For Immediate Release
March 06, 2009
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Outlines three-point strategy to stabilize City budget and move Boston forward
In a speech to the Boston Municipal Research Bureau, Mayor Thomas M. Menino today proposed a three-point strategy to stabilize the City of Boston's financial outlook. Discussing the unprecedented economic challenges confronting Boston, Mayor Menino outlined a plan to bridge the City's anticipated budget shortfall for fiscal year 2010, reform city government, and invest in opportunities for growth and savings. Mayor Menino's three-point budget strategy focuses on: 1) reforms and cost cutting measures for City government; 2) responsible use of reserves and funding from the American Recovery and Reinvestment Act; and 3) shared sacrifice to minimize the impact of layoffs. The speech addressed issues facing both the public and private sectors, emphasizing the collective action needed to overcome the current challenges.
"I will be open about the challenges we face and specific about the actions I am taking to address them," Mayor Menino said. "The crisis we're facing is unprecedented, but I am confident in our collective ability. If we take action together we can rise to meet the future. I am committed to delivering a plan that saves jobs and protects core services, stabilizes the public sector, and helps the private sector grow. Thankfully, Boston confronts these challenges from a position of real strength."
Under Mayor Menino's leadership, the City's department of Administration and Finance has continued to take action to address financial concerns. In addition to curbing discretionary spending, the City instituted a strategic hiring freeze last year that has saved millions of dollars. However, Boston still faces a $130 million budget shortfall for fiscal year 2010.
Mayor Menino's strategy aimed at closing this anticipated budget gap involves reforms to City government and cost cutting measures that consolidate services and eliminate activities that are nonessential. For example, the Boston Public Library will move the services of the Kirstein Business Branch to the central branch at Copley Square. This move will strengthen resources for entrepreneurs and save the City $250,000 annually. The City of Boston will also close its printing operations, resulting in a savings of over $400,000 next year and $1 million every year thereafter. Other reforms include eliminating a layer of management in the City's community centers to save over $500,000 annually, and restructuring management in the Boston Fire Department in order to protect frontline services. Similarly, Boston Public Schools will reduce central office management in order to protect teachers.
Additionally, the City will tap into its reserve funds next year to help narrow the budget gap. Mayor Menino underscored that rainy day funds would be used responsibly so that the City maintains the savings needed for future use. The use of reserve funds will be supplemented with one-time funding from the federal Recovery Act to further bridge the FY 2010 budget gap. Having been allocated approximately $147 million in federal funds thus far, the City is allowed to use $21 million of this funding toward next year's operating budget.
The Mayor also provided reassurance that the City would utilize federal recovery funds to strengthen infrastructure, spur innovative development, and initiate programs to benefit residents. $39 million in recovery funding will be used for roadway improvements throughout Boston's neighborhoods, ranging from the reconstruction of Dorchester Avenue and the repaving of other roads to traffic signal upgrades. Boston also intends to use Recovery funding to launch Renew Boston, a public-private partnership that will create 100 "green" jobs and provide residents and municipal buildings with energy efficiency and renewable energy upgrades.
Finally, Mayor Menino again called on Boston's municipal union leaders to bear a share the financial burden to help keep Boston on solid footing. In February, the Mayor and his cabinet took a voluntary 3% pay cut, and all unions have been asked to consider a one year wage freeze that would save $55 million next fiscal year. Without the cooperation of union leadership, the City will be forced to lay off roughly 700 employees, including over 100 teachers from the Boston Public School system.
In today's address, Mayor Menino announced that three more unions – the Municipal Police Superior Officers Association, the National Conference of Fireman and Oilers (representing personnel in Property Management), and AFSCME (American Federation of State, County and Municipal Employees) – have accepted the one year wage freeze proposal. Prior to today's announcement, five other unions – the Boston Police Superior Officers Federation, the Boston School Police Union, the Boston EMT Union, the Public Health Nurses Union, and the Public Health Steam Fireman and Oilers Union – all agreed to accept a one year wage freeze. In total, eight unions have accepted the wage freeze proposal.
AFSCME, a 1,239 member union represents employees from the Department of Public Works, the Boston Transportation Department, and other departments that provide basic city services. On average next fiscal year, these employees will forgo approximately $1,000 each. This sacrifice will allow the City to protect nearly 50 jobs and maintain core services for residents.
Reaffirming the City's commitment to protecting and strengthening private industry, Mayor Menino has directed his administration's economic development team to identify Boston companies with leases ending in the next 24 months. This team will be responsible for working with commercial real estate companies to target such businesses and provide financial and technical assistance where appropriate.
Despite the economic realities, Mayor Menino pointed to the strengths that put Boston in a unique position to weather the economic crisis relative to other major cities. Boston benefits from a diversified economic base – including leading colleges and universities, healthcare providers, financial institutions, and the life sciences industry – that has allowed for growth even in a difficult economy. There are nearly $5 billion in projects currently under construction, and Standard and Poor's and Moody's recently reaffirmed the City's Aa1 bond rating, which reflects Boston's strong financial position. Office occupancy rates remain high, and the City's unemployment rate is lower than many others around the country. For residents, housing prices have remained stable, and Boston has been recognized as a national leader for its foreclosure prevention efforts.