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NEWTON

Caution is policy in fiscal storm

Plan to mend budget on hold

By Rachana Rathi
Globe Staff / October 5, 2008
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NEWTON - The state's emerging budget troubles trickled down to Newton last week, when Mayor David Cohen's budget chief cautioned aldermen that the city needs to go slowly on spending initiatives.

The immediate issue was Cohen's proposal to use $450,000 in unexpected revenue to restore teacher and police cuts in this year's budget.

Sandy Pooler told aldermen Wednesday that using the money to restore some budget cuts depends on the city not suffering any reduction in state aid.

Pooler's comments came a day before Governor Deval Patrick confirmed that state revenues for the first quarter of this fiscal year were down significantly, and that cuts in the state budget would have to be made. The revenue drop reflects a general decline in the nation's economy and may worsen, Patrick said. The uncertainty brought about by the country's credit crisis makes the state's budget picture even cloudier.

The total amount of unanticipated revenue is $500,000, Pooler said. He said the mayor would like to use $50,000 to purchase a new computer server and the rest to address budget cuts that were necessary after voters turned down a $12 million property-tax increase in May. Cohen wants to give 70 percent of the remaining amount to the city's school district, and 30 percent to the municipal government, to restore two police positions.

But for now, Pooler said, the mayor is proposing to put the money in the general reserve fund until it is clear that the financial crisis will not lead to a cut in state aid to Newton.

Reflecting concern over the fragile state of the economy and of government budgets, aldermen approved a motion to ask the mayor to meet with them during another budget session. The date of the meeting had not been set Thursday.

"Today is not a good time to make these decisions," said Alderwoman Victoria Danberg, echoing the statements of several of her colleagues about the uncertainty of the state's and nation's economic situation.

Cohen had refused to honor numerous resolutions from the Board of Aldermen during the budget season, when they lobbied for police officers, teaching positions, and branch libraries to be restored.

A dozen aldermen decided to try again after the mayor announced last month that he expects $11.2 million in unrestricted funds, known as free cash, to become available. They called a special board meeting to discuss amendments to this year's budget, including using a portion of the free cash this year and restoring some cuts.

But at Wednesday's meeting, Pooler said the mayor expected to spend the free cash the way it is typically spent: on snow and ice removal, energy overruns, overtime, capital projects, and in a future year's operating budget.

Free cash from the 2008 fiscal year, which ended June 30, will become available for use this fiscal year after the state reviews an audit of the city's books and certifies the amount. It represents revenue from fees and taxes, from spending less than budgeted in some areas, from health insurance savings, and from an energy rebate.

About $2.3 million of the $11.2 million in free cash is from a state reimbursement for a school building project, and will go to the capital stabilization fund for future capital projects.

City officials told aldermen it is not fiscally prudent to spend money on recurring expenses, such as salaries, with nonrecurring income from free cash. They also emphasized that the funds are needed because of rising costs for fuel, energy, and road salt, as well as the difference between how much Newton appropriates for snow and ice removal and how much the city actually spends.

Although Cohen did not change his stance on free cash, he did offer one amendment that the 12 aldermen sought - increasing the amount of anticipated revenue by the $500,000 amount. And he left room for another amendment - restoring cuts.

At the meeting, Alderman Paul Coletti said the mayor knows he must be amenable to the aldermen's wishes because they will hold the cards when it comes to appropriations he requests later this fiscal year.

"Last year, after the tax rate was set, he asked for $7 million" in various expenditures, he said. "When it comes our time, it will be interesting to see if the board is going to write these checks."

Rachana Rathi can be reached at rrathi@globe.com.

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