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Holyoke Acting Mayor Terence Murphy seeks $3M in cuts for fiscal 2022

May 13, 2021

HOLYOKE – Acting Mayor Terence Murphy will release a fiscal 2022 operating budget in the coming days., which includes $3 million in cuts.

Murphy, who updated the City Council during a special meeting Wednesday, has already met with city department heads to identify budget priorities for fiscal 2022, which begins July 1.

“My ultimate goal in presenting the budget was to give a budget that provides stability. And put the new mayor, whoever that might be, in a position where they would be able to work from a solid financial footing,” Murphy said.

He added the Sewer Enterprise Fund continues to run deficits and eats into funding for city services. He expected to release a hard copy of the budget by Friday, which included $3 million in cuts.

In a letter to the council, Murphy said his goal was to maintain services “while also being fiscally sound.” He proposed the $3 million in cuts “because projected revenues could not sustain these additional expenses.”

Murphy called on the council to raise the Sewer Use Fee. “It is my hope that the council would increase the sewer fee to generate an additional $1.9 million, which could eliminate future deficits,” he stated.

While a fee increase could be seen as a burden on residents and businesses, Murphy proposed a transfer from the Stabilization Fund Account “to provide significant tax relief for Fiscal 2022 in order to lessen the financial burden this year.”

Murphy stated he discussed his plans with Cinder McNerney, a managing director of Hilltop Securities. The firm advises Holyoke on investments, including long and short-term bonding projects.

In his conversation with McNerney, Murphy noted most municipalities’ Sewer Enterprise Funds are self-supporting via collected fees rather than drawing from a General Fund to cover shortfalls.

Any tax break or sewer fee offset would likely come from the Stabilization Fund, Murphy wrote. He explained to McNerney that he wanted to avoid any negative impacts on the city’s bond rating.

“Should the council adopt the sewer fee increase, the budget proposal deficit would be reduced to just slightly more than $500,000,” Murphy stated. “While revenue projections have used conservative calculations, I do believe that much of that could be made up with local receipts.”

Murphy’s budget funds a fourth captain position while reducing a lieutenant position by one on the Holyoke Police Department. “I did so to provide a more balanced command structure, but also with the intent of reducing the need for overtime with that rank,” he wrote.

The budget proposal also funds 92 patrol officers and 80 firefighters to reduce overtime costs.

The fiscal 2022 budget reflects a 2.28% rise over last year’s, according to Murphy. The council passed a $141.36 million operating budget that cut nearly $1 million in spending from Mayor Alex Morse’s original proposal.

Morse and the council took a conservative approach to the fiscal 2021 budget as COVID-19 surged nationally. State revenue collections and local aid remained the unknown variables for most of Fiscal 2021.

Morse called the spending plan a “placeholder budget,” an apt description at the time. However, local tax collections stayed steady during the worst of the pandemic.

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