Springfield ends year with $19M in free cash; officials considering spending some on tax relief

0 6

SPRINGFIELD — The state has officially certified the city’s free cash, giving officials an additional $19.3 million to spend by the end of the fiscal year.

“We will look at a lot of things, adding to our pension fund and tax relief,” Mayor Domenic J. Sarno said.

Free cash is money raised throughout the previous year on income generated through different fees, such as from building permits, as well as funds budgeted but not spent for a variety of reasons, like not filling vacant positions.

This year, the city received $19,317,806, but the total includes $1.5 million in opioid funds that came from settlements of suits filed against drug makers in state court. That money must be used to reduce opioid abuse and assist people who are addicted to the drugs, said Patrick Burns, acting chief administration and financial officer.

That means the city actually has $17,796,271 to spend on unexpected expenses, such as replacing a vehicle that breaks down, a road collapse or other needs that come up throughout the year.

Over the past eight years, the amount of free cash the city has received has fluctuated dramatically. Last fiscal year, the city received $67.8 million, but that was out of the ordinary, as Eversource was required to pay a large sum in personal property taxes and interest, which totaled $41.1 million, Burns said.

The money came from a Court of Appeals decision that settled a decade-long dispute over how much the utility should be assessed in property taxes for its utility poles, transformers and other infrastructure.

In 2022, free cash stood at $27.6 million, but in earlier years, the amount has been much lower, ranging from $7.4 million in 2018 to $4 million in 2019.

When Burns made the announcement, City Councilor Tracye Whitfield said she hopes the mayor and the city’s financial team looks at adding some of the money to the tax base to reduce the amount residents and businesses have to pay.

Sarno said he expects to release his recommendation for setting the tax rate within the next week or so, and using some of the free cash to lower the levy will be a serious consideration. Last year, $10 million was set aside to reduce the tax rate, and in previous years, $2.1 million and $1 million were transferred for relief.

He said the city also has tried to help those who need relief the most by lowering the eligibility of tax abatements for low-income seniors to 65 from 70 and increasing the amount they can receive from $500 to $1,000.

“We will look at what is the highest and best use of the funds,” Sarno said.

Although it is not exciting, the mayor said it is also vital to continue to invest money in the city’s stabilization or savings account, which now totals about $68 million, and reduce the pension liability.

The stronger the city’s financial standing is, the better its bond rating, which allows officials to borrow money at a lower interest rate. That is key as the city looks at continuing to replace aging schools, renovate others, upgrade parks and improve other infrastructure, Sarno said.

- Advertisement -

- Advertisement -

- Advertisement -

Leave A Reply

Your email address will not be published.