LAWRENCE - The city piled up a $6.6 million surplus in the fiscal year that ended June 30, including $2.7 million that was left on the table by city departments and $3.3 million from another surplus left over from the year before, the state Department of Revenue said yesterday.
The surplus amounts to 3 percent of the $220.4 million that was budgeted for the city and its schools in 2012, which was the first budget in four years that did not include deficit spending or borrowing.
Unlike the surpluses accumulated in each of the last two years, when much of the free cash was devoured by unanticipated expenses such as the mold cleanup at the Guilmette School and a string of police brutality judgments, the claims on the 2012 surplus may be small.
The biggest claim on the surplus could be by the fire department, where a two-year, $6.6 million federal grant that allowed the city to hire 38 firefighters, including 23 who were laid off July 1, 2010, will run out by June. If the federal government – which itself is headed for a so-called fiscal cliff early next year that could trigger deep cuts in federal spending - does not renew the grant, Lawrence itself may face a cliff of its own, at least at its firehouses.
“The city would have to come up with the funding, or we’ll have to lay people off,” Fire Chief Jack Bergeron said yesterday.
Lantigua did not return a phone call seeking information about his plans for the surplus.
But Robert Nunes, the fiscal overseer appointed by the state to oversee spending in Lawrence, said Lantigua will propose budget amendments this week that may call for spending about $1 million of the 2012 surplus on “one-time expenses.”
He did not elaborate, but offered a typically upbeat assessment of the city’s fiscal health.
“By adhering to responsible and sustainable practices, we’ve made positive measurable changes to the fiscal well-being of the city,” Nunes, a deputy commissioner in the state revenue department, said in an e-mail.
He did not respond to a question about whether Lawrence still needs fiscal oversight given its three straight budget surpluses and a bond rating that recently began inching back up from near junk-bond status.
City Councilor Daniel Rivera, who chairs the council’s budget committee, said the city should put most or all of the 2012 surplus in the bank to guard against what he said could be cuts in state aid that may follow the spending cuts Gov. Deval Patrick recently said he may propose to deal with revenue shortfalls in the state budget. In October, the state collected $162 million less than anticipated, Patrick announced this week.
“We should be proud that through the conservative budgeting of the City Council and the administration, city departments are spending tax dollars more wisely.” Rivera said. “However, we should be prudent and very careful on the use of free cash, if we use it all.”
Last year’s $6.6 million surplus was the biggest by far of the last three. The surplus in fiscal year 2010 was $5.4 million; in 2011, it was $4.7 million.
In a related development, Nunes disclosed that Lantigua recently appointed a capital budget committee to develop a plan for major infrastructure improvements and big-ticket purchases. The state directed the city to develop a capital budget three years ago, as part of a deal that allowed the city to borrow up to $35 million to cover deficits in earlier operating budgets.
Nunes said the committee already has met twice, but did not say when it would propose its first budget.