FRAMINGHAM – Because of the COVID-19 pandemic and lower commercial consumption, the City is facing a deficit or gap in Framingham’s Water and Sewer Enterprise Fund. The Division of Local Services (DLS) will not certify the City’s General Fund tax rate unless the revenue gap in the enterprise fund is closed. Without action, the shortfall will be added to the levy to balance the budget for FY21, which would result in increased taxes.
Instead, City’s strategy is to pay off the shortfall over three years. DLS will allow amortization of the FY20 revenue shortfall, but Framingham will have to take one-third ($500,000) of the FY20 $1.5 million shortfall in FY21.
However, DLS will not let the City amortize the FY21 estimated shortfall. According to DLS, Framingham must pay off the total estimated FY21 shortfall, which is $2 million (this assumes the pandemic impact on commercial consumption goes through the spring).
While the first quarter of FY21 – July, August, and September – revenue looked good, and October was fair due to extraordinary irrigation revenue – 127% above a three-year average, revenue will drop off after December, as 92% of irrigation revenue is typically billed by December 31.
The trend of lower consumption by commercial customers is projected to continue if the pandemic lingers until spring. Lower commercial consumption is at the higher rate tiers – hence the larger dollar drop. Residential consumption is still higher than last year (running at 17% higher), but those revenues
are at the lower rate tiers. The sum total is the City has to close a projected $2.5 million shortfall.
To help close the $2.5M shortfall, the Mayor recommends to amend the FY2021 General Fund voted budget by supplementing or reducing the following budget appropriations:
• Reduce Framingham Public Schools by $800,000 to $142,449,434
• Amend the FY202 Enterprise Fund voted budget by supplementing or reducing the
following budget appropriations
o Reduce Water Department by $100,000 to $22,796,293
o Reduce Sewer Department by $100,000 to $29,169,794
• Appropriate $1,500,000 to the Utility Enterprise Fund to offset the anticipated revenue
loss from the COVID pandemic impact on water and sewer system consumption
This solution requires two votes of the City Council, a public hearing (which can be one of the Council vote meetings), and the appropriation request posted on the City’s website for ten days.
The City has requested that the City Council Chair refer the recommendation to the Finance Subcommittee for its meeting of December 8 for review.
Above is a press release from the City of Framingham