The city of Springfield, Massachusetts has an almost $10 million surplus and there is debate over what to do with it.
Eyeing a possible recession, the city’s chief finance officer wants to set aside most of the free cash for the proverbial rainy day. Some City Councilors want to use a good chunk of the money to lower property taxes.
City Councilor Tracye Whitfield, who chairs the Finance Committee, said low-income and elderly homeowners should be given a break on their property tax bills.
“They can barely afford the cost of living as it is and now we’ve got $5 gas and $5 milk and they’re already on a fixed income,” Whitfield said.
During debate at a Council meeting on the administration’s request to assign the free cash to various reserve accounts, Ward 8 City Councilor Zaida Govan relayed the story of a couple in their 80s who she said reached out to her asking for help with what they said were ever-increasing property tax bills.
“They’ve worked their whole lives and now they should be just living in peace, enjoying the winter of their lives, and helping them would help us all in the long run,” Govan said.
The full Council voted to continue debate over the free cash at a Finance Committee meeting scheduled for later today.
If the unreserved free cash is not used by the end this month it rolls over into the next fiscal year. But the money would be unavailable to the city until the amount is certified by the state later in the year.
The city put $2.5 million in free cash toward reducing this year’s tax levy. Despite that, the tax bill for the average single-family home increased by $216.
The administration has committed to use $3.5 million in free cash to reduce the tax levy for the fiscal year that starts on July 1st. The impact on next year’s tax bills won’t be known, however, until new tax rates are set in November or December. The tax levy is projected to increase by $17 million as a result of the budget approved earlier this month by the City Council.
While a reduction in the property tax levy has an across the board impact on all property owners’ tax bills, steps have been taken to target seniors for additional tax relief, said Chief Administration and Finance Officer T.J. Plante. The abatement has been doubled from $500 to $1,000 and the age for eligibility was lowered from 70 to 65.
“We are doing everything we can do statutorily for the seniors,” Plante said.
Last year, only 240 elderly homeowners applied for and met the income and asset restrictions to obtain an abatement.
Plante warned that using a large sum of free cash to lower the tax levy now could result in sticker shock for taxpayers later if a recession hits and the city’s rainy day fund gets spent down.
“We can reduce taxes this year and at some point when we don’t have the ability to do that anymore, I don’t want taxpayers to see a $400 increase in their bill,” he said.
The free cash transfer order sought by the administration would boost the city’s stabilization reserve fund to roughly $50 million.
