Citing ‘severe economic stress,’ Northampton mayor delays property tax increase

  • Northampton Mayor David Narkewicz  GAZETTE FILE PHOTO

Staff Writer
Published: 4/17/2020 12:12:02 PM

NORTHAMPTON — Citing the financial impacts of the COVID-19 pandemic, Mayor David Narkewicz has announced that a property tax increase approved by voters last month will be delayed until July 2021.

The additional $2.5 million in taxes approved under a Proposition 2½ override will not be collected until next year, the mayor told the City Council during its virtual meeting Thursday night.

“Given the uncertain duration of the COVID-19 crisis, and the severe economic stress facing Northampton residents — including many who are now furloughed or laid off from jobs, we have local businesses that have been forced to close because of the shutdown — I feel we cannot in good conscience implement a voter-authorized property tax increase in just over two months,” said Narkewicz, who tested positive for COVID-19 in late March and has been recovering and working from home. 

On March 3, residents overwhelmingly approved a permanent property tax increase so the city can raise an additional $2.5 million.

“I’m not saying I’m wiping away the election results,” Narkewicz explained in a presentation to the council and public about the pandemic's impact on the city’s finances. “As mayor, I’m going to submit a budget that doesn’t utilize that additional $2.5 million in this fiscal year. I will not do that until the next fiscal year.”

At the same time, a hard-hit economy and increased costs tied to the pandemic have left the city projecting lost revenue. 

In the second half of the current fiscal year, which ends on June 30, city officials estimate Northampton will lose an estimated $1,858,000 in local general fund revenue. Projected losses include taxes from hotels, meals and adult-use marijuana, as well as revenue from building, plumbing and wiring permits, Narkewicz said. A lack of parking meter fees and enforcement will lead to an estimated loss of $731,000 in April, May and June. 

“We are also facing many unbudgeted expenses,” he said. “We were not thinking about a worldwide pandemic this time last year when we were creating our budget for FY 2020.”

The city has opened up a 24-hour emergency shelter at the high school, for example. Narkewicz said he expects that the Federal Emergency Management Agency will reimburse much of the expenses for pandemic-related costs such as the shelter, but it’s unclear how much the city will receive. 

City departments have been working on the budget for the coming fiscal year, which is due to the council in 75 days, Narkewicz said Thursday.

In the first quarter of the coming fiscal year, Narkewicz estimates $1,547,465 in lost local revenue tied to sources including parking and permits, and taxes from adult-use marijuana, meals and hotels. It’s not yet known how much may be lost in state revenue, he said.

The mayor said he is “fully expecting that we are going to have to make significant reductions to account for those lost revenues,” giving the possibilities of not filling vacant positions or reducing staff. 

Savings such as the fiscal stability fund — a pool of money created as a result of the $2.5 million override voters approved in 2013 that helps stabilize the city’s budget — may be used, he indicated.  

“I ​​​hoped we would not have to face this type of situation, but this illustrates in real-time why these stabilization funds are critical,” Narkewicz said. “We will be looking at those as ways to support parts of our budget going forward, potentially.”

Federal aid to support the state budget is critical, Narkewicz said. “Without federal aid, the budget crisis is going to be severe. As is often the case, that will roll downhill to cities and towns and worsen our outlook.”

Greta Jochem can be reached at gjochem@gaznettnet.com.




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