General

Agenda — 4 items

1. Mayor submitting the Fiscal Year 2027 Operating and Capital BudgetsMay 14, 2026Salem City Council93 Washington StreetSalem, MA 01970Dear Councillors,The City of Salem’s FY27 Budget advances the framework of the FY27 Strategic Plan: Salem should be livable and welcoming to all in our community, municipal services should be delivered effectively and efficiently, and we want Salem to remain a vibrant and thriving city.A livable and welcoming city strives to be more affordable, treats all people with equity, justice, compassion, and professionalism, and works to be a safe community for all. Effective service delivery is achieved by providing city programs and projects in a manner that is financially efficient, equitably delivered, transparent, and accessible, while maintaining a forward-looking spirit that is open to innovation and new ideas. Lastly, a vibrant and thriving city means strengthening our local economy, local workforce, and local educational institutions, acting thoughtfully to protect our community from risks or harm, and ensuring that future generations in our city benefit from the actions and decisions we make today.The FY27 proposed budget is $225,261,444, an increase of 4.5% over the previous year’s budget. Fixed costs (health and retirement benefits for employees, debt payments, charges by the state, etc.) will increase by $5.5 million, contributing significantly to that budgetary increase. When fixed cost centers increase more than 2.5%, which is the levy ceiling increase limit established by Proposition 2-1/2, it creates an especially challenging financial impact. In FY27, some of those centers include health insurance (8.2% increase, or nearly $1.7 million), Essex North Shore Agricultural and Technical School’s (ENSATS) assessment (12.2% increase, or $316,150), retirement costs (5.6% increase, or $924,360), state charges (3.9% increase, or $453,617 overall) including charter school tuition charges (6.0%) increase, of $546,339, and the trash contract costs (4.0% increase, or $194,287). For these reasons, in FY2027 we have taken a very limited approach to discretionary increases, to help offset the rapid escalation of these fixed costs.Balanced against those, as well as the impacts of inflation, the Commonwealth continues to limit the tools and options available to cities and towns to derive revenues to fund the services upon which residents rely. Sensible measures to address this have consistently died in the legislature, while the restrictions imposed by state laws, including Proposition 2-1/2 and the inflationary cap of 4.5% and flawed required local contribution formula in Chapter 70, place added constraints. Salem is fortunate that, due to our history and current practice of responsible fiscal practices and conservative budgeting, we continue to maintain excess levy capacity, but the pressure to use that capacity is growing quickly. The City appropriation for the school department is $81,755,368, an increase of $3,582,307, or 4.6%, over FY2026. That increase is 43% more than the average increase over the past decade and exceeds the average increase over the previous decade of 3.4%. This reflects our commitment to our public schools, our educators, and, most importantly, our students. The City’s appropriation for the school department additionally does not include school-related costs that appear elsewhere in the budget, such as school employee health insurance, unemployment, and debt for school building projects. $12 million of our FY27 health insurance costs will be for school employees, and school costs account for 87% of our unemployment compensation. School-related new capital projects funded by City dollars in the FY27 Capital Improvement Plan (CIP) total $3.11 million and previous school projects account for $2.244 million of the FY27 long-term debt payment, or just over one-quarter of it. When these expenses on the “City” side of the budget are added to the school department appropriation, the total amount funded to Salem Public Schools in the FY27 budget is over $96 million.In addition, the City pays charter school and ENSATS assessments, which are also education-related expenditures. The ENSATS assessment for FY27 is increasing $316,150, or 12.2%, despite there being only one new Salem student in the upcoming 9th grade class there. Charter school tuition assessment is increasing $546,339, or 6.0%. When charter and ENSATS payments are factored in, funding to support Salem students is easily the largest single area of operational spending in the budget. Despite these local investments, however, Salem continues to suffer from inequities in the Chapter 70 formula that drive down the state’s target aid share and drive up the local contribution. We will continue our advocacy with state legislators and officials to correct this issue.The enterprise fund budgets will increase by $347,738, or 1.6%, over the FY26 enterprise funds budget, due to increases in assessments for these services and the need for ongoing infrastructure maintenance and upgrades. Water and sewer improvement projects are the largest category of capital projects in the FY27 CIP, which is also included in this budget. The forward-looking annual and five-year capital plans are a responsible and transparent way to plan for future obligations while meeting present-day needs. The CIP is funded through multiple funding sources, including bonds, short-term capital, grants and rebates, receipts, retained earnings, and more. This thoughtful approach to capital projects has enabled us to maintain a low change the total annual debt payments for general fund and enterprise fund capital for FY27, with just a 1.2% increase overall.The FY27 CIP reflects the City’s goal of investing in our critical capital needs to ensure a vibrant, resilient, and accessible community, but doing so in a strategic and efficient manner. The FY27 CIP includes many projects of importance, with particular emphasis this year on addressing critical and essential infrastructure. To highlight a few:$3.88 million for location-specific water and sewer improvement projects.$3.86 million for citywide water and sewer system maintenance, repair, and upgrades.$2.04 million for road repaving and repair.$1.6 million to cap the transfer station.$1.16 million for road safety projects.$1 million for the High Street Park improvement project.$1 million for the relocation of the Willow Avenue offshore sewer pipe.$810,000 for school technology upgrades.$700,000 and for school security/life safety improvements.$660,000 for stabilization of the former Coast Guard structures at Winter Island.$600,000 for the next phase of the Safe Sidewalks repair project.$350,000 for renovation of the Forest River Park bathrooms.$170,000 for fire and police radio system maintenance and upgrades.$156,000 for anti-vehicle bollards at Salem Common’s main entrance.$125,000 to replace the main truck doors at Fire headquarters.Salem maintains record stabilization levels, our best bond rating ever, and considerable levy capacity. We have also enjoyed a low average tax bill increase relative to the region. Salem’s average tax bill change over the last decade has been less than the average on the North Shore. This has been achieved by reasonably exporting costs onto visitors where possible and by offering as many exemptions and abatements as allowed by state law. The latter are particularly focused on our most vulnerable taxpayers, including lower income residents, seniors, veterans, and those living with disabilities. The City also continues to tax below our allowable levy limit. For FY27, we will again maintain excess levy capacity – in the amount of $8,291,185 – a further demonstration of prudence and care with taxpayer dollars. We have also enhanced tax title efforts, recovering over $1 million in the past year in unpaid taxes, more than double the typical amount. This effort ensures greater fairness in taxation and lessens the burden on other property taxpayers.The financial challenges presented by fixed cost centers rising by more than the arbitrary ceiling of Proposition 2-1/2%, and the many externalities pressuring our fiscal conditions have a very real effect on our budget. Despite those pressures, I am proud that the FY27 budget maintains our dedication to fiscal responsibility while making important investments to strengthen our community. Our fiscal practices have resulted in not only our receipt for 19 years in a row of recognitions and awards from the Government Finance Officers’ Association, but also affirmation of our historic high AA bond rating for the last 14 years in a row. In its affirmation of the AA bond rating, S&P Global Ratings has specifically cited Salem’s “strong financial management environment with a focus on long-term financial and capital planning…to support stable finances.”Lastly, another key factor in enhancing our local economy and contributing new revenues to help meet budgetary needs are the public and private investments we continue to see in the community. To mitigate the impact on existing property taxpayers, new growth remains a key strategy for Salem. New growth is projected to provide $1.2 million for FY27, lessening the burden on existing Salem taxpayers by that amount. To put that amount into context, however, it is less than the increase in health insurance costs (just under $1.7 million) alone. Without growth, fixed cost increases such as that would fall exclusively and entirely onto existing property taxpayers to fund.Without responsible new growth we cannot provide the services and improvements that residents deserve. Given the ongoing increases in fixed costs and the financial challenges and uncertainties of the current economic and fiscal climate, a reflexively anti-growth position is equivalent to endorsing substantial tax increases on Salem homeowners and reductions in essential City services like public safety, public schools, and public works. With appropriate new growth comes much-needed housing, commercial enterprises with jobs, and new revenues to support the delivery of critical municipal services and projects.In FY27 we will continue to strive to exceed the service level expectations of our constituents, while simultaneously ensuring prudent fiscal oversight in all expenditures. The mission of Salem’s City government is to provide all members of our community with open, honest, and pro-active services equitably, effectively, and efficiently, focusing on the needs of today, with a vision for the future. To accomplish this, the proposed budget aligns operations with strategic goals and objectives, while maintaining necessary fiscal controls and careful attention to financial forecasts. I appreciate the hard work and cooperation department heads have put into the preparation of this year’s budget. I cannot say enough about the efforts made by the Finance Department especially. The department’s work ensured that the budget was ready for submission and in compliance with the high standards we set for ourselves pursuant to GFOA’s Distinguished Budget guidelines.Salem is one of only a handful of Massachusetts communities who annually earn both a Certificate of Excellence for our Annual Comprehensive Financial Report and a Distinguished Budget Presentation Award from the GFOA. In furtherance of improving transparency, the budget once again is accompanied by a “Budget in Brief” summary document.In 2016, Salem embarked on a Vision Plan called “Imagine Salem,” to gather community input and feedback about what the people of Salem wanted the city to be like in 2026. As the city has now arrived at our quadricentennial, the vision outlined by Imagine Salem is central to how departments are framing their work and objectives for this coming year: “In 2026 we are a sustainable and livable city where we celebrate our diverse histories and where people of all backgrounds and means participate and thrive.”The proposed FY27 budget reflects that vision and represents a strong commitment to the people we are fortunate to serve. It continues our balanced and responsible approach to City finances. It invests strategically and efficiently in the critical services and projects that make Salem a livable, equitable, and vibrant city. I recommend adoption of the proposed FY27 budget, CIP, and other associated budgetary measures and I look forward to working with you over the coming weeks to enact this proposed spending plan for the year ahead.Sincerely,Dominick PangalloMayorCity of SalemCC: Department heads Salem School Committee members State Senator Joan Lovely State Representative Manny Cruz
2. ORDERED: That the Salem City council vote, pursuant to the provisions of MGL Chapter 44, Section 53E ½ to authorize the establishment of the revolving funds for fiscal year 2027 has herein described. Expenditures from said funds shall not exceed the amount of funds received in the respective accounts or as authorized as stated, shall come from any funds received by respective boards for performing services, shall be used solely for the purpose of implementing the programs delineated and shall be approved by a majority vote of any respective boards in accordance with His Honor the Mayor.Dept.Fund NameFund #Programs & PurposesType of Receipts CreditedAuthorization for SpendingFY 2027 Budget Request Maximum Annual ExpendituresCOACOA Programs2374To defray program costs including instructors, presenters, entertainment, decorations, food, etc.Revenues and fees charged for programsCOA Director and Mayor40,000.00ElectricalTelecom2376To fund public information technology, telecommunication and electrical initiatives and projectsApplication fees and rental revenue from telecommunications attachments pursuant to sections 12-125 and 12-170 of the City OrdinancesCity Electrician and Mayor50,000.00FireR/A Local Emergency Planning Comm2433Training and special equipment needed to respond to hazardous materials incidents per CH 21EFees charged to persons spilling or releasing hazardous materialsFire Chief and Mayor40,000.00FireR/A Confined Space Drills2449Confined space training for Firefighters.Fee charged to Dominion Power Plant to cover OT costs for Firefighter Confined Space Drill training.Fire Chief and Mayor20,000.00HarbormasterR/A WI STORAGE2368To Fund Capital items for Harbormaster, maintenance costs of equipment, and maritime access projects.Fees charged for Boat and Float Storage at Winter Island and Kernwood MarinaHarbormaster 85,000.00Health DeptHealth Clinics2364To support vaccination program and other Health Promotion activities of the Health DepartmentReimbursements from vaccination programsHealth Agent and Mayor 20,000.00MayorSpecial Events2361To cover expenses for Fireworks, bands, portable potties and other unanticipated expendituresRevenue from RFP's for services from vendors, and from misc sponsorships.Mayor 275,000.00RecreationWinter Island Store2362To increase and replenish store inventory as needed and to enhance and maintain Winter Island Store & Facilities.Revenue from sale of inventory/services at Winter Island.Recreation Director and Mayor 30,000.00RecreationProctor's Ledge2384For Maintenance of Proctor's Ledge siteRevenue of 25 cents from the sale of each ticket at the Witch House. Recreation Director and Mayor 75,000.00RecreationRoad Race Fees2385For Park MaintenanceField rental fees and five percent of race and event registration fees.Recreation Director and Mayor 85,000.00RecreationDog Park2435Renovations and Maintenance of Dog Park at Leslie's Retreat Park.Fee charged for pass to use dog park (pooch pass). $25. annually for pass.Recreation Director and Mayor 25,000.00RecreationPark & Rec Public Access2452To be used for the operation and maintenance of Winter Island and McCabe MarinaParking and launch fees charged at McCabe Marina & Winter IslandRecreation Director and Mayor 75,000.00RecreationSalem Willows Meters2459Renovations and Maintenance of Willows Park.Money generated from Willows MetersRecreation Director and Mayor 85,000.00RecreationWitch House2499To support Salem Award committee and the Salem Witch Trial Memorial25 cent surcharge to tickets beginning in May 2009Recreation Director and Mayor 25,000.00Planning & Community DevelopmentOld Town Hall2373Maintenance costs of old town hallRental revenue of old town hallDirector of Planning and Mayor 150,000.00Planning & Community DevelopmentDerby Square/Artists' Row2375Improvements for Derby Square and Artists' Row including outdoor furniture, signage, lighting, public art, marketing and stipends for performersVendor fees from Derby Square Flea/Salvage Art Market, Rent and Vendor Fees at Artists RowDirector of Planning and Mayor 50,000.00Sustainability & ResiliencyUtility Energy Credit Fund2377City projects or programs that reduce utility costs, use, and/or emissions. To include personnel costs associated with municipal programs that generate the credits.Credits or payments received for City projects or programs that specifically result in reduction in utility costs, use or emissionsDirector of Sustainability and Mayor1,250,000.00Sustainability & ResiliencySalem PowerChoice Income Eligible Discount FundNEWTo provide the funding for an income eligible discount program the City is administering as part of the Salem Power Choice Community Electric aggregation program.Payments from solar developers.Director of Sustainability and Mayor500,000 Planning & Community DevelopmentSRA Plazas2389Utility costs and maintenance costs for Charlotte Forten Park, Lappin Park and East India SquareRevenue from programming contract, vendor fees, event rentalsDirector of Planning and Mayor 20,000.00Planning & Community DevelopmentSalem Ferry/Salem Wharf Operational 2453Fund operational costs of the Salem Ferry and operating, maintenance, capital repairs, security, utilities related to Salem WharfFees received during the season for leasing of the Salem Wharf, MBTA Salem Passes, and fuel reimbursementsDirector of Planning and Mayor 500,000.00Department of TransportationBike Sharing2383To receive and expend revenue from bike share program for system operation and promotionRevenue from rentals and annual membershipsDirector of Transportation and Mayor 50,000.00Insp ServicesAbandoned Property Maintenance2371To maintain abandoned and foreclosing residential and commercial propertiesRegistration fees ($300.00) for vacant and/or foreclosing residential properties.Inspectional Services Director and Mayor 85,000.00Public ServicesTree Replacement 2330To replace trees removed during construction as directed by the Tree Warden or Planning BoardRevenue from contributions per the Tree Ordinance or Planning Board decision Director of Public Services and Mayor 30,000.00EngineeringTraffic Island 2439Projects related to City beautification events including Traffic Island, Beautification, and special events Primarily from: Traffic Island Sponsorships, Special Events Revenues, Event and Beautification effort sponsorsCity Engineer and Mayor 20,000.00TreasurerTax Title2388Costs incurred for legal fees associated with tax title processAny fees, charges and costs incurred under sections 15, 55, 62, 65, 68 or 79 of M.G.L. Chapter 60 and collected upon the redemption of tax titles and sales of real property acquired through foreclosures of tax titlesTreasurer and Mayor 40,000.00TOTAL3,625,000.00
3. ORDERED: That the sum of Five Million, Seven Hundred Twenty-Three Thousand, Three Hundred Forty-One Dollars ($5,723,341) be and hereby is appropriated as part of the FY 2027 Capital Improvement Plan to be expended as listed below in accordance with the recommendation of His Honor the Mayor. DepartmentDescriptionAccount Amount BuildingAnnual Priority Small Repairs, Upgrades, FF&E, & Associated Improvements20002722-5846MD$90,000BuildingSecurity Alarms and Upgrades20002722-5846ME$20,000BuildingSalem Common Bandstand20002722-5846MF$200,000BuildingADA Compliance and Associated Improvements20002722-5846MG$20,000BuildingPioneer Village20002722-5846MH$200,000ElectricalADA Walk Signal Buttons20002708-5846MI$10,000ElectricalFire Alarm Boxes20002708-5846MJ$56,270FireReplace Steam Heating Systems at Three Fire Stations20002710-5846MK$60,000FireFire Alarm Panels20002710-5846ML$25,000FireRadio Voc. Alarm Updates for Dispatch20002710-5846MM$70,000FireAnnual Priority Small Repairs, Upgrades, FF&E & Associated Improvements20002710-5846MN$20,000FireHeadquarters Overhead Doors20002710-5846MO$125,000ITVoice Migration and Router Upgrade20002707-5846MP$92,249ITIT Lifecycle Management20002707-5846MQ$210,000ITDigitization20002707-5846MR$25,000ITCLC Great Room Update20002707-5846MS$50,000LibraryAnnual Priority Small Repairs, Upgrades, FF&E, & Associated Improvements 20002714-5846MT$53,000LibraryADA Improvements and Associated Repairs at Library20002714-5846MU$10,000LibraryFurniture Upgrades for Main Floor and Reference20002714-5846MV$40,000Park & RecreationPark Upgrades20002717-5846MW$135,000Park & RecreationPark and Recreation ADA Compliance and Related Repairs20002717-5846MX$10,000PlanningPlanning, Policy, and Zoning Studies and Implementation20002720-5846MY$50,000PlanningOld Town Hall & Artists' Row Annual Repairs, ADA Compliance, Minor Renovations, Studies, etc.20002720-5846MZ$30,000PlanningMaster Plan Update20002720-5846NA$250,000PlanningWinter Island Building Stabilization Project20002720-5846NB$60,000PlanningTerminal Building Design Phase20002720-5846NC$207,822PoliceSalem Police Headquarters General Repairs, Upgrades, FF&E, Studies, and Associated Replacements20002721-5846ND$200,000PoliceCameras - Community/Police20002721-5846NE$40,000PoliceSmall ADA Compliance and Associated Repairs20002721-5846NF$10,000PolicePolice Officer Locker Room Replacement20002721-5846NG$100,000PoliceAxon Body Worn Cameras20002721-5846NH$150,000PolicePolice/Fire Radio System Maintenance (Years 2-5)20002721-5846NI$100,000PoliceEvidence Room Upgrade/Expansion20002721-5846NJ$150,000PolicePortable Radio Replacement20002721-5846NK$100,000PoliceDrone as a First Responder (DFR)20002721-5846NL$41,667Public ServicesDredging the Ponds at Greenlawn Cemetery20002723-5846NM$50,000Public ServicesPermanent Street Sweeping Signage20002723-5846NN$25,000Public ServicesADA Improvements and Associated Repairs - DPS & Cemeteries</p></td><td valign="top" style="width: 23.8586%; vertical-align: top;"><p style="margin-left:0in;">20002723-5846NO</p></td><td valign="top" style="width: 15.1694%; vertical-align: top;"><p style="margin-left:0in;">$15,000</p></td></tr><tr><td valign="top" style="width: 15.9057%; vertical-align: top;"><p style="margin-left:0in;">Public Services</p></td><td valign="top" style="width: 45.0663%; vertical-align: top;"><p style="margin-left:0in;">Purchase of Utility Gate Turning Trailer</p></td><td valign="top" style="width: 23.8586%; vertical-align: top;"><p style="margin-left:0in;">20002723-5846NP</p></td><td valign="top" style="width: 15.1694%; vertical-align: top;"><p style="margin-left:0in;">$132,000</p></td></tr><tr><td valign="top" style="width: 15.9057%; vertical-align: top;"><p style="margin-left:0in;">Public Services</p></td><td valign="top" style="width: 45.0663%; vertical-align: top;"><p style="margin-left:0in;">Truck 12120002723-5846NQ$95,000Public ServicesRepairs to Street Sweepers20002723-5846NR$55,000Public ServicesReplacement of Unit 86 – Park Department20002723-5846NS$140,000Public ServicesReplacement of Car 2520002723-5846NT$54,000Public ServicesSzetela Lane Phase 3 DEP Clean Up20002723-5846NU$200,000Public ServicesInstallation of Bollards around Salem Common20002723-5846NV$156,333SchoolPainting School Buildings20002725-5846NW$150,000SchoolADA Work/Repairs20002725-5846NX$25,000SchoolGrounds20002725-5846NY$125,000SchoolVehicles20002725-5846NZ$100,000SchoolInterior Upgrades BAIS, Saltonstall, HMLS20002725-5846OA$200,000SustainabilityCity Wide Hydraulic and Hydrologic Model Development20002730-5846OB$237,000TransportationTraffic Calming Programs20002718-5846OC$200,000TransportationParking Infrastructure Improvements, EVs, and Equipment Installation/Maintenance20002718-5846OD$150,000TransportationBicycle Infrastructure Design, Implementation & Repairs/Improvements20002718-5846OE$100,000TransportationGarage Improvements - Annual Repairs & ADA Compliance20002718-5846OF$50,000TransportationProctor/Pope/Mansell Intersection Design20002718-5846OG$79,000TransportationProctor St Corridor Design (Mansell to Highland)20002718-5846OH$154,000TransportationWillson Street Design20002718-5846OI$220,000TOTAL CAPITAL OUTLAY FUND $ 5,723,341
4. Fiscal Year 2027 Water and Sewer Capital Improvement Program (CIP) Funded from Bond AuthorizationOrdered: That the City of Salem appropriates $7,660,000 to pay costs of the following projects under “FY27 CIP Projects” in the amounts provided under “FY27 CIP Amount,” including the payment of all costs incidental and related thereto; that to meet this appropriation, the Treasurer, with the approval of the Mayor, is authorized to borrow $7,660,000 as provided under “FY27 CIP Costs to be Funded by Borrowing,” said amount under “FY27 CIP Costs to be Funded by Borrowing” and pursuant to Chapter 44, Section 7(1) of the General Laws, or pursuant to any other enabling authority, and to issue bonds or notes of the City therefor:DepartmentFY27 CIP ProjectsFY27 CIPAmountFY27 CIP Coststo be Funded by BorrowingSewerWillow Ave Sewer Pipe Relocation$1,000,000$1,000,000SewerSSES Report Implementation (eliminate I/I sources citywide)$610,000$610,000SewerCitywide Drain & Sewer Cleaning, Inspection, Replacement, Engineering, GIS, Construction$525,000$525,000WaterWater Transmission Main System Improvements$1,200,000$1,200,000WaterCanal Street (from Forest Avenue to Washington Street)$1,000,000$1,000,000WaterBridge Street Drainage (from Lynn to North)$800,000$800,000WaterJefferson Avenue (Laurent to Ocean) and Ocean Ave utility repairs$1,300,000$1,300,000WaterWater Distribution Main System Improvements$825,000$825,000WaterCitywide Flushing, Valve Repair/Maintenance, Leak detection, GIS$400,000$400,000TOTAL$7,660,000$7,660,000Be it further Ordered:That the Mayor and the Treasurer are each authorized to file an application with the appropriate officials of the Commonwealth of Massachusetts (the “Commonwealth”) to qualify under Chapter 44A of the General Laws any and all bonds of the City authorized to be borrowed pursuant to this loan order and to provide such information and execute such documents as such officials of the Commonwealth may require in connection therewith.

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