LAWRENCE — The city's financial turmoil is delaying third-quarter tax bills, normally sent out to residents and businesses by Dec. 31.
The bills are backed up because city leaders couldn't set the tax rate this month due to a budget deficit estimated at $17 million, officials said.
City Councilors normally set the tax rate in December, send it to the Department of Revenue for approval and then send out the tax bills. But with the budget unbalanced, DOR said the tax rate can't be set until the deficit is eliminated, wrote Patrick Blanchette, outgoing City Council president, in a memo to newly elected council members.
"... DOR states that a tax rate could not be set prior to this taking place, which prevented us from taking a vote before January," Blanchette said.
Gov. Deval Patrick, lobbied by local officials and legislators, is expected to file a bill early next month that will allow Lawrence to borrow millions of dollars to plug the deficit. Cities and towns can't borrow money without legislative approval.
Without the loans, the city will go broke sometime this winter, possibly as early as Feb. 1. The tax bill delay will also effect city cash flow, said Alex Vega, city assessor.
The new City Council will also be asked to accept a new state law that extends the deadline for tax bills through Jan. 30. The Legislature recently approved the bill to help all cities and towns during the economic downturn.
Councilor-at-large Daniel Rivera, elected on Nov. 3, said this would be "one of the first and foremost" things for the council to do at its first meeting on Jan. 5.
The new council will also have to take a formal vote "to allow for deficit borrowing," Blanchette advised.
The current residential tax rate is $10.70 per thousand dollars of valuation. The commercial tax rate is $22.62 per thousand, said Vega.
Vega said he does expect the rates to increase. However, he's unable to predict when the tax bills are mailed until the emergency loans are approved and a tax classification hearing is held.
The state is also expected to appoint a financial adviser to oversee day-to-day budget operations in City Hall.
City leaders have made repeated attempts to fix the $240 million budget. DOR has repeatedly found deficits. Two-thirds of the city budget is built using state aid.
Previously, leaders blamed the city's budget problems on both management and cuts in state aid.
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