A recent projection from Beverly's Financial Forecasting Committee found the city could find itself with a $2.1 million budget gap in the 2014 fiscal year.
The commitee based its findings for fiscal years 2012 through 2014 on projected city revenues, municipal expenditures and school expenditures, Councilor at Large Patricia Grimes, the subcommittee chair, said at a City Council meeting last night.
"What we did was look at things as they stand at this time," Grimes explained to councilors. "There are a lot of unknowns... at this point we don't know what the legislature is going to do in terms of heath insurance reform."
The study looked into the budget gaps using two scenarios: one assumed the cost for city employee health insurance would increase by eight percent each year, and the other assumed health insurance would rise by 11 percent in the 2013 and 2014 fiscal years.
The forecast did not take into account possible increases in salaries for municipal employees, according to a memo from the subcommittee that detailed the study results.
The likely budget gap for 2012 stands at just under $760,000 under both scenarios, according to the memo. Under the assumption health insurance increases by eight percent, the gap would grow to $1.05 million in fiscal 2013 but decline to $909,061 the next fiscal year, their findings found. An 11 percent growth in insurance costs would bring fiscal 2013's gap to about $1.6 million and fiscal 2014's to about $2.1 million, the subcommittee's data suggests.
Each year cities and towns must balance their budgets despite any gaps. However, gaps must be closed by cutting programs, decreasing funding or through other measures.
After presenting the findings, Grimes noted that a number factors such as health insurance cost and local aid offered by the state could change these numbers.
"Other things could happen to tip this one way or the other," Grimes said.
After Ward 3 Councilor James F. Latter pointed out the predicted 2014 gap was lower this year than projections from past years, John Dunn, Beverly's finance director, told the council that the study did not account for possible cuts in the future.
"[The gap] is closing down a little bit," Dunn said. "But again, it could explode, we're dependent on state aid for the second biggest source of revenue in the city."
Mayor William F. Scanlon, Jr., who attended the meeting, said although the state budget will likely not come out until June, Beverly may be able to plan their budget around unofficial information before the budget passes.
"First we'll get something from the House, then we'll get something from the Senate, then we'll get something from the conference committee," Scanlon said. "I would think that once we get the conference committee information... I think it's actually going to be in May, we'll probably be able to use that as our horse to ride for a while."