Fiscal Year 2019 Budget

Beginning July 1, 2018 and ending June 30, 2019

Last updated: 4/11/18

Operating Budget

The FY19 Recommended Operating Budget totals $3.29 billion and represents an increase of $137 million or 4.3% over FY18. The FY19 budget continues the City’s record of strong fiscal management. Expanding on savings initiatives launched during Mayor Walsh’s Administration to offset growth in fixed costs. The FY19 budget features data-driven investments in a thriving, healthy, and innovative city.

Revenue

Local sources continue to drive revenue growth in FY19, as property tax and local receipts make up 97% of revenue growth over FY18. While the City is expected to experience continued robust property tax growth in FY19, overall revenue growth is expected to be hampered by sluggish state revenue growth. State revenue, the City’s second largest revenue source, never recovered following the last recession, and in FY19, Boston’s state revenue is budgeted to only grow at 1.0% over FY18. Net State Aid (state aid net of assessments) is budgeted to decline as continued increases in state assessments for charter school tuition outpace stagnant budgeted state revenue.

Expenditures
On the expenditure side, the FY19 budget reflects an increase of $137 million or 4.3% over the FY18 budget. Of that growth, 27% is dedicated to education, including Boston Public Schools (BPS) and Charter School Tuition Assessment, and 31% will go to all other city services, such as Police, Fire, and Public Works, and the Public Health Commission. 22% of the growth comes from estimated employee wage increases in the collective bargaining reserve that will ultimately be transferred to education or city services and the remaining 20% of the growth will be consumed by pension, debt service and other fixed cost expenditures.

Budget summary

(dollars in millions)

Category FY16 Actual FY17 Actual FY18 Budget FY19 Budget
Total revenues 2,883.01 2,996.81 3,157.62 3,294.58
Total expenditures 2,881.09 2,990.13 3,157.62 3,294.58
Surplus (Deficit) 1.92 6.69 0.0 0.0

Revenues

(dollars in millions)

Source FY16 Actual FY17 Actual FY18 Budget FY19 Budget
Property Tax 1,963.09 2,092.14 2,216.49 2,327.02
Property Tax Overlay (38.05) (38.74) (30.60) (23.04)
Excises 223.82 190.55 188.09 197.29
Fines 61.05 63.25 63.85 69.08
Interest on Investments 0.18 2.33 2.0 5.0
Payments in Lieu of Taxes 51.2 53.57 45.0 46.02
Urban Redev Ch. 121A 48.11 47.51 33.5 27.5
Department Revenue 63.09 66.37 60.7 62.03
Licenses and Permits 74.44 84.09 67.06 66.26
Penalties and Interest 14.48 10.81 7.51 9.01
Available Funds 0.0 0.0 23.45 23.45
State Aid 421.58 424.93 440.58 444.97
Total recurring revenue 2,883.01 2,996.81 3,117.62 3,254.58
Budgetary fund balance 0.0 0.0 40.0 40.0
Total revenues 2,883.01 2,996.81 3,157.62 3,294.58

Expenditures

(dollars in millions)

Expenditure FY16 Actual FY17 Actual FY18 Budget FY19 Budget
City Appropriations 1,158.96 1,200.51 1,261.34 1,298.74
Public Health Commission 76.16 77.27 79.51 84.88
Boston Public Schools 1,016.28 1,031.63 1,092.19 1,108.74
Reserve for Collective Bargaining 0.02 28.0 11.39 41.0
Other Post Employment Benefits 40.0 40.0 40.0 40.0
Total appropriations 2,291.41 2,377.41 2,484.43 2,573.36
Pensions 196.55 199.28 221.3 238.71
Debt Service 157.69 165.31 183.57 191.28
Charter School Tuition 142.79 151.82 173.78 194.24
State Assessments 87.79 88.63 90.66 93.11
Suffolk County Assessment 3.87 3.87 3.87 3.87
Reserve 0.99 3.81 0.0
Total fixed costs 589.68 612.72 673.19 721.21
Totals 2,881.09 2,990.13 3,157.62 3,294.58


Overview

Revenues

The City’s projected revenues provide the basis for planning FY19 appropriations to maintain a balanced budget. Selected FY19 budgeted City revenues compare with FY18 budgeted revenues as follows: the net property tax levy increases $118.1 million or 5.4%; excises increase $9.2 million or 4.9%; fines increase $5.2 million or 8.2%; miscellaneous department revenues increase by $1.3 million or 2.2%; state aid increases by $4.4 million or 1.0%.

Expenditures

On the expenditure side of the budget, total appropriations increase by $89 million or 3.6% and fixed costs increase by $48 million or 7.1%. Selected FY19 budgeted appropriations compare with FY18 budgeted appropriations as follows: City appropriations increase $37.4 million or 3%; the Boston Public Health Commission increases by $5.4 million or 6.8%; and the School Department increases $16.5 million or 1.5%. In addition, a collective bargaining reserve has been set aside at $41 million; when the outstanding collective bargaining agreements are negotiated, these reserves will be used to cover those increased costs in City departments and at BPS. Within City Appropriations, actual City Departments are increasing by $32.5 million or 3.2% over FY18.

Other increases

These departmental increases now include wage increases for union contracts that have settled. City Appropriations also consist of 11 central appropriations, including a large appropriation for Health Insurance totaling $221 million, which has an increase of $4.8 million or 2.2%.

FY19 budgeted fixed costs are increasing by $48 million and compare with FY18 budgeted fixed costs as follows:

  • Pensions increase $17.4 million or 7.9%;
  • Debt Service increases $7.7 million or 4.2%;
  • Charter School Tuition state assessment increases $20.5 million or 11.8%;
  • MBTA state assessment increases by $2.4 million or 2.8%; and
  • other state assessments increases $46 thousand or 1.0%.

Expenditures

Expenditures are broken down into two primary groups: (1) appropriations directly related to departmental services and (2) fixed and mandated costs. FY19 appropriations are subdivided into three subgroups as follows:

  • City Appropriations, which includes all operating department appropriations, centrally budgeted costs such as health insurance and Medicare, a risk retention reserve and a set-aside for tax title and annual audit expenses;
  • Boston Public Health Commission (PHC), the City appropriation for the quasi-independent authority and successor to the Department of Health and Hospitals;
  • and School Department, the City appropriation for the Boston Public Schools (BPS).
Appropriations are also presented by expenditure category across the three subgroups. (Figure 6)

Personnel Services include salaries, overtime, unemployment compensation and workers’ compensation, and collective bargaining reserves for estimated wage increases for union employees whose agreements are not settled. The majority of departments had employees who reached agreement on collective bargaining contracts, so department growth reflects those wage and cost of living increases, while outstanding contracts are reserved centrally.

Negotiations for successor agreements are ongoing.

The Health Benefits category includes the cost of health, dental and life insurance for City, BPS and PHC employees and retirees, employer Medicare payroll taxes, and the appropriation for Other Post-Employment Benefits (OPEB).

The Contractual Services category includes expenditures for communications, repairs and service to buildings, equipment and vehicles, transportation, trash collection and disposal, as well as outside legal, advertising, and printing expenses.

Included in the “Other” category are supplies and materials such as gasoline, uniform allowances, office supplies, workers’ compensation medical expenses, medical indemnification in the Fire and Police Departments, legal liabilities, and aid to veterans. Also included in the “Other” category are appropriations for equipment, vehicles, a risk retention reserve, the Housing Trust Fund, tax title, and funding for the City’s outside audit.