On Monday, April 27, Mayor Marc Laredo presented his proposed FY27 budget to the Newton City Council. In the coming weeks, the City Council will deliberate — and, eventually vote — on his proposed budget.
But what exactly are the roles of Mayor Laredo and the City Council in the budget process? How is the budget drafted, reviewed, and finalized? And what about pensions, COLA, and Free Cash — terms that come up frequently in budget discussions?
Who plays what role?
Massachusetts General Law provides a general framework for the annual budget process in Massachusetts cities. However, cities may outline their own process in their city charter, which Newton has done. By and large, Newton’s process is very similar to the aforementioned general framework.
Newton’s current charter was approved by voters in 1971. Article 5 outlines the City’s budget process, as well as the powers of both the Mayor and the City Council in that process.
The charter explains that the Mayor is responsible for submitting a budget proposal to the City Council every year. The Mayor must also deliver a budget message and supporting documents.
The Council then has 45 days to adopt the budget proposal, with or without amendments. However, the Council’s amendment powers are limited: the Council may delete or decrease line items, except those required by law or for debt service. The Council is not permitted to increase any line items in the budget without mayoral recommendation.
Importantly, the Council does not have the power to outright reject the proposed budget or to decrease it by a general amount. If the Council voted to do so, the proposed budget would go into effect anyway. The Council may reject or decrease only specific line items — not the budget as a whole.
If the Council were to reject or decrease line items, the Mayor has no veto authority over those changes.
The Mayor’s Office prepares a proposed budget
In an interview with League of Women Voters Board Member Alex Jablon, Mayor Laredo and Chief Financial Officer Maureen Lemieux explained the process behind the Laredo Administration’s budget proposal.
Mayor Laredo and Lemieux outlined the annual process in four major steps:
Step 1 — Pensions and debt services. Early on in the process, Mayor Laredo and his team review these numbers. They are predictable: the City contributes a predetermined amount of money each year to its pension fund, and the City sells its bonds once a year. This happens many months before it’s time to put the budget together.
Step 2 — Revenue. Mayor Laredo and his team carefully estimate what they think the City’s revenues will be. Some sources of revenue, like property taxes and state aid, are more predictable, and they make up 90% of the budget. The remaining 10% — which includes things like building permits — are more difficult to estimate. To do so, Lemieux considers the state of the economy, inflation, and trends at the Federal Reserve Board.
Step 3 — School budget. Mayor Laredo speaks with the rest of the School Committee, as well as Superintendent Anna Nolin, to get a sense of their priorities for the Newton Public Schools (NPS). Then the Mayor’s Office informs the School Committee of the budget allocation for NPS, well ahead of the budget address. This year, that meeting took place in early March, well before the Mayor’s budget presentation in late April.
Step 4 — City services. Mayor Laredo and his team work with department heads to finalize the budget for the City’s municipal departments, looking carefully at previous budgets as well as goals for the future.
City Council reviews the budget
Over the weeks following the Mayor’s presentation, City Council Committees meet independently to review the budgets of specific departments (see calendar below). The Council then reconvenes as a Committee of the Whole (this year on May 26, and May 27 if necessary) to discuss the budget and potentially approve it and/or approve resolutions to the Mayor. If the Council does not act within 45 days of the Mayor’s original proposal (this year, June 14), the proposed budget automatically goes into effect.
City Council’s FY2027 Budget Calendar
- April 28: Finance – Comptroller/Retirement, Treasurer, Purchasing
- April 29: Public Facilities – Public Works
- April 30: Finance and Programs & Services: Schools
- May 5: Zoning & Planning: Planning, Community Preservation Act, Inspectional Services
- May 6: Programs & Services: City Clerk, Veterans, City Solicitor, Health & Human Services, Older Adult Services
- May 7: Public Safety & Transportation: Fire, Police
- May 11: Finance: Assessing, Financial Services, Executive/ Sustainability, Human Resources
- May 13: Public Facilities: Public Buildings
- May 14: Programs & Services: Information Technology, Museum, Library, Culture & Arts, Parks & Recreation
- May 26 (and perhaps 27): City Council meets as Committee of the Whole
- June 14: Deadline for action by the City Council
Pensions and COLA
The City is mandated by the state to fully fund all of its government pension plans by 2040. For the last several years, the City has set aside funds toward this goal. Newton’s pension funding schedule is regulated by the City’s Retirement Board, which has full power to set the funding schedule, independent of the Mayor and the City Council.
Until recently, the Board-approved schedule had the pension liability paid off by 2032, eight years ahead of the state-imposed deadline. However, Mayor Marc Laredo has made extending that deadline a priority, in order to make more funding available for other purposes during this time. Doing so, he has argued, will provide invaluable relief to the City budget in the coming years.
The Retirement Board recently approved Mayor Laredo’s request to extend the deadline to 2035. That approval was contingent upon the City Council approving a $3,000 increase in the cost of living adjustment (COLA) base for retirees.
Free Cash
Free Cash is another important component of the budget process. When actual revenues exceed budgeted revenues, the money left over at the end of the fiscal year is called Free Cash. In recent administrations, Free Cash has been used in subsequent years for “one-time” expenditures on the assumption that it may not be available to fund ongoing operations. This year, Mayor Laredo is making an effort to set budgets closer to estimated revenues in order to make more funding available for current operations while reducing the amount of Free Cash that is often seen as available on a “one-time” basis.
Learning more
The complete FY2027 budget materials can be found here. Alex Jablon’s interview with Mayor Laredo and Lemieux is available here. (The interview is part of a series called The League Presents, which is produced in collaboration with NewTV. It airs periodically on NewTV and is posted on the League’s website.)
Theo Younkin is a Fig City News student reporter, a senior at Newton South High School, and former Co-Editor-in-Chief of the NSHS Lion’s Roar.
