Boston records $15.3M surplus for FY21
Despite the challenging year and financial uncertainties due to the COVID-19 pandemic, Boston ended FY21 with an operating surplus of $15.3M. This comes after the budget was revised downward earlier in the fiscal year by $17M to adjust for a projected reduction in revenue from excise taxes and to adjust state assessments for charter schools. Operating revenues came in over budget by $15.6M due to a combination of deferred collections from the previous fiscal year arriving in city coffers in FY21 and better performance from certain revenue sources. Property taxes remained strong and made up for revenues that came in under budget. While the city overall spent $295,263 more than budgeted, most departments kept spending under budget, with the exception of Police.
Revenues – Operating revenues drove the FY21 surplus, as Boston collected $15.6M more in revenues than budgeted. Revenue collections in FY21 partially reflect payments that were deferred in FY20 largely due to new policies and procedures that allowed businesses to defer payments beyond the final quarter of FY20, which were adopted as many public institutions and businesses were shut down in the last quarter of FY20 because of the pandemic. Boston relies heavily on the property tax (74% of revenue) which has continued to be a dependable source, totaling $2.7B, $5.2M more than budgeted. State Aid (13% of revenues) totaled $468.8M, $13.1M over initial budget figures due to delayed state budget action in the face of COVID-19 pandemic uncertainty.
Chapter 121A payments brought in $12.6M more than expected as some FY20 payments were delayed to FY21. (Chapter 121A allows local governments to suspend the imposition of property taxes at their normal rates in order to encourage redevelopment and housing) Building permit revenue was $3.7M more than anticipated, illustrating continued confidence in the lab space and residential housing markets. More economically sensitive revenue sources, such as excise taxes, came in under budget even with deferred collections from FY20. The exception is the motor vehicle/boat excise, bringing in $4.1M more than budgeted, reflecting the impact of robust car sales. The city estimated that in FY21, all excise taxes would bring in $122.5M in revenue; in actuality, they yielded $94.9M ($27.6M less). Additionally, while the City anticipated a significant decline in hotel tax due to COVID-19, this account came in $21.1M less than budgeted.
Expenditures – Boston’s FY21 spending totaled $3.6B, with the majority of departments coming in under budget. Almost 62% of Boston spending is allocated towards ten departments. Approximately $17.5M of FY21 operating payroll costs directly related to COVID-19 response were shifted to the CARES-CRF grant. Departmental surpluses were most often attributed to spending controls enacted during FY21 and to operational disruption brought about by the pandemic. Further impacting departmental surpluses was a reallocation from the Police department to 11 departments to fund social services that occurred late in the FY21 budget process. Some departments were not positioned to utilize all the funds in FY21. The Police department ended FY21 with an $18.7M deficit due to overspending in the overtime budget. This is primarily due to an increase in public unrest along with operational and coverage impacts caused by COVID-19. The administration remains committed to reducing police overtime by focusing on bringing injured officers back to work.
