back to the council, we're going to use reserves. I mentioned this $1.8 million increase in debt service. Looking at our reserves, we've drawn down about $17 million in reserves this year for a variety of things.

We can draw down another $14.5 million between now and June 30th. And what I would like to do is apply those reserves towards the debt service for these projects that we are contemplating We got a number on that, but that will reduce the deficit somewhat. Reserves should only be used for one-time only expenses or capital projects. We will look at reserves for anything in the 2027 budget that is a one-time Purchase, or whatnot that we need to do. So we will look at this very seriously as a budget mitigation strategy. On the city side, we're looking at all vacancies right now. There are a number of open positions. We'll make some decisions on whether we will continue

To keep those positions or not, that's certainly a more painless way of dealing with this budget situation than going to Any field positions, obviously. The goal here is we don't want layoffs, city or school. And I think that that's... I think that's quite attainable and if we utilize all of these tactics and as best we can. Audit expenditures, so we have asked all city departments to come up with focusing on non-personnel expenses a five percent reduction as a scenario as a planning scenario we've also asked the school department to look at a tiered We don't want to get to that unless we have to, and we won't know exactly. If we do have to cut budgets to some extent, we really don't know what that is at this particular point in time.

We want to get these other mitigation strategies in place, especially on the revenue side. So in terms of examining and updating fees, the mayor is going to be forming a working group to meet with Tufts University. and to look at the pilot payments, possibly negotiate a new agreement. We haven't had a pilot agreement, a formal one with Tufts since 2017. We'll be taking a look at other potential pilot payments as well, but most of our pilot payments are from small nonprofits. I already mentioned that we'll use stabilization funds to net down the borrowing and one time costs, vacancy control.

We're taking a very, very hard look on the city side of any discretionary spending such as travel and conferences as well as the indirect costs for water and sewer enterprise. We can legally charge the water and sewer enterprise for any cost that the general fund provides. We get that now, but we haven't re-evaluated that in several years. So these are tactics that we need to move on and we're working on these things now to try to get that $4.5 million budget deficit down. Next slide. As I said earlier, there are several key budgets, several key events when we go out to borrow. Hopefully, we'll get better rates. State Aid, we are relying on the governor's figures right now. And on health insurance, we have open enrollment still in place.

So I think there's a lot of work to be done here in the next six weeks or so, but the goal will be to try to get this $4.5 million gap In a resolvable way and in the most painless way for all. I think I've gone through the presentation. Oh, there's one more. Well, I don't have that slide.

Okay.

The 2027, as it says here, will be predominantly level service with few target investments. The administration is looking at a new form of decision-making, a cabinet structure. So there will be some organizational reform here, and so you will see some departments that will be Reconfigured, renamed, moved, incorporated into existing budgets. We'll make these changes very, very clear. We will work to mitigate the level service deficit through revenue where appropriate and long-term fiscal health is a major priority. We must focus on a sustainable base budget and use one-time resources cautiously. and I believe that's the presentation. Open to questions. Thank you. Questions?

Clingan. Mr. President, through you, I just want to ask, as far as the GIC goes, overall it's still The best deal we can get or how could we or could we not even get out of it at this point?

Yeah, Mr. President, I was... I was serving on the transition team in Everett for the new mayor earlier this year, and I was stunned to see their self-insured with health insurance. Their health insurance went up $6 million in one fiscal year. We moved off the self-insurance in 2012. We saved $7.5 million. The GIC is a huge pool in terms of purchasing. Let's also be reminded that... The state did backstop the GIC this year. I think it was $200 million that they threw in there, which you're not going to get in a private situation. So the private rates are higher. I've talked to a number of folks here. So it's even worse in a private situation.

Thank you. I just had to ask for the public watching, because I know that, you know, like you had said, the increases previous to, I think, three years ago were very minimal, and now we've just seen this explosion. Like you said, mainly due to the GLP-1s. So it's just been... Quite a shock coming from the GIC, which was supposed to stabilize rates to some degree, but they're not immune to this explosion. So thank you.

On that point, Mr. Mayor, go ahead. Yeah, thanks, Mr. President. I was talking to a mayor out in Western Mass that is a non-GIC community, and he said that they were seeing a 22.4% increase in their insurance premiums this year, so it could be worse. Ewen-Campen.

Thank you, Mr. President. Through you, all three of you, thank you very much. We're very lucky to have you all here and your teams. I think the question that I'm anticipating getting the most from members of the public is, you know you open your first slide is about these really scary situations we're seeing in other communities and then we're ending on what's like kind of a note of relief right that like the worst we're looking at at least according to this is maybe vacant positions getting a How would you explain to a member of the public kind of what's the difference between what's going on here for some of those kind of worst case scenarios that we're seeing in other communities? I mean, you just gave us a whole presentation on the details, but kind of to summarize,

Well, Mr. President, number one, we've had that tax base gross over time, and we have built up reserves. I think we've taken a very prudent management style here as well. I think that we've Some of these other communities haven't had the tax base that we've had, especially the suburban communities. Maldon is probably the only real big city that's gone for an override. They never went for an override before and they lost that override now. So even $5 million in new growth is a far better number than we're seeing in other places here. But the tide is turning right now, and we have to be thinking about the budget base here. and especially as we move forward next fiscal next year we'll be going for a debt exclusion on a new school and we'll be presenting that before the taxpayers so we want to stay out of an override situation if we possibly can I think

Mr. President, he's too modest to admit it, but a big part of the reason that we're not in a worse position is because of Director Bean, along with just the new growth that we have had that has differentiated us from other communities. The two biggest factors I'd say right there.

School Committee Member Green. Thank you and I want to actually thank the mayor for highlighting the importance of that new growth because when I look at the state aid numbers you pointed out I gotta be honest, it feels kind of disingenuous. Yes, we were getting a smaller percentage of our budget from state than we were 20 years ago because we were a much richer city than we were 20 years ago. So I'd love to have some information as to how you disaggregate The impact of state aid, which to your by your chart has grown faster than inflation for the last 12, 14 years, even if it did get cut before that with New pressures coming from the state government. That, sure, I can see. We should be getting more money from the state. But why is that different now than it has been for the last 15 years where we've outgrown inflation by your measure?

Well, Mr. President, first of all, I think the state government should give municipalities the flexibility to raise more with new revenue sources, which we don't have here in Massachusetts, which we have in other communities. and other states, I should say. Yes, we have grown the property tax base, but that hasn't always happened. Certainly in the early years, in the year 2000, where our new growth was like 1.2 or 1.5 million, The state really wasn't pulling the weight in terms of municipalities. I think is, you know, just in general, I think there's a clamor throughout the state with the legislature at this particular point in time. I mean, this Municipal Empowerment Act, what's the problem with giving us the opportunity to raise the meals tax? or the Hotel Motel. That's a local option. Leave it to the municipality to make those decisions.

We don't even have that type of openness right now from our leaders in state government. So I think that the limitations of Proposition 2 1⁄2 are going to cause problems for us as well. There needs to be some thought on the state government leaders to make appropriate changes and give us more power, basically. Others?

Thank you, Mr. President. Through you too, Director Bean. In one of the earlier slides, the snow... Yeah, FY26 snow and ice slide. We talked about snow removal and whatnot, and I know that we had the SMEA, the It changed the name recently, but the new union contract and hopefully, and we had a lot of vacancies in DPW, and did some of that get, did we hire some more? DPW employees, and are we still paying a lot of outside contractors for snow removal? And are we still purging all that extra money from the outside contractors instead of in-house? Have any of those numbers changed from last year's budget to this year's budget?

Mr. President, I think the DPW Commission will have to answer the question. I don't think we could remove snow without having some outside vendors. I don't think we could hire enough employees to do that. I think the costs have gone up quite a bit this year, obviously because of the nature of the snowstorms this year. But I think this is a question you could raise with the DPW Commission during budget time as well, I'm sure. he can discuss that with you

Mr. President, through you too, Director Bean, I definitely want to talk to the DPW director on that, but I wanted to know if that is also a factor with you when you weigh in how this looks as well. How many employees we have versus how many employees we'll have or we had last year. Does that in any way factor in with you? So for instance, even just like with water and sewer, where we had numerous vacancies and...

Yeah, Mr. President, I think in terms of the snow removal, I think, you know, I don't, no, I haven't asked, I haven't asked specifically how many employees We're involved in the operation vis-a-vis vendors. But I think the situation is, given the magnitude of the storms and whatnot, I don't think it's... Realistic to be able to say that you can hire enough employees to handle this and do that quickly as an emergency situation. There are a number of vendors that they have on the side that they would call on that type of thing to do this.

Did you want to add to that? Thanks, Mr. President. Yeah, just Commissioner Wiseman's not here, but I just want to just clarify in case the public gets the wrong idea, we don't have of year-round positions of snowplow driver in the city. What we have in DPW are people who are able to, they have the correct licensure and they are interested and able to go operate snowplows. So the capacity of that in-house is dependent on who can be pulled off of doing other things to go do that plowing. And that varies year to year. Yes, to the councilor's point, Not having vacancies increases the odds that we have those folks, but that is sort of, you know, it's an interesting factor that having gone and watched the operation firsthand. I'd encourage everyone to do the same.

Castroza. Mr. President, yeah. Through you, Mr. Mayor. Yeah, totally. I agree with you that, yeah, we got pummeled with snow this year. Confirmed. and right it is variable but we all know and my larger point of that is how as we talk about further down in slides of how We're going to be tightening or finding which vacancies in which departments we have, which ones we can hold off on a couple of years and tighten our belts as we go. How does that factor in with DPW? How does that factor in with the water and sewer department? How does that factor in with our services and the general or the outside contractors we're going to use? How does that factor into the budget, and has this preliminarily been included in that, or is that more we're going to see in a month or so, how that, the conclusion, the great big conclusion? I don't really know if that needs an answer, maybe that's just, oh cool, there is, okay. Mr. President.

Mr. President, Mike Mastroboni, budget director. Thanks for the question. As I understand it, and in agreement with Mayor Wilson, Having more public work staff in positions 100% pushes us towards less contractors. In terms of vacancies, we're evaluating vacancies in a number of ways, but first and foremost is maintaining and preserving core city services. DBW is a huge part of that. They're a massive part of that, so I wouldn't expect Those type of positions that we then lose out on them and have to farm out additional work for plumbing or carpentry work and pay a premium on that. I wouldn't expect at this point, things can change, I wouldn't expect significant movement in that area.

School Committee Member Stallman.

Thank you, through the chair. Given that the Somerville public schools are a top priority, which is great, what can we expect in terms of avoiding the need to cut critical services and what can we expect to be able to enhance the significant improvements that we have been seeing in the presentations from schools across the district. and being able to build on that success costs a lot of money. What can we expect?

Mr. President, we can expect to work very hard in the next six weeks to mitigate this deficit. I think in terms of You know, school's the first priority. There may be cuts on both sides. I think they will not be exorbitant cuts. But we just don't know the parameters right now, so I think we have to look at various scenarios and contingencies and we'll continue to work on our end with the school administration. With Superintendent Carmona and Mr. Barretta. And we meet regularly on this. We meet every two weeks, I believe. and I update the mayor and I update folks with the condition of the city you know any new events that take place and We get to a point where we understand where the deficit is, and then there'll be a question of prioritization of services. We want to keep the essential services.

We want to keep our gains. So we're looking very carefully at discretionary monies in the budget right now, at least in the city side. Things that I'm not critical that could be jettisoned, you know. So I think it was still, this is a work in progress basically.

Yeah, thanks Mr. President. This has come up in the school committee and I committed publicly to the school committee and I'll say it again here. We're looking to To avoid that scenario of having to make those contingency cuts, should we be in a situation where our read is that revenues are lower than what we need? and we have to make those cuts and the revenues come in higher which is a thing that happens I committed the first things we'll put back in would be any contingency cuts made to the school budget because we want to see that at that level service

My microphone is not on. School Committee Member Biton, and going in order, folks who haven't spoken yet, I have School Committee Member Lippens, then we'll come back around for second job.

Thank you, Mr. President, through you, through the chair also. I don't know who I'm looking at here. To Director Bean, thank you. And also just thank you to the mayor for that commitment. Cuts on the school side because of how our school budget is constructed we're 85 percent salary so I want to be very clear with everyone that It will be very difficult to avoid very painful cuts if cuts have to come from the school side budget. One piece I didn't hear in the presentation and would be very interested to learn is On the city side, what is the proportion of of allocation that goes towards salary versus the proportion that goes towards non-salary. And in salary I'll also just extend, you know, insurance and sort of personnel associated costs.

Yes, Mr. Massaroni.

Do I?

Mr. President, through you, I don't have that off the top of my head. Last time we looked at it, it's getting close to that 80% figure on the schools. Municipal government is about people doing work to solve problems in the community. It's pretty consistent across the board. You know, the health insurance sits on the city side, which covers both the schools and the city, but we're in the same ballpark around there. I think last year it was somewhere around in the 70s, but it's pretty close.

Member Lippens.

Thank you, Mr. President, to the Mayor. We just had our presentation about the proposed cuts, which are terrible to more terrible. Thank you for your commitment to ensuring our public schools are funded. I know last year the prior administration also made public education a priority. By giving a larger share to the school budget and I'm wondering this year last year in FY 2026 it was 31.36 percent and this year It's 31.21%, so I guess I'm wondering why is that? Why are we getting a smaller slice?

Mr. Mayer, you want to take that one? Yeah, thanks, Mr. President. Through you, it might be a lot of that is the health insurance piece, and it's important to point out the health insurance piece is felt entirely on the city side despite paying the health insurance on the school side. We heard that was a big piece of that. I'm competitive and I'll be eager to see where we stack up to every other municipality in Massachusetts in terms of percentage increase to the school budget this year. On that point, Member Green?

Thank you. I'm really glad to hear the mayor's competitive because While we have made great improvements in the last several years as far as our school budget, as far as the percentage of our school budget goes to schools, we actually trail most of our competitors, who in neighboring communities average close to 40% to our historic 30%. So I'm also curious to know, in the spirit of that competition, where does the city think we should be as a percentage of our city budget going to schools?

Mr. Mayor, does that sound like a question to you? Mr. President, I don't want to say it's a rhetorical question. I am curious to hear if people have thoughts on that. I'm all ears. I don't have a number in my head but I am willing to talk to people about that. I do think it's important that we compare apples to apples always and don't compare ourselves to say towns like Winchester that we're talking municipalities with a similar profile to us.

Lippens used to have the floor. All set? All right. Let's see. Let's see. Councilor Scott, Member Piton. Go ahead.

Patel. Thank you, President Davis. Thank you. Super helpful. I don't know if this is a question to this team, to the mayor. I know I hate these terms, but like belt tightening, strategizing, thinking hard about plans, about pausing or rescheduling investments that we're planning on doing. I think we all know that if we pause or reschedule investments in schools kids are hurt right so if we say for example just because of the examples that the district brought up there's a program that we'd like to launch with our Female students that are really challenged right now called Working on Womanhood. One of the proposals does not make that investment. Those kids will continually We have interest in continuing to expand the pilots for inclusion programs so we've invested money to

Change the model, put a little bit more staff to better serve our special ed students who are currently included in regular ed classrooms. We've had incredible outcomes. We'd like to continue the pace on that. And another example is coaching. Coaching is an incredibly high leverage investment that the district is trying to build up. Just so everybody knows what coaching means is that we hire really talented educators that Thank you for joining us. I'm gonna use a bad example, but if we slow down work on a park, not great we slowed down work with our kids is really painful so I just really want to make sure that that headset is in this work and again it's not a judgment it's more I don't mean to um

speak to the emotional part of but schools are not delivering and or making widgets schools are you know forming our future so i just wanted to throw that out there that i wanna i wanna hope that The city is really being thoughtful about like, hey, we are planned next year to do XYZ. Maybe we have to minus a little bit to make sure that we're funding the schools because we don't want to let our kids continue to get behind. Thank you.

Scott. Thank you, Mr. President. A couple things before I kind of get into some of my points. I really very much appreciate these questions and this discussion here. Fully in alignment with a lot of what's been voiced already. There was a question about how much of our fixed costs were in salaries, benefits, insurance, et cetera. Slide 34. you know if I'm just doing the back of the envelope math here it looks like about 67 67 and a half percent it says a fixed cost drive municipal budgets so I'm not sure if that 67.5% is averaged between city positions and the school positions being 80%. or if that's just 67% on the non-school general fund position. So through you, I'd like to ask that question to Director Mastroboni there. Numbers on the slide. I figured somebody made it.

Shared it through you, Mr. President. So this is looking at the city's general fund portion, but does not include things like, so there's other non-salary personal services items that I would consider salaries that are not part of this. This is a more scoped down analysis. I'm happy to look at what we spend on employees across the board. But this is a subset of that.

So through you, Mr. President, the stuff that was scoped out, let's say, might be the uniforms budget that's in personal services.

A better example, three, Mr. President, might be overtime to pay for Core City services. Another example might be training for staff. It would not include uniforms because that's not a personal services item. That's in our OM lines instead.

That's right. Thank you. Okay. Overtime. Oh, my goodness. I wasn't planning on talking about overtime, Mr. President. So Mr. President, I really appreciate this. I appreciate this discussion. I really appreciate the frank examination of what's here. And so in the spirit of a frank exchange, you know there's been talk about painful cuts and page slide 35 talks about how operational costs the salaries and bennies for personnel are a fixed and unalterable barrier to changing the base budget and all of this talks about how we don't want to actually have to cut positions and you know refers to a Re-examining the OM lines, the stuff and things budgets of departments as a potential way to cover the shortfall here. But I just want to say that's not Practically speaking, true, right?

We've added many, many, many positions over the years. In the last 10 years of explosion of this city's budget, We have added a great many positions. It is not a deadly sin to revisit those to see if the juice is worth it in a time when we are all feeling the squeeze. I'm old enough to remember when the entire communications department of this city was one person. One. Now just the core, core comms department, not talking about immigrant affairs or 311, just the core comms department is 12 people, three of whom have titles that include the word director. Now, I am not targeting the comms department here, all right? Being a good government means you're doing good things and then you're telling people that you don't. That's important too. But as we are in lean times, I think we need to have our focus squarely on doing good things.

We must deliver for our neighbors, our constituents lest they get the correct idea that government at the local level is just as ineffective or broken as the federal government has been lately. We have to do better. The audience tonight here is sparse. So perhaps I'll be forgiven for speaking frankly in the language of politics. If our neighbors thought that existing trends and our level services were satisfactory, our previous mayor would not have been eliminated in the primary. Things are a little bit busted. I think we need to focus on fixing them here, not just holding the line on the system that we have, on the government that we have. The government we have has shaped over the choices of the last four years and the 16 years before that. Trimming 5% out of the non-personnel, OM, stuff and things, budget departments, it's already the smallest category of our spending. It's not going to cut it.

I think we need to not only cover this $4.5 million gap that's been mentioned to be mitigated, but we need to do it while stepping up to provide better services to our residents. And I think in order to do that, some city positions will need to be eliminated in these potential reorganizations. I implore our mayor and our staff to be willing to look at that, right? Talking about reorganization, we're talking about evaluating open positions that right now are just providing lag money, which is free cash, which is, as said, a short-term resource that we can use to cover some gaps. If we're reorging, we really need to reassess the dozens of positions that have been created over the last four years that had titles like manager, supervisor, and director. I think we really need to focus on service delivery, including in our schools. which is kind of the epitome of, as someone said, paying people to fix problems and to take care of each other.

Our schools are just the epitome of that, the definition of that. I think we need to focus on that kind of service delivery and direct services and maintenance of our existing sidewalks, streets, neighborhoods rather than on management capacity or consulting services or contracted services that as one of my colleagues called out you know cost us up to four times what internal service delivery internal frontline positions would cost the city so I know this is all part of the discussion in some of the rooms I just want to emphasize that Our constituents have already told us that things are hard. Sorry. You know, the other day I went to the bodega down in Union Square, bought a two liter Diet Coke, cost me $4. I quit cigarettes before they got seven dollars a pack. I'm not sure I'm ready to quit caffeine.

I just I think we're all our neighbors are making these hard choices. I think it's time for us to make some of these hard choices as well and some of that's about reevaluating just how we do things as a city and where we redevote our resources to that direct service delivery. Thank you for your forbearance, Mr. President.

Mr. Berry, you want to weigh in on that? President Davis, happy to report to the good counsel from Ward 2. That's one of the parts of the restructure we're doing is looking at those positions. Obviously, you want to start with vacant positions because then you're not putting someone out of a job. But that is what we are doing. That's what the CAO is working on with the budget team is making sure that we have a leaner, meaner setup on the city side.

Okay, so I've got for the second time around Councilor Strezo, Councilor Biton, and then we'll come back to Councilor Green. Councilor Wheeler in before the bell with the first comment. Councilor Wheeler, go ahead.

Thank you, both chairs. I just want to start by echoing what my colleague from Ward 2 said and appreciate It's a very difficult thing to talk about any kind of need for cuts. It's a reality that many cities, many municipalities, many towns have experienced that it's easier to add a position than to remove a position. The work that people are doing in our city government is vital, it's wonderful, and it's crucial. And when conditions change and three positions It turns out it could be being done by two people, even if that would be less comfortable.

It's very hard for any organization, government or business, to adjust to that. We are in a situation where the flexibility we might have in other years to say, Those tough questions are questions for another time. We may need to ask some more of those tough questions this year. I applaud any efforts to do that in a way that takes seriously our most fundamental commitments to our young people. and to the vulnerable in our community. And that understands that if we are able to find some small That is something that I think can help our sustainability in the long term as difficult as it is now.

So I want to make sure it's something that we're not afraid to talk about as important as it is. Thank you. Crouchage.

Thank you through the chair. Along those same lines, your mention of wanting to support our students but then also our historically marginalized communities is of wild importance when we're looking at a time that Our formative assessments that we choose to progress monitor, so many of our kids are struggling. Just to bring some real data to that, in the reading realm, about 50% of our kids are a year or more behind, some two or three. and then when you're looking at math it's about 59 percent of our students are behind. We've seen pockets of immense growth and in areas that were mentioned earlier along the lines of co-teaching models and push-in math services and these were all mentioned in some of the school improvement plans. and I'm just saying this because I do not think this is the time to take our foot off the gas when it comes to improving outcomes for our students.

The foundation of being a critical thinker is being able to read, write and do math and if we can't provide that to our students, then we are completely missing the mark I think of what the heart of Somerville is and how important it is to make sure our Students are thriving. Along those lines, just to reemphasize the point, some of our youngest learners are also struggling with literacy and we have some really great curriculum and some great things in the works. but stepping away from that now and not reinforcing coaching and reinforcing co-teaching models and reinforcing interventionists which we're hearing why they're widely needed would be a real big misstep and I think really could and many more.

They become so hard to decrease again and the change in outcomes really affects these children and especially in the historically marginalized communities, these numbers are significantly worse. So just along those lines, I wanted to emphasize.

Okay. Councilor Strezo, second crack.

Thank you. Well, I was going to ask about... The exciting world of exercise tasks. But I do want to use this moment, too, to echo what School Committee Member Pitone said, I know, mentioned as we talk. and go back to one of the dire possibility of the public school system eliminating some much needed Services for some of our most vulnerable students, including menstrual products and menstrual equity and how Concerning it would be if there was that additional amount taken off of the budget because as it was mentioned in schools where there's a need for washing machines because

If you're young and you can't afford menstrual products and you just don't go to school, for a couple of days because you're embarrassed and you're young and you're working trying to figure out how your body works and that's unacceptable so to eliminate menstrual products of course in this time would be Absolutely an equity issue. And while we're on the topic of equity issue, yeah, we should not be in any way eliminating services that are helping girls thrive in this environment. In addition to that, I'm hearing a staggering report from special ed parents in the district to save costs, a concerning trend of Students on IEPs being tossed off their IEPs or manufactured to be tossed off their IEPs under 504s, IEPs are federally mandated and must be

invested in where 504s there is no liability for them to be for their needs and there's clear disabilities to be addressed. And we've heard about that for a couple years now. So as we go into this steep decline, I worry about that happening as well in the special ed department. Our kids are worth investing in in every way possible. and we don't want to lose that. So let's find out what that looks like in the budget this year and where our values actually lie. Thank you.

Okay. Member Biton and then we'll come back to Member Lippens.

Thank you, Mr. President, through you. I want to commend Councillor Scott for raising a frank conversation and reinforcing this idea that We're going to need to think creatively, and we're not only going to need to think creatively, we're going to have to make difficult decisions, right? We're going to need to Commit to looking at how we're doing things in this different economic landscape. We're seeing the trends. This isn't a one-year blip. We're now in a multi-year trend situation. And I think one thing we need to evaluate is how are we delivering services in our city in light of the different economic climate that we're seeing?

I also think we need to look at how we've been growing our school budget and I think under Dr. Carmona's leadership, under Dr. Beretta's leadership, we are doing just that and we're looking in very Uh... Very detailed ways at how we can deliver services and provide better outcomes using the same dollars. So I'm 100% in alignment there with what Councillor Scott was saying. One thing that left me hungry for more information in the presentation, and I will stay tuned as we get deeper into this budget season. is...

Where in our budget, I saw the 30% going to schools, and again, I'm grateful to the mayor for allocating what is, I think we all agree, our number one priority in the city is our schools. Um... Outside of that, I had a very hard time seeing discrete numbers in what are we investing in in terms of delivering core services because I have to say, you know, I'm very sensitive to Not wanting to demand more for something in our school, something needs that I see that we absolutely have. When it may be balanced against some cut that may be equally impacting our residents lives, right? But without knowing what is on the other side of that ledger, it's really hard for me to

I'm always going to lean more on our school budget because I can see line by line where our money is going and I feel very confident in Those investments. So that's just through you, Mr. President. One thing I will be looking for more from the city finance team to provide us so that we can help make this These decisions in concert. Thank you

Mr. Mayor, you want to respond to that? Yeah, thanks, Mr. President. This is one of those things that results from the different timelines that the schools are on versus on the city side, right? The school's budget happens, you know, it needs to go through a process. you all are on the school side are farther along than the city is and that's why there are more fully fledged I think we are close to having some harder numbers on the city side but I hear you I noticed the same thing in there

Green. I'm going to go to Member Lippens because she's got her second crack, and then we'll come back to Aston. Councilor Sait has not spoken yet, so Councilor Sait.

Thank you, Mr. President. First, thank you, Director Bean, for the presentation. Many of my colleagues have mentioned this already. I want to thank Councilor Scott for starting this conversation. Again, as many have said, this is not This is not easy. It is going to be painful. To me, we should do everything we can so we don't make any cuts in the school budget. As a former educator, I know that if we make cuts now to very important services, it's something we're going to be dealing with for the next few years very, very soon. And so instead, I'm glad I'm hearing from Mayor Wilson that we want to look at

How we can consolidate departments and how many managers and directors we have. Yeah, think creatively. Again, I don't want to mention any department right now, but this is where my focus is going to be. Looking at city departments, looking at positions, and Yeah, working with you and your administration, Mayor Wilson, to figure out how we can work creatively there to Find this money and the other one is contracting out work. We know, I mean, year after year, this council keeps bringing this up. I think this year I want to see numbers. Director Bean of like how much is this cost in the city, whether it's DPW, whether it's other departments. Hiring consultants.

I think this is the time to really just think about ways to avoid that and what we can do in-house and what we can just... and maybe stop doing. Again, it's really hard to like have a conversation right now without these numbers and this is just the beginning of budget season so I'm looking forward to seeing that.

Okay, now back to Member Lippens.

Thank you, Mr. President. I just wanted to come back to the smaller slice of the pie, which Thank you, Bobby, for helping me run the numbers. But even that small percentage that we're talking about is more than half a million dollars. It's about $588 million. Steele, and so on. Cuts from the CTE, cuts from curriculum expansion and intervention, cuts from supplies and food budgets. So these numbers have meaning, even these tiny, tiny, you know, Things have impact. So again, I guess it's my question as to why.

Mr. Brand, you want to take that one? Sure. As I understand, through you, Mr. President, the question from Member Lippens is why would we ask for contingency cuts?

Why are we from last year to this year, why is the percentage of what we are getting less? So last year it was, I have the numbers, sorry.

Mr. President, I understand the question. To my earlier answer, I think the primary driver has to be the health insurance premiums, which are felt on the city side. So that drives up the city side, not reflected on the school side. But again, a reminder, Are there more employees on the SPS side than on the city side? It's got to be close. That's a cost the city is bearing. That's going to drive that up. That will not be reflected on the school side.

I appreciate that. It just cuts our heart. I feel it more being in schools every day. So I do know that we as a body all want our schools to thrive. So money makes a difference.

Okay, second crack, Councilor Clingan.

Mr. President, through you, I'm going on a limb here a little bit because we don't have anything in front of us that we're speaking on, but I'm not going to speak specifically about the school budget as there is nothing in front of us. As I am usually recused from that discussion. But I will say that, and I hear everybody loud and clear on the potential hard decisions that we have to make. I just want to say that I think that we should at least let the mayor hear that we're going to back him up If it comes to, say, this mobility project or whatever heat he's going to take for squaring this, I think we all need to be in this together. So if we're going to make hard decisions, and have to have to parse out and decide what in terms of priorities certainly we all agree that the children are our top priority in the schools

But I think it can be very difficult to be in that seat and be that decision maker. So I just want to say that I'm prepared to support the mayor in whatever decisions he has to make. Thank you.

Councilor McLaughlin.

Thank you, Mr. President. On a similar note, I'm prepared to support the mayor, but that's because it's all going to follow on him to solve this budget problem. Because I do know if it gets to the city council level and we're the ones who are expected to make the cuts to balance the budget, that's not going to be fun. It's not going to get us to the money that we actually need to save. It'll probably be political and not efficient. So I'm just saying that now because I already feel we're heading down an interesting road where we're going to be making value judgments based on the budget when we do have to make practical judgments. and if it gets to the council to make this decision it's just not going to be fun for anybody.

On that point? On that point, Mr. President, I know it's very tempting for people to look at this as SPS versus the city. And I personally reject that framing. There's so much that the schools do that you know from you know on food insecurity and in so many areas right uh social services so much is coming through the schools and on the city side so many things that the city is doing also directly impact SPS families. And I think it's important that people, we don't wanna pit SPS against the city. Nothing good will come from that process.

Third crack. First crack. Councilor Hardt.

Thank you, Mr. President. I actually have a question on a totally different subject, so if other people want to continue on the same subject, that's fine with me.

It's on the matter before us. Go right ahead.

Well, just looking at the revenue side, I was just wondering, given that the vacancy of the life sciences buildings is such a I'd love to hear more about just possibilities for turning that around and what's just the efforts in that regard.

Who wants to take that one? I'm looking at you, Mr. Mayor.

I'll take it, Mr. President. Thank you. Through you. Yeah, that's a huge thing, right? We just, you heard tonight and people know from previous statements that the transmedics deal would solve about 25% of the problem for us, right? and many more. I don't want to blow up anyone's spot here but we are talking to people about doing exactly that. I've encouraged economic development to think about our strategy of how we're going out and basically selling the city to potential Two potential companies interested in relocating here, opening up a site here. It's a big market in Europe. Yeah, it's bleak times right now in terms of the biotech sector, but that's not to say that there There are still companies that are growing, there are still companies moving, and we're aggressively looking to market Somerville as the place they want to be.

It's early days in terms of that strategy, but I think we're seeing some encouraging results, and hopefully we're back before the council. With good news here in the not-so-distant future.

I have a follow-up that, you know, as a constituent, I have wondered my understanding is that you know these buildings are built to scientific specifications but Are there other opportunities that aren't for biotech that could also go in these buildings? And if so, is that being explored as well?

Mr. President ah through you yeah it's definitely something you look at the problem is like your typical life science building has a lot of They don't need to have windows on the interior so much. Turns out, if you're talking about residential or other applications, they don't make good retrofits into other uses just because of the design of the building. There's a lot of... Air Handling you know with especially if it's designed for like you know wet chemistry in a lab they don't make the best in terms of flip into another use it's the the sad reality I know I had the same question as well um It's where we're at. So we're really focused on trying to tenant those buildings.

Okay, we'll go a quick third crack to Member Green and then Member Strezo. I'll note that we do have a rule for the City Council that members can only speak twice an issue. Councilor Strezo moves to waive that rule for this evening. I would encourage folks to... Scott, and then we're going to go for our third cracks.

Thank you, Mr. President. Maybe I talked a lot. Maybe that was a two for one. No, I just want to thank everyone here for engaging in this tonight. I don't want to keep us here much longer. I think this has been a helpful discussion, hopefully. As far as the mayor goes and supporting him in hard decisions that are going to have to be made, I agree. As Truman once said, the buck stops there. Now, I do reserve the right to be salty on behalf of my constituents when the budget comes out, but I also opened this conversation in the spirit of helping the mayor to understand where our priorities lay as his colleagues in a theoretically co-equal branch municipal government. It is undeniable that there are plenty of departments in the city that are making differences in people's lives that are directly impacting them. I've got neighbors.

that are out of federal custody because of the hard work of the Office of Immigrant Affairs. Hard to change a life more than that, really. I did have a quick question just to make sure I understand because I heard the whole contemplating these contingency cuts. Is that contingency cuts across all departments or just the school department? I just want to make sure I understood.

Yeah, Mr. President, I appreciate that question. Obviously, we can't order the school committee to make cuts. On the city side, what we've done is we've asked each department, so you're going to get a full briefing on this when we release the budget and show you We're going to a cabinet level architecture where you have nine departments made up of divisions. We're asking at the department level So we don't care. We need each division to do a 3% and a 5% of OM, ordinary maintenance. We're asking across the department because all divisions aren't created equal. You might have a small division where a percentage cut is brutal to them. So we're asking the department level, they come up with this, they work on this, and they present these options to us. There might be things that we might not be in a position where we need cuts, but we like these ideas and we see an opportunity to save money, we're going to go for it, right?

If we determine it's a more painful cut, then that will be saved for a contingency. On the school side, what we did ask for very specifically were sort of four levels of Member Lippens referred to it as from, in my words, least terrible to most terrible, of looking at if we had to cut, what would we cut? and I want to thank the SPS administration for putting those together. And yeah, as advertised, they started at least terrible and went to most terrible. We're really hoping to avoid that scenario, but it's an important exercise. What do they say? hope for the best plan for the worst and that's what we're doing right here we want to make sure no one's caught by surprise if those numbers don't come in where we want them to be we want to make sure that we're prepared for for any scenario here

I appreciate that thank you Mr. President uh through you thank you Mr. Mayor um I really appreciate that like I said earlier I don't think that three to five percent in the OM budgets are necessarily how we're gonna um Both cut this gap and step up for our neighbors where we need to. And I know lots of folks don't want to talk about actual departments. I've never been shy about recommending cuts. I will say I do think it's a little bit bonkers to be contemplating cuts to a school department that does not have a whole lot of fat on it. at the same time that we're considering a pre-negotiated contract increase of two to three percent to the police department above and beyond the extra infrastructure cost to implementing some new technology over there. I just think that's just bonkers to me. And I think we have other, as I mentioned, all the other middle management positions have been created. Heck, some whole departments that we spend a lot of money on that

Again, I just keep coming back to we need to focus on what's delivering services to our neighbors. So thank you for that. I promise my second bite at the apple is my last, Mr. President. Member Green.

I apologize for not knowing the city council rules. Fader, shorter, more frequent comments rather than fewer longer comments. That said, I'm going to ask us to back up for a second for This is my 11th budget as a member of the Somerville government. And for 11 budgets now, I've heard my colleagues in government pontificate very positively about their commitment to equity. and so I'm going to ask if we are equity is very easy when there's plenty of money to go around because you can make decisions that are all additive when we have to figure out where scarce resources go it becomes a lot harder And I know it's very traditional to say we can make budgets meet by tightening our budgets a little everywhere. I'm not saying we not take that approach. I'm going to ask that we be mindful of a few things.

In a city where, according to the census, 9% of us are in poverty, 44% of Somerville public school students are low income. In a city that is one-third people of color, 60% of our students are people of color. In a city where 12% of people represent... Sorry, where 7% of people report having disabilities, 20% of our students do. and in a city where 12% of people report being English learners, 25% of our students are. So if anything we have said about equity for the last 11 years is more than empty rhetoric. The most important thing we can invest in is our schools. And I say this as someone, like many of us around this table, has a certain degree of economic comfort. There are plenty of things this city does

that are nice, that are pleasant, that make my life as a middle class resident at Somerville More enjoyable. But they are nice to haves. They are not need-to-haves. So I'm going to ask this administration and this council to before they start thinking about how to make, as Councilor Scott pointed out, Strezo.

Thank you, round three. This is why those menstrual products are so darn important in the nurse's office. Equity. It's really important. And on that, and last point, this question, Mr. President, through you to Director Barretta of Somerville Public Schools, I had a question for you. If you recall in... Last month, I put forward a resolution. Thank you so much. I put forward a resolution requesting because thinking about this budget hole that we're about to go into and Strezo, anything that goes to the schools can go through me. Mr. President, that is not accurate I believe.

You can direct your questions to the chair.

Okay, Mr. President, you to the chair. As we know, when it gets to the city council level, it's an up or down vote. We have full trust in the school committee to do their job and look through the budget. But the past couple years, actually as far as I've been a councilor, The school budget has pretty much been like a nine-page PowerPoint presentation and doesn't really go into descriptions. And the resolution I had brought forward I requested that we see this year, especially with your wonderful contribution to our city, welcome, You've been in your position for a while now. And so the time is now to have a itemized budget presented to the school committee and the city council. That has the salary line items of every department.

Expenditures identical to what we receive at the city. and these numerous pages. And I know that there were thoughts that maybe, hopes that this could be possible and I'm asking you tonight, can we anticipate this this year?

Strezo, that has been noted. Thank you. You have requested to the schools. We are hearing it. Thank you for your request.

Mr. President? Ami, noting what school committee member Ackman has stated. May I have that question answered?

This is a joint meeting. You've posed a question. If member of the city staff would like to answer the question, they're entitled to. They're also entitled to not.

Thank you very much.

I don't want to step on anybody's toes, but yes, we have committed to doing that. We have not published a budget book in many years. At the start of the school year, we committed to publishing a budget book with a lot more detail. We've given snippets of that. We published a sort of retroactive budget book from last year. So yeah, that is very much in our plans. it's just it takes a little bit of time given you know the city's timeline and we we are a budget team of just me so uh it takes a little bit of time to put all that stuff together so once we do have the finalized version of the budget it will be you know presented with various Snapshots and yes itemized by departments so you'll be able to see salary lines, FTE comparisons year over year and all that stuff.

Mr. President, through you too, Director Barretta, thank you. Thank you. So we can't expect this. This is exciting. Thank you very much.

And when we... have that presentation to us. We invite you as well as all the city councilors to come to that presentation.

Clingan. Final word. Yeah, thank you, Mr. President. Through you, I just was still on that same subject. When something gets framed, like I would certainly not I was more speaking to all of our support, including to what Councillor McLaughlin said, as well as School Committee person, Green is that I think we're really what who we're talking to here is the public that they understand if we are true in our If we are truly investing in our children, then when decisions have to be made, because we already know how this plays out as counselors, He makes a cut. We get inundated with emails. Now we're coming for him. It's just, I would like to have this, you know, people to kind of be working together on the same page going into this.

So that we're not going down into the depths of political hell this budget season. So hopefully we can all, and like it's been noted, best case scenario, maybe things aren't nearly as bad as they might I see him at the moment and we get a fully funded school budget. Thank you.

All right, seeing no further questions, thank you, everyone. Thank you very much, gentlemen, for all the information, answering all the questions, appreciate it, and all the work that goes behind it, and everyone else who's putting in a ton of work behind it as well. So our gratitude to speak for the council. Ewen-Campen moves to adjourn. We're going to place this item on file. We'll need a roll call vote for adjournment and to place it on file, which we can take together. Madam Clerk.

For adjournment, Councillor Ewen-Campen? Yes. Councillor Link?

Yes.

Scott, Klingan, Strezo, Sait, Wheeler, Hardt, McLaughlin, Mbah, Davis.

Yes. We are adjourned.