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In the Mayor’s Office, May 9, 2008

To the Members of the City Council:

In accordance with Chapter 44 of the General Laws, I hereby recommend the following annual
budget for the fiscal year ending June 30, 2009, with recommended appropriations totaling
$315,240,405. To meet these expenses, I recommend appropriations from the Estimated
Receipts – Ordinary Revenue of the Fiscal Year 2009 amounting to $264,942,427; from the
Fiscal Year 2009 Estimated Receipts – Enterprise Revenues, appropriations of $35,662,941;
from Sewer Enterprise Fund Retained Earnings, total appropriations of $491,822; from Water
Enterprise Fund Retained Earnings, total appropriations of $1,951,376; from Refuse Enterprise
Fund Retained Earnings, total appropriations of $855,720; from Available Receipts Reserved for
Appropriation of the Parking Authority, total appropriations of $572,486; from Weights and
Measures Fines Receipts Reserved Funds, total appropriations of $68,901; from Certified Free
Cash, an appropriation of $10,383,451; from Renewable Energy Enterprise Retained Earnings,
appropriations of $101,281; and from Accumulated Library Incentive Grant Funds, as
authorized by the Library Board of Trustees, an appropriation of $210,000. I would request that
these appropriations be made in the manner as detailed on the attached form of budget order.
Accompanying this budget request is a letter from the City Auditor attesting to sufficient
balances in Free Cash, Sewer Enterprise Fund Retained Earnings, Water Enterprise Fund
Retained Earnings, Renewable Energy Retained Earnings, Refuse Enterprise Fund Retained
Earnings, and the Receipts Reserved for Appropriation accounts, and the Accumulated Library
Incentive Grant funds.

The Commonwealth has yet to adopt its final budget, but we can be reasonably assured of the
approximate level of state aid, and of the final required amount of “Net School Spending” for the
school system, although not fully confident that the State will accept the City’s accounting for its
contribution to Net School spending from city budgets In order to permit the City Council a
meaningful opportunity to review the budget before July 1, I am submitting this budget well
before its due date. My budget submission for distributions for Chapter 70, lottery, and the
category of aid called “Additional Assistance” relies on the joint resolution of the House and
Senate. For all other State aid categories, the budget has been prepared using the state aid
estimates of the House Ways and Means budget.

This budget contains sufficient funding, $71,787 in total, to pay for a recent contract settlement
with the Department Administrators Union, a copy of which was transmitted to the City Council
on May 6th. The departments affected were Council on Aging ($4,461), Health ($7,561),
Procurement ($5,131), DPW ($13,247), Water ($12,133) and Sewer ($7,188), Veteran’s
($5,686), Parking Authority ($3,184), Parks ($7,188), Library ($5,796) and Cemetery ($1,437).
The settlement is for FY2008 and FY2009 in total, all funded for $71,787, with settlement terms
similar to the pattern of other unions which settled during FY2008. If the necessary funding is
not appropriated, the parties will return to bargaining. The contract was submitted as
information to the City Council on May 6.
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The budget also contains sufficient funding to allow for a one year settlement with our police
supervisors union, based on the city’s proposal for a base wage increase and a new top step. The
city’s proposal is for a settlement pattern similar to that of the police patrolman’s union for
FY2009. I can provide additional details separate from this letter.

This budget was prepared in the context of four (4) inescapable realities. One, the State has yet
to restore local aid, except for Chapter 70 Aid and lottery assistance, to the level of support
achieved in FY2002. Even Chapter 70 Aid has only kept up with inflation, and other aid, in
total, is still either reduced in some accounts, or not increased for inflation in other accounts.
Two, many of our costs are increasing at a much more rapid rate than our local revenues. Three,
prudent management should restrain the use of appropriations from the Stabilization Fund to
make up the difference between what we’d like to spend and our available revenues. Four, the
unavoidable consequence of inadequate revenues and reserves is cost reductions. The only
question is from what accounts to make these reductions.

My decisions in constructing this budget were centered around three (3) major objectives. First,
attempt to maintain core services, especially those affecting public safety and instructional
services in the classroom. Second, avoid to the extent possible reductions which would require
any actual layoffs. The economic impact of a job loss to many of our workers would be severe;
the loss of those employees would result in a decline in services to the public, and the budgetary
savings in the first year of a layoff is significantly reduced by unemployment costs. Third,
evaluate the impact of the cost reduction on the entire public, not just one interest group, both in
terms of the resulting service reduction and in terms of the financial equity of the cost of the
service to the population of taxpayers who finance that cost.

When I asked the department heads to prepare their budgets, I asked them first to prepare a
budget which would attempt to maintain services, but to level fund their total ordinary
maintenance budgets for discretionary costs, with certain fixed cost accounts, such as debt
service, excluded from that target. I also asked them to prepare budget reduction ideas for 40
percent of their discretionary funding. Almost all departments diligently and conscientiously
complied with this requirement, and the ideas that were presented assisted greatly in creating this
budget.

This budget was funded without any appropriation from the Stabilization Fund; in fact, the
budget adds $150 thousand to that fund as a contingency for rising fuel costs. The budget also
adds $150,872 to the Chapter 324 Supplemental Reserve to Ensure Fiscal Stability to comply
with legal funding requirements. The budget adds $125 thousand to the Law Department for
Outside Counsel Services relative to the power plant and adds $400 thousand to the Finance
Department Insurance budget because of increased coverage requirements for new city owned
facilities (schools, wastewater treatment) and the Campanelli Stadium/Shaw’s Center complex.
The budget also adds $150 thousand to the Snow and Ice appropriation; despite additional
funding authorized in FY2008, the city has incurred a deficit in excess of $400 thousand this
year.
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The budget fully utilizes the available Free Cash of more than $10.3 million, but even so a
significant number of positions were not funded compared to FY08. In the various
Finance/Administration functions, the reduction was a total of 10. In the Clerk/Council/
Elections functions, 2 positions were lost. In the Department of Public Works (not counting
Water/Sewer), a total of 7 positions were lost. In the Health/Inspections/Public Property/
Weights and Measures functions, 6 positions were lost. In the Human Services functions,
excluding the Library, one position was lost. In the Library, 8 positions were lost. In Traffic,
Civil Defense, License and Animal Control, one position was lost. In Fire, 8 positions were lost.
However, in the Police Department, 10 positions were gained, of which 4 will be paid by State
Grant. The Enterprise Funds gained four positions in Water/Sewer. In total the City gained 14
positions, but lost 43 positions, with a net loss of 29 positions. Of these 15 will be by layoffs.
This represents a positive development since my presentation to the City Council Finance
Committee in early March. The major factors contributing to this change were favorable
weather conditions in March which diminished the need to reserve for additional snow/ice
deficits, the contribution of funding from reserves by the Library Trustees, and cooperation from
city unions during layoff impact bargaining which preserved the employment of certain
employees, while avoiding layoff costs.

I believe that it is apparent from this summary that the impact of the funding cuts in this budget,
especially for DPW, Public Property, Library, and School Transportation, will seriously diminish
the city’s ability to serve the public. In addition, the level of staffing for the fire department,
although not reduced from the current level by this budget, is well below the levels of just a few
years ago. Although funded positions are added to the Police budget, it too is funded below
levels most of us would like to see. Also this budget only continues the decline in staffing over
the past few years through attrition in most other departments.

This budget contributes to realizing a restructuring of the planning and economic development
functions of the city. I believe that the result will be a stronger, more effective function with
more accountability for good results. The concept is to reallocate and consolidate resources from
the city’s Planning Department and its BRA to the Brockton 21st Century Corporation, under a
contract with the city, and to charge the corporation with the planning and development
responsibility for the city. To this end, funding for the Planning Department has been reduced.
In order to concentrate the focus of the corporation on its core mission, the corporation’s
responsibility to manage the lease relationship with the Campanelli Stadium and Shaw’s Center
facilities will be transferred to the City, and the city will receive all lease revenues. The City will
take ownership of the facilities; the land lease will be terminated and the corporation will in
exchange be relieved of any further debt repayment obligations. There will be little net effect
from these steps on the city’s budgeted revenues/expenses over the remainder of its 20 year land
lease with the corporation.

The School Department appropriation which I have recommended is significantly lower than
what the Superintendent and School Committee had hoped to receive. The School Department
had developed an initial budget request of $146.7 million, an increase of $11.7 million, or 8.7%
over FY2008. Of this, the sum of $137.1 million represented Net School Spending, an increase
of $9.9 million, or 8.1% over FY08. An additional $9.6 million represented Non-Net School
Spending, primarily transportation, an increase of $1.9 million, or 23.9%. Because of the city’s
budget constraints, I informed Superintendent Nembirkow that the city could support an
appropriation of only $132.2 million for Net School Spending. This is a reduction of $4.9
million from the school department’s budget, but it represents an increase over FY2008 of $5.0
million, or 3.9%.
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It should be noted that the city projects that this appropriation would result in a level of funding
for the “Foundation Budget” about $3.5 million above the minimum required. However, that
calculation rests upon the city’s accounting for and claiming $5.9 million in health insurance
costs for retired school employees in the city’s health insurance budget. In previous years, these
costs were accounted for but not claimed as “Net School Spending”.

For Non-Net School Spending my recommendation is for a budget of $5.95 million, a reduction
of $3.65 million from the school department budget. It also represents a steep reduction of $1.8
million from FY2008. This will require a significant change in transportation policy and will
result in a loss of bus services to some students.

It should be clear that the city needs an infusion of new revenues. I would prefer that most if not
all of these new revenues come from the state aid accounts which have been cut or from new
revenues sources other than the property tax. The governor’s proposal last year for new taxation
of certain telecommunication company property, plus a two percent meals tax, could have
generated $2 to $3 million for the city, if the Legislature had adopted it. The restoration by the
state of the Cherry Sheet aid for transportation and additional assistance only to FY2002 levels is
worth about $2.2 million. However, it would appear that none of these factors will come into
play soon. Accordingly, the City will confront the same difficult choice which many
communities recently have faced: raise the property tax, or significantly reduce service levels,
including public safety. This budget is balanced without a Prop 2 ½ override, but there are
significant service reductions. Over the coming weeks, I will work with the Council to secure
acceptable ballot questions to modestly raise the city’s tax levy to address some of the service
cuts.

I want to close by reinforcing the impact on Brockton of the State’s backing away from its
commitment to assist cities and towns to provide basic services, other than classroom education.
This abandonment is especially troublesome when the cities and towns are restricted in levying
property taxes and are confronted by costs escalating at more than inflation of 2 to 3 percent.
The restrictions on our financial flexibility imposed by state funding decisions, mandates, and
laws have caused financial distress. I would hope that by next year, the state has renewed its
partnership with the cities and towns of Massachusetts to attack our mutual fiscal problems.

Respectfully submitted,

James E. Harrington
Mayor

JEH/amw
[FY09BudgetLtr-Mayor]
May 14, 2008

TO: Members of the City Council

FROM: James E. Harrington, Mayor

RE: Typographical error on letter dated May 9, 2008

I have discovered a typographical error in my budget letter to you. On page 3, in the last
paragraph on the page, the third sentence should read that the School Committees request of
$137.1 million Net School Spending represented “an increase of $9.9 million, or 8.1% over
FY08” not “an increase of $4.2 million, or 3.2%”. Attached is a replacement page 3 which has
been corrected.

I regret an inconvenience.

XC: Anthony J. Zeoli, City Clerk


Mark Gildea, Legislative Counsel
John A. Condon, Chief Financial Officer

JEH/amw