METHUEN — Mayor William Manzi said the city will not be able to make the $496,000 payment that the Methuen Contributory Retirement Board is demanding by today.
"Do I believe the city has an obligation to pay it? Yes," Manzi said. Though the city has told state finance officials it has sufficient reserves to pay the obligation, Manzi says he'd prefer to look for other places to cut rather than expend the reserves. He wants to meet with the board to consider other solutions.
Michael Hennessy, an employee representative on the Methuen Contributory Retirement Board, said earlier this week that the city had until today to fund $496,000 in pension payments that city councilors are delaying, or else the retirement board will sue.
The City Council voted Monday night to ease the burden on taxpayers partly by reducing the amount of revenue raised through property taxes by $496,000. Manzi has shown the state Department of Revenue that the city can use money from its reserves to pay the "binding legal obligation," so the city will have a balanced budget, Manzi said during an interview yesterday.
Manzi said he would prefer not to use reserves to pay the $496,000. He hopes to meet with the retirement board to come up with a possible resolution and he will look for other places to cut from to find funding for the pension payments, although he doesn't think there's anywhere else to slash the budget, he said.
"I'm not saying we won't go back in and try to scour it," he said.
The city has about $1 million in reserves now, so paying the $496,000 would leave about $500,000, Manzi said.
"From a financial standpoint, the current reserves in the city of Methuen are not adequate," Manzi said.
Reserves provide the city with funds to tap if there's a disaster, and having more money in reserves means the city will have a better bond rating, which makes it cheaper to borrow money, according to Manzi.
