Watertown’s budget will be healthy enough to add several positions in Fiscal Year 2024, but City Manager George Proakis told the City Council Tuesday night to expect some challenging budgets in the years to follow.
The FY24 budget, which will be approved by the Council in June and begins July 1, will be $190 million. This is 5.9 percent below the FY23 budget, but Proakis said if you take out the money used to purchase Walkers Pond and the former Parker School, it would be 6.99 percent higher than FY23.
The stormy seas ahead are due to five converging forces, Proakis said, and they could impact the budgets from FY25-28.
The first factor is the cost of construction, which comes at a time when Watertown is taking on the biggest in its history: a new high school which will cost more than $200 million.
“Public construction projects have seen unprecedented cost escalation, well beyond what cost estimators continue to estimate,” Prokis said.
The second problem comes with payment of the borrowing. Unlike a home mortgage, where payments are the same over the life of the borrowing, when local governments pay off borrowing they pay interest based on the amount of principal.
“We pay more interest on debt in the first, second and third years when you do large amount of borrowing,” Proakis said. “It goes down over time, and we end up paying a small amount of interest in year 30.”
The highest payments on the high school project will be in FY26 and FY27, and then will begin to ease in FY28.
The economy, particularly related to the life science industry, also looks soft. In FY24, the budget includes $6 million in tax dollars from new growth, mostly from new life science developments. Proakis said he is confident in that figure because they are based on projects that have already started construction. Future years are not as certain.
“Projections are strong in FY24, but FY25 and FY26 projections based on new life science projects breaking ground right at a time when the industry is seeing fewer projects financed, may have a debilitating impact on new growth,” Proakis said. “It’s not like it goes from $4 million to zero, but it could go from $4 million to $3 million, and those sorts of challenges start to open a gap if we don’t manage other pieces carefully.”
The fourth big cost increase comes from solid waste disposal, or trash and recycling. The City is renegotiating the contract with the hauler, but Proakis said he does not expect costs to get any lower.
“If we are looking at solid waste, probably the most significant change is the costs are higher — the cost of hauling is higher, the cost of disposing is higher … I don’t think it is going to go down. I think it is where we are,” he said.
Finally, the City is in the process of negotiating contracts with six municipal unions. The contracts would cover fiscal years 2023-25, so when they are settled, the City would have to retroactively pay the employees for the raises over the period of the contract that has already occurred.
No one thing will bring down the ship, or the City’s budget, Proakis said, but a combo could spell trouble.
“One thing will not create a challenge, I think, but a couple of them together could be challenging,” he said.
The new budget also includes new positions, and a reorganization of the City’s organization chart. The City Council will be considering the reorganization at the same time that it looks at the budget. Two budget hearings are planned in late May and early June, before the final budget vote in June.
Some of the new positions would be part of implementing new programs, such as the 311 system which creates a one-stop place for residents to get answers to questions about City government, and another position in the Health Department will work on implementing a rodent control program.
Others would be key, Proakis said, to implementing goals of the Comprehensive Plan, such as supporting local businesses and changing zoning in town. The DPW gets some new positions to help maintain the City’s parks and fields and to oversee different divisions.
The following positions are proposed in the Manager’s FY24 budget:
New Leadership Positions
● Chief Financial Officer
● Constituent Services (311) Director
● Planning Director (Director of new CDP Planning Division)
New Staff Positions
● Constituent Services (311) Representative (II.I)
● Community Engagement Specialist
● Assistant City Clerk
● Assistant Procurement Director
● Parker School Custodian
● DPW Staff Engineer
● DPW Projects Manager
● Health Officer (focused on rodents)
● DPW Parks Heavy Equipment Operator
● Assistant Building Inspector
● Senior Planner: Economic Development
● Senior Planner: Open Space
● Associate Assessor
● IT Help Desk Technician
Follow Watertown News for more reports about the FY24 budget and the reorganization of City personnel.