Haverhill CFO: Prior Mayor Left City Reliant on Inconsistent Surpluses; Taxes to Rise Again Next Year

City Auditor and CFO Angel A. Perkins. (WHAV News file photograph.)

At the start of her first term this year, Mayor Melinda E. Barrett was quickly informed her predecessor had left behind a budget overly reliant on “free cash,” a reserve created by each year’s budget surplus—the sum of all revenues coming in higher and costs lower than planned.

“It was one of the first things I briefed the new mayor on when she came into office,” CFO and City Auditor Angel A. Perkins said.

The city is expected to raise taxes by 8%, or $444 on average per single-family household, for the current fiscal year, which started Monday, to pay for a $262 million spending plan. The Barrett administration argues it made the move in part because former Mayor James J. Fiorentini overly relied on this pot of money, keeping taxes “artificially” low. Beginning, as Perkins put it, to “wean” off free cash—a process projected to continue until 2033—the city budgeted almost $900,000 this year toward items previously paid by the inconsistent source.

Other major costs include $1.7 million for the Dr. Albert B. Consentino School building project, $1.5 million for the fire department contract and $800,000 for schools, which grappled this year with what would have been an $11.1 million shortfall.

With no guarantee the city will generate the same amount of free cash every year, Perkins explained it should only go toward one-time expenses. The reserve is made up of unexpected windfalls like the city spending $195 less on dog pound repairs than expected, an example from the 2023 budget. It’s bad practice for cities to use too much of this surplus to pay the operating budget, which includes consistent costs like annual salaries for police officers and firemen, she added.

Fiorentini usually closed the year with a minimum of around $4 million left over, Perkins explained. “But in his last six months in office, he went completely against what he used to do and spent it down to below a million.” She added she didn’t want to speculate about why he made the decision.

From private conversations, “at least a couple” of city councilors knew, according to Perkins. To her knowledge, none raised the issue publicly.

With less and less in the reserve since 2020, culminating in a low of roughly $800,000 on June 30, last year, Perkins said the problem had been building. The fund contained $6.4 million on the same date in 2020, $4.1 million in 2021 and $3.9 million in 2022.

Another main driver of higher taxes is the $152 million for Consentino. With the state paying for half, Haverhill voters approved a debt exclusion June 2023 to pay the city’s part. Residents must pay $1.7 million toward the project next year.

Of the city and school collective bargaining agreements totaling $3.7 million, the contract with the fire department caused the biggest jump because it took three years to reach. Annual cost-of-living adjustments and salary increases mean “a triple increase for the city’s second largest department,” she said.

Barrett’s spending plan this year included a projection that taxes next year will build on this year’s increase and grow another 5.1%,

School Committee member Thomas Grannemann said during a May 20 budget hearing, in the future, the city may need a Proposition 2 ½ override to help the district keep pace with rising costs. When asked about the likelihood that will happen, Perkins said, (CUT: perkins-they would go.wav) “It’s the will of the taxpayer. That’s just too large of a population for me to speculate which way they would go.”

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