Boston’s FY22 Budget & Recovery

Investments in recovery and equity and planned use of federal stimulus

On April 14th, Acting Mayor Janey presented her FY22 recommended budget of $3.75B, which proposes a 3.9% increase of $141.8M from FY21 projections. The budget reflects the City’s initial planning for use of federal funding, such as offsetting local revenue decline, and departmental appropriations for economic re-opening, recovery from the pandemic, and the first full fiscal year of the Equity and Inclusion Cabinet focused on equity initiatives across city government.

General Fund Revenue Summary
($ Figures in millions)
Account FY21 Projections FY22 Recomm. Variance %
Net Property Tax $2,671.1 $2,753.3 $82.2 3.1%
State Aid 467.7 476.0 8.2 1.8%
Excises 122.5 131.1 8.6 7.0%
All Others 311.0 303.8 -7.2 -2.3%
Sub-Total Recurring $3,572.4 $3,664.3 $91.8 2.6%
Non-recurring Revenue 40.0 90.0 50.0 125%
General Fund Revenues $3,612.4 $3,754.3 $141.8 3.9%

Revenues   In spite of a year of uncertainty regarding new development, the City projects revenues from property taxes will be up 3.1% or $82.2M (73% of overall revenue) from FY21. The $45M budgeted for new growth is below historic levels of recent years, mostly due to the two-month moratorium on nonessential construction in spring 2020 and the pandemic’s impact on development. Budgeted revenue from state aid is up $8.2M or 1.8% from FY21, mostly due to the first year of the Student Opportunity Act taking effect, but the total may change slightly after the MA legislature finalizes the FY22 state budget.

Excise tax revenue is projected to increase by $8.6M or 7.0% from FY21—though this is still well below pre-pandemic levels. Hotel occupancy taxes are budgeted at $41M, which—though 10.8% higher than what is projected for FY21—falls below the $99.3M collected in FY20 and pre-pandemic levels of hospitality commerce. Other recurring revenue sources, such as parking fines and revenue from 121A tax agreements, are budgeted to be less than FY21 projections as the local economy continues to slowly rebound from COVID-19.

The FY22 recommended budget also includes $90M in non-recurring revenue including $50M of the estimated $434.7M designated for Boston via the American Rescue Plan Act (ARPA) for use through December 2024. The City plans to use the $50M budgeted for revenue replacement of local revenue sources affected by COVID-19. The City estimates that it will be receiving $215M via ARPA to use over the next year.

Expenditures   Three less flexible spending areas are projected to be up significantly in FY22, together increasing by 9.6% or $76.1M from FY21 projections: pensions, debt service, and state assessments. The increases are mostly driven by the City maintaining its pension funding schedule, a 9.0% uptick in debt service payments resulting from increased borrowing for the five-year capital plan, and a 14.9% or $32.0M increase in the charter school tuition assessment. While not yet required by state law, the City also continues to set aside $40 million annually towards funding its long-term obligation to provide retiree health and life insurance also known as “Other Post Employment Benefits (OPEB).

General Fund Spending Summary
($ Figures in millions)
Account FY21 Projections FY22 Recomm. % of Total Variance %
School $1,143.2 $1,174.3 31.3% $31.1 2.7%
Police 421.2 399.9 10.7% -21.3 -5.1%
Fire 271.5 274.4 7.3% 2.9 1.1%
Public Health Commission 106.5 110.7 2.9% 4.2 4.0%
Public Works 98.9 101.1 2.7% 2.1 2.2%
Other Dept’l 393.7 433.2 11.5% 39.5 10.0%
Sub Total $2,435.0 $2,493.5 66.4% $58.5 2.4%
Health Insurance  333.4 332.7 8.9% -.7 -0.2%
State Assessments  313.8 346.4 9.2% 32.6 10.4%
Pensions 292.1 318.7 8.5% 26.6 9.1%
Debt Service 188.7 205.6 5.5% 16.9 9.0%
Other  49.5 57.4 1.5% 7.9 16.0%
General Fund Expenditures $3,612.4 $3,754.3 100.0% $141.8 3.9%

Education continues to make up the biggest share of the budget, with Boston Public Schools (BPS) accounting for $1.2B, or 31.3%, of the overall operating budget (not including school health insurance). This is a 2.7% or $31.1M increase from FY21 projections (not including school health insurance). The operating budget also includes a 5.1% cut to the Police Department, which is attributable to a 33.3% or $21.9M reduction in police overtime spending, reducing it to $43.9M. In June 2020, the City Council approved a $12M cut to the police overtime budget to reduce it from $60M to $48M in the FY21 budget, but the City’s current projection of $65.8M for police overtime reflects that the Department has overspent its target by 37.1%. The Administration plans to achieve the 33.3% cut by recruiting more officers to reduce attrition and investing $500,000 in a medical triage unit and clinicians to reduce injury and replacement leave driving overtime costs.

Implementing an ordinance signed into law in December 2020, the FY22 budget includes an appropriation of $1.0M for an Office of Police Accountability and Transparency to serve as a single point of entry for complaints or concerns regarding the Police Department. The majority of the $1.0M appropriation will go to personnel costs for six full-time staff, including a recently hired Executive Director. In addition to OPAT, the FY22 recommended budget creates a new Equity Cabinet, including two new departments—the Office of Equity and the Office of Language and Communications Access—as well as the Office of Diversity and Office of Resiliency & Racial Equity, both of which are being moved from the Mayor’s Office alongside the Human Rights Commission and the Office of Women’s Advancement. The proposed appropriation for all six departments combined is $6.5M.

A key spending area in FY22 is what the City is calling its efforts in recovery, reopening, and renewal, including investments in a variety of programs and initiatives in housing and homelessness resources, local business support and job training, and advancing equitable recovery.  A number of departments will see significant appropriation increases as part of the initiative, including a 62.1% or $1.4M increase for the Office of Arts and Culture for COVID-19 recovery and promoting equity in local arts, and a 59.6% or $4.7M increase for the Office of Youth Engagement and Employment to increase available summer jobs and professional development opportunities. The budget for the Office of Health and Human Services is more than doubling, increasing by $3.2M or 132.5% to $5.6M, while budgeted appropriations for the Public Health Commission are up $4.2M or 4.0% to $110.7M.

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