Mayor Laredo’s FY27 budget targets NPS, City services, and community building

On Monday, April 27, Mayor Marc Laredo and Chief Financial Officer Maureen Lemieux presented the Laredo Administration’s draft Fiscal Year 2027 budget to the City Council. While Mayor Laredo has presided over multiple years of budget reviews as City Council President, this budget process is his first since his inauguration in January.

In the 90-minute address, Mayor Laredo and Lemieux framed the budget proposal around three goals: providing an excellent Newton Public Schools (NPS) education, providing outstanding City services, and building community.

“Our budget is more than a series of numbers. It’s a statement of values, coupled with sound financial practice to ensure that we are spending the taxpayers’ money carefully and wisely,” Mayor Laredo told the Council.

New Mayor, new approach

Mayor Laredo emphasized that his administration is taking a revised approach to the budget process. Given the challenges inherent in financial forecasting, he said, it would be unwise to budget 100% of expected revenues. However, he added, budgeting too conservatively leads to a surplus of funds at the end of the fiscal year — money that is called Free Cash — that could have been used in City and NPS operating budgets. Typically, 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.

For that reason, his proposal budgets 99% of expected revenues, a higher figure than Newton has used in the past.

“We did it differently for a reason: We want to give the schools and our municipal departments the expected money they need, so they’re not looking for Free Cash later on to fund operating shortfalls, but we are fair, open, and transparent as to what we have right from day one,” he said. “And that’s what we’ve done.”

Mayor Laredo said that despite budgeting a higher percentage of expected revenues, he is confident in the financial security of his approach. He described it as striking “the right balance,” given that Newton’s tax base is fairly stable — most of the City’s income comes from residential property taxes, which typically vary less than commercial taxes.

This method, he said, has allowed his budget proposal to fund key priorities. 

As an example, he pointed to the “historic” 7.38% increase included in this year’s NPS allocation.

“That’s a very large increase, much larger than has ever been done in recent years — and we did that for a reason. Our schools need the money. We want to provide the best possible education for our children. And I think this is our highest priority,” he said to applause.

Mayor Laredo said that above all, he values investment in long-term progress.

“In this budget, we are not afraid to make minor additional expenditures that are good investments,” he said. “You sometimes need to spend money to do the job better.”

Lemieux: Three bold initiatives 

In her presentation explaining the financial mechanisms behind the budget, CFO Lemieux pointed to “three bold initiatives” that she said support the Laredo Administration’s budgetary goals.

In addition to Mayor Laredo’s 99% initiative, she said, the Administration is pursuing two initiatives related to Newton’s outstanding pension liability. 

The City is mandated by the state to fully fund all of its government pension plans by 2040. Newton’s unfunded pension liability came into the spotlight last year amidst challenging Newton Public Schools (NPS) budget discussions.

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. But extending the funding schedule beyond 2032, Lemieux said, would free up funding for City and NPS operating budgets in future fiscal years.

For that reason, this spring, the Laredo Administration asked the Board to extend the schedule. On April 14, the Board approved that request. The new plan will have the liability paid off by 2035, which is expected to provide $51.5 million in budget relief over the next five fiscal years. 

“Changing the funding schedule to 2035 is absolutely a game-changer for us. But it is not the panacea — it doesn’t solve everything,” she said. “However, it generated $5 million for us this year, and that number will only grow over the next few years.”

The vote by the Retirement Board to extend the deadline was conditioned on the City Council increasing the cost of living adjustments (COLA) base for retirees from $15,000 to $18,000.

Lemieux said that the second pension-related initiative was selling a Pension Obligation Bond (POB). POBs are taxable bonds that fund unfunded portions of pension liabilities. In essence, they convert the liability of unfunded pension requirements to the liability of bonded debt that extends over a longer time.

Lemieux said that at the beginning of Mayor Laredo’s term, the Administration convened an investigative committee to determine if selling a POB was appropriate. The committee decided unanimously that it was.

Lemieux said that the next step will be for Newton’s State Senators and Representatives to shepherd a POB request through the legislature. If that request is approved, the City Council would still have to vote to approve a bond authorization. She said that this would likely happen no earlier than July, and a POB would be sold in 2027 at the earliest.

What’s in the budget?

Lemieux said that the budget proposal takes important steps to fund the Administration’s goals. When it came to the first goal – excellent education – she pointed to the 7.38% increase in NPS funding from the original base last year. With regard to the second goal – outstanding City services – she outlined changes in four major categories:

• Management and oversight. In addition to providing for the new positions of Chief Community Services Officer and Chief of Staff, the budget notably proposes absorbing the City’s Purchasing department into Financial Services.
• Customer service for residents and business owners. The budget includes a new full-time electrical inspector position.
• Customer service and information technology. The budget provides for a new City website, enhanced City Council docket tracking, and a new 911 notification system.
• Infrastructure maintenance. The budget makes investments in municipal building maintenance and improvement projects; paving, roads, and traffic management; fields, playgrounds, and public grounds maintenance; and tree maintenance.

For the third goal – building community – Lemieux pointed to improvements in three major categories:

• Older adult services. The Cooper Center for Active Living will receive funding for a variety of programs, increased staffing, and expanded meal services.
• Arts and culture. Notably, the proposed budget adds 1.5 full-time employees to the newly formed Arts & Culture Department.
• Economic development. The “newly elevated” Office of Economic Development, which Mayor Laredo has moved to the executive office, will receive funding as well.

Looking to the future

Mayor Laredo said that in addition to funding services for the next fiscal year, the proposed budget takes into account a variety of important needs in the future.

He pointed to Newton’s stormwater management system, which he said is “simply not adequate to meet our needs, especially considering the severity of future rainstorms and flooding because of the effects of climate change.” 

Mayor Laredo announced that in order to address the issue, he will be asking the City Council to approve a “much-needed” increase in the City’s stormwater management fee.

“I do not ask for additional funds lightly. But we cannot afford to make the mistakes — or rather, repeat the mistakes — of years past, when we did not fund our infrastructure properly, when we did not fund our pension obligations properly,” he said. “And we can’t afford at this juncture, at this time, to stay stagnant, and burden our children and our grandchildren with a failing stormwater management system.”

Mayor Laredo also said that the proposed budget includes feasibility studies for three noteworthy capital improvements: a new police headquarters, renovation of Newton South High School, and a new Ward School — or a combination of Ward and Underwood schools. (He said that if the City determines consolidating the two schools to be reasonable, then the School Committee would make a final decision, with public input.)

“All of these projects are long overdue. Getting this work done symbolizes what’s so great about this city. Because while our workforce is critical, we always want to support the folks who work here,” he said. “Public buildings, school buildings, City buildings are also important because if you don’t have the right facility, you can’t do the job properly. It’s time to get to work to get those facilities in place.” 

Budget materials are available here. In the coming days, City Council committees will discuss the proposed budget in separate meetings. According to the City’s budget calendar, the City Council as a whole will vote on the proposed budget on either May 26 or May 27.

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.