Join us for our final Words of Wisdom dinner of the year featuring Councilor Brian Worrell and Representative Chris Worrell.
10/10/2024
5:00pm - 7:00pm
Greater Boston Chamber of Commerce
Don’t miss our upcoming Government Affairs Forum with Massachusetts State Treasurer Deborah B. Goldberg. Register now!
10/15/2024
9:45am - 11:00am
Bank of America
The Transportation First Series offers a platform to discuss the challenges faced by our region, with the input of experts and changemakers.
10/30/2024
2:30pm - 4:00pm
Hybrid | Greater Boston Chamber of Commerce
Go deeper than basic DEI training to achieve higher productivity, satisfaction, and revenue growth with our new corporate workshop.
Join our Transformational DEI Certificate! Our comprehensive learning & development offerings are designed to connect and grow strong leaders who lead both inside and out of the office.
Our Women’s Leadership Program enables you to take your leadership to the next level by arming you with the most in-demand leadership toolkit.
Our Boston’s Future Leaders (BFL) program provides emerging leaders with a socially conscious and civically engaged leadership toolkit, as well as the opportunity to apply their knowledge through experiential assignments.
City Awake empowers young professionals in a variety of ways that encourages these rising leaders to stay invested in the region’s future success.
We are developing an ecosystem of corporations and partners with the influence and buying power to transform economic inclusion for minority business enterprises (MBEs).
The Fierce Urgency of Now Festival brings Boston’s diverse young professionals together with business leaders, organizations, and their peers to build connection, advance careers and ignite positive change.
09/14/2024 -
09/17/2024
Suffolk University - Sargent Hall
BIMA (the Boston Interactive Media Association) serves a vibrant community of like-minded professionals from agencies, brands, publishers, and ad-tech companies with business interests in the New England market.
For 30 years, the Chamber’s Women’s Network has connected female professionals of all background and career levels. Today, our Women’s Network is the largest in New England, strengthening the professional networks of women each year.
The Massachusetts Apprentice Network convenes employers, training providers, and talent sources interested in developing and implementing apprenticeship programs in occupations across industries and statewide in fields such as tech, advanced manufacturing, healthcare, financial services, and more.
We support small business through public policy initiatives, events designed to connect small businesses in Greater Boston to their peers and established business leaders, professional development offerings, and free small business advising.
Explore our mission and values to better understand how we are leading the business community forward.
Our member directory is your resource to discover, connect, and engage with Boston’s businesses from every industry and sector.
June 2, 2021
On April 14th, Mayor Janey released Boston’s Recommended Fiscal 2022 (FY22) budget totaling $3.75 billion, with the majority of revenue derived from property taxes and spending dedicated to public schools and public safety. This is an increase of $142 million or 3.9 percent over the FY21 budget, which is in line with the FY21 budgeted increase of 3.4 percent, but below the 4.8 percent average increase in the five prior fiscal years.
The City Council is now conducting budget hearings and a final budget will be adopted in June. The City Council only has the authority to approve or reject the Mayor’s budget and cannot change departmental appropriations. However, the Council recently approved a charter amendment proposal that would allow the Council to modify specific appropriations. If deemed constitutional by the Attorney General, this question will be on the ballot for the November municipal election.
Although the FY22 budget theme is investing in “post pandemic reopening, recovering, and renewing,” it is still very much impacted by COVID-19. Plummeting excise tax revenues and a slowdown in development drive the City to draw on one-time revenues from the rainy day fund and federal aid.
The massive federal aid infusion requires planning and performance metrics from city budget managers to ensure the funding is well-spent and will achieve intended goals. Additionally, the City should aim to end the use of one-time funds for recurring expenses by FY23, and invest ongoing federal support in crucial one-time capital projects.
Revenue
Property Tax – The City’s budget depends on property tax for an enormous share of funding, with property taxes accounting for 73 percent of general fund revenues.
Due to Proposition 2 ½, [1]new development, known as new growth, is the City’s primary method to increase property tax revenues. In a typical year, new growth accounts for as much as 60 percent of the annual levy increase.[2] However, due to slowed development, budgeted FY22 new growth of $45 million is well below even FY21’s new growth of $103 million. Even one year of slow new growth compounds in future years’ budgets, so city policies should not deter future development, whether by increasing direct and indirect costs or by creating burdensome review and approval processes.
State Aid – The City’s budget relies on state aid of $476 million or 13 percent of general fund revenue. The largest category of state aid is $223 million in Chapter 70 Education Aid. FY22 is the first year that the Student Opportunity Act is funded, which increases Chapter 70 Aid for school districts.[3]
State aid also includes $208 million in unrestricted government aid, a charter tuition reimbursement of $41 million, and several smaller aid accounts like payments for state-owned land.
Excise Tax Revenues – Excise taxes, which include meals, hotel rooms, and aircraft fuel are projected to generate $131 million, or 3.5 percent of general fund revenues.[4] As the table below shows, revenues from hospitality related excise taxes plummeted compared to prior years as COVID-19 decimated the hospitality industry. Compared to FY19, these three excise taxes declined by $92 million or 54 percent. This valuable revenue source, as well as the jobs supported by the industry, are two of the reasons the Chamber supports additional investments in the hospitality industry.
Non-Recurring Revenue – To offset the slower new growth and excise tax revenue, the City plans to spend $90 million in non-recurring revenue in the FY22 budget. This includes $40 million from the City’s stabilization fund and $50 million from the American Rescue Plan. Boston is awaiting confirmation of the total funding it will receive from the American Rescue Plan but expects to receive $435 million to support general City services over the next five fiscal years. In future fiscal years, the City should dedicate this windfall federal funding to one-time expenditures such as capital projects.
Other Revenues – Other revenue sources total $394 million or 11 percent of general fund revenues. These accounts include but are not limited to fines, payments-in-lieu-of-taxes, departmental fees, licensing and permitting fees, and interest on investments.
Expenditures
City expenditures are divided into two areas: appropriations to departments, which are discretionary, and fixed costs, which the City must pay. As with other municipalities, schools, police, and fire compose the majority of departmental appropriations leaving the City with limited flexibility in its appropriations to smaller departments. Fixed costs include assessments for services provided by the state, contributions to the city’s pension liability, and debt service to support capital investments.
Appropriations
Boston Public Schools – Spending of $1.3 billion on Boston Public Schools (BPS) represents 34.5 percent of the general fund budget and a 3 percent increase over FY21. In addition to the general fund, BPS has an external funds budget of $145.5 million and a capital budget of $162.5 million, bringing the total expected BPS budget to $1.6 billion in FY22. Furthermore, BPS will receive over $430 million in additional federal aid from the Elementary and Secondary School Emergency Relief (ESSER) Fund, with most of it available through September 2024.
The BPS budget assumes FY22 enrollment of 52,280 students, with a per pupil investment of $23,500, a $1,700 or 8 percent increase over the FY21 budget. Investments in BPS continue to grow despite declining enrollment due to demographic changes and the growth of charter public schools. In the past ten years, budgeted enrollment has declined by 4,266 students, or 8 percent, while the BPS budget has grown by $464 million of 56 percent.
Other Appropriations – Boston’s Fire and Police departments have a combined budget of $674 million or 18 percent of the general fund budget. Spending on employee health insurance is budgeted at $212.2 million, or 5.7 percent of the total budget. This excludes health insurance spending for BPS and the Boston Public Health Commission, which include health insurance costs in their departmental appropriation.
The remaining appropriated funds total $588.7 million in spending, or 15.7 percent of the general fund budget. This includes all other departments and discretionary appropriations such as retiree health care and the reserve for collective bargaining, which are funds set aside for future salary increases contained in contracts with city unions.
Fixed Costs
State Assessments – Every year the state assesses municipalities for specific services. The largest state assessment is $247 million for the tuition costs of the over 11,000 Boston students who attend charter public schools and are not covered by the BPS district budget.
The MBTA assessment is paid by the 175 cities and towns that receive MBTA service. Boston’s assessment of $94 million represents more than half the total statewide assessment. This large monetary contribution is one reason that the Chamber supports a designated seat for Boston on any future MBTA Board.[5]
Pensions – The City will contribute $319 million towards its pension liability in FY22. The liability is 76 percent funded, and the City is on track to fully fund the pension system by 2027. In addition to this fixed pension cost, the City appropriates $40 million annually towards its unfunded $2.13 billion liability for Other Post-Employment Benefits (OPEB, also referred to as retiree health care). Once the City fully funds its pension liability it plans to redirect funds to paying down the OPEB liability over several years.
Debt Service – In FY22 the City is required to make $206 million in debt service payments that pay for long-term capital investments made through the capital budget. This payment represents 5.5 percent of the general fund budget, well below the City’s debt service cap of 7 percent of general fund expenditures. Debt service is expected to approach, but not exceed, the cap in coming years when the City undertakes more capital projects.
Capital Budget
In addition to the operating budget, the City develops a five-year rolling capital plan. The FY22-26 Capital Plan totals $3.2 billion. The City’s capital budget plan is guided by Imagine Boston 2030, which provides recommendations for improvements to housing, transportation, land use, and more.
Build BPS – This plan calls for investing $1 billion in Boston Public Schools over a 10-year period. Major investments include more than $420 million for three new school buildings.
In 2015, a McKinsey audit of BPS facilities found that the district had facilities designed to house 38,000 more students than its current enrollment. This report recommended school consolidations to maximize the use of limited education resources. As the BPS makes strategic investments in BPS facilities, and looks to invest an influx of funds made available through federal COVID relief legislation, it must examine its current facilities to ensure that the district’s physical footprint aligns with its current enrollment and student needs.
Climate Resiliency – The City committed 10 percent of all capital spending to climate resiliency projects. This investment aligns with the City’s 2019 Climate Action Plan and Climate Ready Boston. By integrating resiliency into improvement projects, the City will be better prepared for rising sea levels and increasingly severe major weather events.
Transportation – The City will invest $1.2 billion to the initiatives outlined in Go Boston 2030, which include improving roadways for all users, making transportation infrastructure more reliable, and better connecting neighborhoods. Large transportation projects include $219 million for the North Washington Street Bridge, $109 million for the Long Island Bridge, and $100 million for the Northern Avenue Bridge.
Other Projects – The City will also invest in other major projects, ranging from redesigning City Hall Plaza to a new East Boston Police Station. More information on all projects in the FY22-FY27 capital plan can be found here.[6]
[1]Proposition 2 ½ regulates property tax in Massachusetts. Each year a municipality may increase the citywide tax levy by no more than 2 ½ percent over the prior year’s citywide levy. A municipality can further increase the tax levy to account for new development. Proposition 2 ½ also allows for municipal overrides, but Boston has never held an override vote. A full explanation can be found here.
[2] Over the past five years new growth has averaged 61 percent of the annual property tax levy increase.
[3] Other accounts include State Owned Land, Elderly Exemptions, Veterans Benefits, and Local Share of Racing Taxes
[4] In addition to the excise taxes discussed in this section, the City levies excise taxes on motor vehicles ($50 million), condominium conversion ($500,000), short-term rentals ($500,000), marijuana ($1.3 million), host community agreements ($1.3 million), vehicle rental surcharges ($1.1 million) and boats ($40,000)
[5] Other State Assessments Include Mosquito Control, Air Pollution Districts, Metropolitan Area Planning Council, RMV non-Renewal Surcharge, and School Choice Sending Tuition.
[6] https://www.boston.gov/departments/budget/fy22-capital-budget
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Benjamin Stuart
Senior Director, Technology & Business Systems
[email protected]617-557-7355
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