LAWRENCE — The city's budget is so far in the red that state intervention and multimillion dollar emergency loans are needed immediately, according to local officials interviewed last week.
And though they say Lawrence isn't as bad off as Chelsea or Springfield once were, the situation is dire. The once $9.5 million deficit is now believed to be closer to $17 million. And if the state doesn't intervene soon and tax bills don't get out by Jan. 1, they said the city could go broke by March 1.
To prevent that from happening, local lawmakers are working to get someone from the state on the ground in City Hall and to file legislation allowing the city to borrow money.
"We are starting the process of making sure the city manages its budget better," said state Rep. David Torrisi, D-North Andover, by providing "the oversight and resources needed to get back on solid ground."
State Sen. Susan Tucker, D-Andover, said while "valiant attempts were made" to repair the $240 million budget, the state's Department of Revenue has repeatedly found deficits.
"It's just not fixable," she said.
While Tucker isn't pointing fingers, Torrisi blamed the budget deterioration on "management and cuts in state aid."
State Rep. Barry Finegold, D-Andover, noted that two-thirds of Lawrence's budget is funded with state aid. So when state aid is drastically cut, Lawrence feels the pain deeply.
"There's a saying — 'When some communities get the sniffles, Lawrence gets the flu,'" Finegold said.
Mayor-elect William Lantigua, who is also a Lawrence state representative, said outgoing Mayor Michael Sullivan's administration played a large role in the creation of the budget mess.
"During the past eight years, Lawrence's current administration has run the city into a deep financial hole. This chronic mismanagement, coupled with the international financial crisis, has been a recipe for disaster," he wrote in a Nov. 16 letter to Gov. Deval Patrick.
Sullivan would not respond directly to Lantigua's criticism. But he did say that if "there is any way that Lawrence can get special state funding or authorization to borrow — anything that could help the city — that would be a very positive thing to have happen."
This year alone, the city's share of state aid dropped by $10 million. That's a tough hole to plug, Sullivan said.
"The decisions I made over the last two or three years were specifically aimed at keeping public safety in the city whole (by not making cuts)," he said. "I hope the next administration does not have to go down that road."
Confronting the 'inevitable'
For years, Lawrence has hung on a precarious financial slope. In early 2008, a state audit revealed the city was headed toward "an inevitable fiscal crisis" and suggested a lengthy list of reforms.
Mark Andrews, a new budget and finance director, came aboard, but as he tried to implement change, the economy collapsed and state cuts soon followed. Andrews announced last week that he is leaving Lawrence, having accepted a new job as Wareham's town administrator.
On June 30, a majority of the City Council approved an $80.1 million municipal budget that was believed to be balanced. The school's share of the budget is $160 million and subject to separate scrutiny and review by the School Committee.
Starting in August, the city began receiving letters from the DOR, warning that the municipal budget at first had a $10.9 million deficit, and later, after some changes were made, a $9.5 million deficit.
Last week, Lantigua revealed that another $8 million capital project deficit, created by cost overruns from the high school and City Hall renovation projects, could also exist.
"I think Lawrencians have known for some time the fiscal situation in the city is precarious," Tucker said. But she said residents "should be relieved we are working to solve this... so we can avoid a full blown crisis by acting early."
Since August, after the first DOR letter arrived, the Lawrence budget crisis has been a focal point for local politicians, triggering a host of closed-door meetings both in Boston and in Lawrence.
"For months, the whole delegation has been working on this, trying to find ways to keep the city out of receivership," Torrisi said. A heavy-handed state control board isn't coming to Lawrence, he explained, but "there will be some level of state intervention within the next six weeks."
In his letter to Patrick, Lantigua said he is "gravely concerned," as the city's budget woes are "even more severe than originally thought."
The deficit "cannot be corrected without immediate assistance," he wrote, and asked the governor to appoint a state-approved financial advisor "who would be assigned to Lawrence on a full-time basis to assist my finance team."
Lawrence is not Springfield
Leaders said they are "confident" the city is not headed into receivership, which has occurred in the past in the cities of Chelsea and Springfield. After five years of "intense" state involvement and $50 million in loans, the Springfield control board was decommissioned on July 1.
But officials agreed that Lawrence sorely needs someone from the state to oversee the day-to-day management of city finances.
At the same time, area lawmakers said legislation will be filed to allow the city to borrow the millions it needs for broad budget repair. Cities and towns cannot borrow money without legislative approval.
"We are trying to give the city the appropriate tools... the ability to borrow the money to meet the deficits," Torrisi said.
Any such bailout plan "has be to crafted through legislation," said Robert Bliss, a DOR spokesman. "There is no other way to do something like this."
But keeping the budget in the black will require teamwork with Lantigua's administration and the new City Council, officials said.
Tucker said a great deal of "outreach" with both the mayor-elect and the new council is already underway "to make sure everyone is on the same page."
Incoming City Councilor Daniel Rivera said he was elected on a "wave of change," and was well aware that tough budgetary decisions lie ahead. At a recent meeting with Torrisi and Tucker, he said he learned that hard work will be immediate.
"This needs to be done sooner rather than later. We really have to start making these decisions, and some of them may not be appetizing," Rivera said. "We are going to have to take some hard votes. Some of them may mean layoffs. But these are the things we should be doing to ensure we are going down the right path."
As Sullivan prepares to leave office after eight years, Tucker said lawmakers felt "the new city council and the mayor deserved time and a chance to make this right."
"That this was not the time for a heavy hand, but rather a healthy hand," Tucker said.
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