By Paul Leighton
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BEVERLY — Mayor Bill Scanlon said city and school officials can no longer "shy away" from making the painful decisions that will be necessary as the city confronts a multimillion-dollar budget gap.
In his annual State of the City address last night at City Hall, Scanlon never mentioned the word "layoffs" but raised the possibility, unless certain costs, particularly in health insurance, are cut.
Scanlon said he would prefer to reduce the city's work force through attrition, but said, "We cannot deny the very real possibility that attrition alone will not be enough."
"While we continue to move the city forward, we are struggling to adequately fund some of our most basic services, and sometimes we come up short," he said. "The money simply isn't there."
Scanlon said that while the number of employees on the city side of the budget was reduced by 10 last year, the School Department added the equivalent of 23 full-time employees.
The cost of employees continues to rise due to the soaring price of health insurance, he said. Scanlon said the city is now providing health care coverage to more than 3,000 people, including active and retired employees and their dependents.
The city pays more than $15 million per year on health insurance, out of a total budget of less than $100 million, he said. The mayor said he and other municipal leaders have "lobbied hard" for the state to pass legislation that would allow cities and towns to change employees' insurance provisions without union consent.
"I personally believe that most union members would come down in favor of allowing local leaders to modify their co-pays or deductibles in order to save their jobs," Scanlon said.
Another solution, the mayor said, is for the city to hire part-time employees, ineligible for benefits, whenever possible.
The city's financial forecasting committee has said the city is facing a $3.75 million budget gap next fiscal year if state aid is cut 10 percent. Gov. Deval Patrick has recommended that state aid not be cut, but Scanlon said, "There is no way to know at this time whether the Legislature will accept the governor's budget recommendation or vote to reduce it."
Scanlon reiterated his recommendation that the City Council adopt local meals and hotel taxes, which he said would generate $400,000 per year in revenue. He said the extra money would help the city give the schools an additional $1 million next year.
The council will hold a public hearing on the local taxes proposal on Feb. 22.
Scanlon also announced that a study has shown that the condition of City Hall and the main library are worse than expected. He said City Hall, which has leaks in the roof and some walls, needs an estimated $2 million of work, while the library, with crumbling stairs and leaking skylights, needs $1.1 million in repairs.
The school bus maintenance garage at Beverly High School is also scheduled to be demolished. The construction of a new facility, possibly at the city garage on Park Street, will cost about $1 million, Scanlon said.
Scanlon said there is some good news in that the city will save money on its borrowing costs for its share of the $81 million high school project due to lower-than-expected interest rates and the city's improved bond rating.
The high school, which includes a new academic wing and renovations to the current field house, auditorium and cafeteria, is "on budget and on schedule," he said. Students are expected to move in by Thanksgiving.
He also said progress is being made on several fronts, including a planned commuter rail parking garage, improvements to the waterfront, a soon-to-break-ground $20 million senior housing development on Conant Street, the new CVS on Rantoul Street and the anticipated reopening of the North Shore Music Theatre.
He also repeated his support for the state to build a road from Brimbal Avenue over Route 128, which he said would open up land for development off Dunham Road. He said the tax revenue from new development there could pay for a new middle school and public safety building.
"While all of these projects will better position Beverly to sustain its quality of life," he said, "they are not a panacea for these most difficult times."
Staff writer Paul Leighton can be reached at 978-338-2675 or pleighton@salemnews.com.
Highlights of speech
Health care costs for 3,000 employees, retirees and dependents "threatening city's long-term sustainability"
City Hall and main library need a combined $3.1 million in repairs
Number of school employees rose by 23 last year
High school project "on time and on budget"
