LAWRENCE — Despite a strategic "recovery plan," emergency meetings and last-minute City Council votes, the city still has a $9.5 million budget deficit for fiscal 2010, according to the state Department of Revenue.
The department recently warned that if this deficit isn't "cured," the city's tax rate can't be set in December and tax bills won't go out by Jan. 1 - affecting "city cash flow, proving disruptive to the city and those it serves."
City councilors are expected to discuss the deficit at a meeting Wednesday night, said council President Patrick Blanchette. The municipal budget is roughly $80 million, which reflects a $10 million drop in state aid because of the weak economy. State aid is used to fund roughly two-thirds of the city's municipal and school budgets.
But Mark Andrews, the city's budget director, remains confident the deficit can be erased and said he will continue to work with the DOR.
Andrews also confirmed he is actively looking for another job and was recently named one of three finalists for the town manager's job in Tewksbury.
"They want more documentation and we plan to cover all the bases with them," Andrews said of the DOR.
But Blanchette said it appears Andrews is focused less on city business and "more on a job search."
"It's imperative we meet as soon as possible to discuss this," Blanchette said.
On Oct. 1, Andrews submitted a $16.4 million "recovery plan" he said would more than satisfy any of the state's concerns with the budget. DOR rejected aspects of the plan, including the use of $3.7 million from a city stabilization fund. Using money from the stabilization fund this year would cause even more hardship in fiscal 2011, DOR said.
The department's latest deficit projection is a $1.4 million decrease from an August estimate of $10.9 million.
Although state aid has decreased by $10 million this year, it could be cut even further in the coming year.
"Though the council has taken votes that would appear to reduce the deficit below $9.5 million, further review and analysis suggest that those votes have not benefited Lawrence's financial picture to any great extent," wrote Gerard Perry, DOR director of accounts, to Mayor Michael Sullivan on Oct. 22.
Perry warned that DOR, by law, cannot approve the city's tax rate "unless this deficit is cured."
Sullivan, in a recent interview, said he was also confident that under Andrews' guidance, the tax rate would be set and bills mailed out on time.
"I have all the faith in the world the same will happen this year," he said. And, "I really welcome the DOR involvement at an early stage rectifying the issue."
Mayoral candidates David Abdoo and William Lantigua said they were both concerned about the deficit, an apparent financial debacle one of them will inherit Tuesday on Election Day.
"It's a very serious issue many people are concerned about," Lantigua said.
Abdoo, a city councilor who serves on the budget and finance committee, said the DOR letter "certainly begs a lot of questions ... The recovery plan we submitted was not acceptable to DOR. We need to get another plan in place that satisfies their questions, increases revenues and reduces expenses."
Other cash-generating plans suggested by Andrews include $6 million in reimbursements and interest payments associated with the construction of the new Lawrence High School in 2007, $2.6 million from a two-month reprieve in health care deductions, $600,000 in savings for renegotiated contracts, $844,000 from the sale of surplus property, and various increases in fees and fines.
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