PITTSFIELD, Mass. — The city's Finance Department is closely tracking expense numbers for overtime and veterans programming, as those budget lines are trending at a higher rate of spending than allocated.

 

Director of Finance Matthew Kerwood provided an update on the city's budget Thursday night to the City Council's Finance Subcommittee. Kerwood said after only one quarter, projections are difficult but those big-ticket sectors are on his radar.

 

"We are trending to be in excess of the appropriate amount in veterans programming, police and fire overtime, and scheduled overtime," Kerwood said.

 

Kerwood said the largest overtime spending is coming from the Building Maintenance and Park's Department, as well as the Police and Fire, which traditionally are underfunded. When it comes to the Fire Department, already $313,632 of the $700,000 appropriation had been expended.

 

However, the city did just accept a federal grant to the tune of $1.1 million that will be used to cover the salaries of eight new firefighters recently hired.

 

But "even with everything I said about the additional firefighters, the chief's numbers trend that we would be over," Kerwood said.

 

The Police Department has already spent $372,247 of the $900,000 appropriated. Kerwood said if that trend continues, there would be a shortfall of $217,000. Both Police and Fire overtime budgets have been routinely underfunded in the budget and earlier this year the City Council had to transfer some $900,000 to offset overages in those lines in last year's budget.

 

The scheduled overtime in the unclassified budget is also being spent quicker than allocated, with Building Maintenance and the Parks Department — which have an increased workload during the summer — spending the most. 

 

Kerwood said he mentioned the concern to department heads at a recent staff meeting and will be watching as it moves forward. If it continues, he says he'll be asking the department heads to curb their spending from that line to bring the trend back into line with the appropriation.

 

For health insurance, Kerwood said new MedEx rates have come in with a 7 percent increase, starting on Jan. 1. That is expected to cost the city $22,000 more.

 

But the most concerning budget line so far for Kerwood is in benefits conversions. The city budgeted $400,000 based on expected retirements but some unexpected ones cropped up — particularly in police and fire. That line is down to just $62,000 remaining.

 

"Folks who weren't necessarily on the radar screen decided to retire so that has an impact on that," Kerwood said.

 

The books do show an overspending of $111,000 on general insurance, but that's not accurate because reimbursements, discounts, and other ledger moves haven't been completed. Essentially, the city pays the entire amount and the School Department transfers money to pay for its portion, the insurance company offers credits and discounts credited back later.

 

"That line item as of today is on the good side to $60,000," Kerwood said.

 

Most of the salary lines are right on target for a quarter of the year, he said, and "there is really nothing that jumps out and is alarming."

 

Workers compensation is also trending above target, but "that is volatile" and unpredictable so if few employees get hurt then that will fall back in line. Nonetheless, Kerwood said it "is clearly on the watch list" as almost half of that budget is gone.

 

A bit of good news comes with the debt services, in which Kerwood said some $19.8 million in bond anticipation notes were converted into bonds, at a great rate. The move also raised the city's bond rating to AA.

 

"We felt the best course of action for the city was to permanently finance those projects which were completed. We did that and got an interest rate of 2.66, so we did very well in the market," Kerwood said.

 

Expenses can be offset by budget line transfers as well, so while some of the lines may be trending toward overspending, lines that haven't been fully spent can be transferred over to make up the difference. 

 

As for revenues, those are trending on target with a few areas of promise. The hotel and motel tax has already brought in $300,000 of a projected $460,000. Timber sales have brought in $61,000 already of the $80,000 anticipated. And in January, the city will see another bump with motor vehicle excise bills going out.

 

"We'll see an uptick in revenue associated with motor vehicle excise after the bills for that first commitment go out," Kerwood said. "Revenues are what you would expect them to be in the first quarter of the fiscal year."

 

The revenue trends are even more difficult to follow this year because Kerwood used the prior year's projections - not the actuals. 

 

"You are much wiser to be conservative with your local receipts," he said."I really didn't feel confident to monkey around with them too much."

 

The Finance Department has developed new forecasting programs, which Kerwood says allows him to look back on trends for more than a decade. In the next budget season, he feels he'll have enough information to recognize if there were any abnormalities and better set those projections.

 

"I have a much better handle on historical data and actual fiscal year data," Kerwood said.

 

When it comes to property values, which will be discussed in greater detail at the tax classification hearing on Nov. 15, the growth has given some promise with a raising of the levy ceiling by about $200,000 more than expected. 

 

"We're not anywhere near where we could be but we are better than what I anticipated when we did the budget in June," Kerwood said.

 

The values for single-family homes remained stable, two-family and three-family homes lost value, commercial property lost about $4 million in value, and industrial values increased by $2.9 million.

 

A "substantial increase" in valuation was seen in personal property tax, but that increase may be countered in the following year because of the closure of SABIC. In all, personal property values increased by $18 million. That includes the closing of the tax increment financing agreement with SABIC, the new agreement with the Beacon Cinema, new properties coming onto the rolls with Big Y Express and the Hilton Garden.

 

However, the assessments were done as of Jan. 1 and SABIC was still there. The company accounts for $10.4 million of all personal property tax revenue, so the majority of that increase seen this year will be lost when it moves out totally of its space. The company's Innovative Plastics division announced a year ago it would relocate its headquarter to Houston.

 

"Some of that value that we gained will be lost due to SABIC's transition," Kerwood said.

 

Overall, property values "have been set. They are slightly higher than we originally anticipated."

 

The city's free cash has not been certified yet but Kerwood is expecting about $4 million. The city had $5 million and made two appropriations — $2 million to offset the tax rate and $900,000 to cover overages in police and fire overtime from last year. That left $2 million remaining and about $2 million of funds from last year's budget will roll into free cash this fall.

 

The 2016 books have been closed out. The highlights of that include local receipts coming in higher than estimated but cherry sheet receipts come in lower.