|Pittsfield's Finance Director Reports Strong Revenue Figures|
|By Andy McKeever, iBerkshires Staff|
01:17AM / Thursday, February 23, 2017
|The City Council's Finance Subcommittee received the report Tuesday night.|
Director of Finance Matthew Kerwood presented an update on the current year.
PITTSFIELD, Mass. — To date, the city is hitting its estimates for revenue.
But there are still some budget lines that are being monitored.
Director of Finance Matthew Kerwood presented a report of the city's fiscal 2017 expenditures to date. He said so far there are a few budget lines that look to go into deficit but revenues are trending upward.
The city receives its local revenue from just two sources: tax collections and local receipts. The city has a strong collection rate of 96 percent historically when it comes to collecting property and personal property taxes and that trend is remaining so far. Kerwood said the total property tax commitment is $73,907,398 and after three quarters, $53,017,587 has been collected — a rate of 72 percent. The personal property tax collection mirrors that with a rate of 73 percent. The total personal property tax commitment is $7,117,506 and, to date, $5,221,535 was collected.
"We're trending right where our traditional collection rate has been with 96 percent," Kerwood said.
He added, however, that "these figures only represent the FY17. There are taxes we collect from prior years but I am focusing only on FY17." He didn't have the total back taxes due, which Ward 4 Councilor Christopher Connell had hoped to know. Connell says the 4 percent going unpaid every year adds up and questioned whether or not the city should hold another tax title auction.
"The 96 percent is paying for the city services for that 4 percent and that is wrong," Connell said.
The city five years ago had a total of around $8 million in back taxes due, Connell said, and two years ago, held a tax title auction that reeled in some $2 million between the sale of liens and back taxes being paid. By time of the 2015 auction, the city had close to $10 million in back taxes owed and the sale brought in about 20 percent of that.
"It is a serious concern. We needed to look at the possibility of another tax title auction or doing something to increase that number," Connell said.
Connell had similar concerns when it came to local receipts. Kerwood reported that those are trending above what the city estimated, for the most part.
Kerwood said the city has already collected $502,401 in hotels and hotels tax compared to the $480,000 estimated. The city has collected $388,414 in meals taxes compared to $660,000 estimated and those revenues pick up in the spring and summer. Kerwood added that last year the city brought in $707,855 from the meals tax.
Motor vehicle excise tax only took in $999,332 of the $4,988,100 estimated, but that's because the majority of the bills don't go out until March.
"Our main motor vehicle commitment does not go out until March. Once that happens, you'll see those number increase," Kerwood said.
Connell, a former regional manager for convenience stores, says he doesn't think the city is getting all of the taxes it could from the meals tax. He doesn't think convenience stores that sell hot pizza or hot dogs is paying it.
Kerwood said those establishments should be paying the tax but he wasn't sure if they are. The money doesn't directly go through his office. The meals tax is added to the state's sales tax, the money is collected by the state, and then Pittsfield's portion is sent back.
"They are responsible for collecting that tax and then it goes to the state and back to us," Kerwood said.
The city has also saw $393,898 in school Medicaid reimbursements, compared to the $400,000 estimated. Kerwood added that the third party responsible for those collections said the administration fee is going down by 2 percent, so the city should see even more of an uptick in the future.
"This is one we have historically collected in excess from what was historically collected," Kerwood said.
Kerwood said bond premiums have been collected to a total of $564,000 and the city wasn't planning on anything. But, this is the last time it will be counted as a local receipt. Kerwood said the state Municipal Modernization Act has changed what bond premiums can be used for so instead of a receipt, it will then be used for debt services or additional appropriations.
In total, local receipts were estimated at $11,701,140 and so far the city has collected $5,884,186 — a total of 51 percent estimated. Last year, the city took in $12,565,422 in local receipts.
While the revenue numbers look good, the expense side of the ledger has some concerns. Though some of the larger expenses have been constant concerns over recent years — police and fire overtime and snow and ice.
Snow and Ice removal is already in deficit by $463,379. Cities and towns are allowed to overspend that budget because of the unknown nature of winters and most cities and towns do so. Commissioner of Public Service David Turocy says there are still more salt bills and equipment repairs which need to be processed, so that number is expected to grow even more.
Overtime in the Fire Department is already mostly spent. The city budgeted $700,000 for that and already spent $535,331. The Police Department has spent much of its overtime already too; spending $84,878 of the special events budget of $150,000; $731,415 of the $900,000 for scheduled overtime; and $64,136 of the $110,000 for dispatchers.
The police and fire overtime budgets have been routinely underfunded and end the year in deficit. In closing out the books from last year, the City Council had to transfer money to offset those deficits.
Kerwood provided an accounting per pay period of when those overtime expenses were occurring in the Police Department. The majority came in August, which is when officers take vacation and overtime is needed to fill gaps in coverage, and in November, when there are three pay periods. The day shift tends to see the most use of overtime and investigations take up the second most.
The Fire Department also saw increases in uses of overtime in August and in November, likely for the same reasons.
Those overtime accounts don't come as much of a surprise. But, there are also concerns about overtime for the Parks, Building Maintenance, Airport and Highway departments. Kerwood said the administration will be moving those overtime accounts out of the city's unclassified budget, which contains a number of departments, and into the respective departments. The unclassified overtime will be only for the departments mostly working out of City Hall, he said.
The unclassified budget has a line for scheduled overtime and that has already been overspent. The city budgeted $100,000 for it and has already spent $110,352. Maintenance and the Parks departments have used the most of that with $40,110 and $31,016 respectively.
Another area of deficit is benefits conversions. The city budgeted $400,000 for that and has already spent $563,483. Those funds are used for employees leaving city employment and cashing in on sick or other paid time owed to them.
"We believe we are on the other side of that. The only issue coming up with are terminations or resignations where employees will be paid out," Kerwood said.
Unemployment benefits are also expected to be in deficit. The city budgeted $220,000 and has already spent $193,000. While the total amount comes from the same part of the budget, Kerwood said $144,959 of that can be attributed to school staff and $48,531 to city staff.
Kerwood also discussed the contingency account, which was budgeted for $275,000 but only $33,340 has been spent. That line was created for the settlement of union contracts and only one has been settled so far. If that goes unspent this year, then that could help to offset some of the deficits.
"That was intended to be the primary use of contingency and any other emergencies that come up during the year," Kerwood said.
The Teamsters Union contract was settled in January for a 1 percent raise the first year, 1.25 percent the second, and 1.5 percent the third year. Kerwood said the impact will be $72,000, which will be moved from the contingency to the salary lines. Kerwood said the Supervisory and Professional Union has scheduled a vote for a contract settlement this week.
Negotiations with three police unions and the firefighters union is under way. All four contracts expired on June 30. The library contracts will expire this June 30.
Kerwood also previewed the budget impacts of the Taconic High School project. He said there will be no impacts on the current budget but in 2018, the project will cost the city $404,000. Kerwood added that the capital planning for that budget comes with other debts being paid off. The hope is to keep the debt management totals for that project as consistent as possible.