Medford Looks To Past Recession Amid 'Dire' Budget Situation

MEDFORD, MA — While officials do not know the extent of the shortfall they're up against going into Fiscal Year 2021 budget, one thing is certain: the situation is "dire," Mayor Breanna Lungo-Koehn said.

"We must protect services for the most vulnerable, steward the education of our children, ensure public health and safety and provide services more cost effectively, and do so without burdening future generations," Lungo-Koehn wrote in an open letter Friday. "But we must be cautious; over-reliance on the city's reserves to solve short term problems can have long term effects on our financial health. It's a delicate balance, and it will require sacrifices."

It's not yet clear how much state and federal aid Medford will receive. To improve its financial stability, officials took steps in the current fiscal year such as imposing a nonessential hiring freeze and restricting nonessential spending.

Looking forward to Fiscal Year 2021, officials are building a budget that ensures city services operate efficiently and residents in need are supported, without jeopardizing Medford's long-term financial health, said Lungo-Koehn.

To be blunt: "the way we solve these challenges and meet our core community values will require sacrifice and difficult decisions. Many of the goals we lay out, together, for the short term will be delayed in the interest of maintaining critical services, particularly as we await decisions from the federal government on local aid for our communities," she said.

In Fiscal Year 2020, state aid accounted for more than $26 million, or 13 percent, of Medford's operating budget. Given the lack of direction when it comes to aid this year, officials must "plan for the worst and hope for the best," according to the mayor.

The state has postponed its own budget deliberations, estimating a $4-$6 billion deficit in receipts but not yet agreeing to a revenue target or local aid distributions, so communities have to estimate what resources they will have in the coming fiscal year. Medford is working off a similar model to the Great Recession, when local aid was cut by nearly 25 percent.

In that case, Medford would see a nearly $6.5 million cut in state aid for Fiscal Year 2021. On top of an anticipated $3 million decrease in local revenue from lack of permit fees, and lower meals, excise and hotel taxes from the shutdown of nonessential services, and the lingering effects of the public health crisis, the city is looking at a potential budget shortfall of $8 million, Lungo-Koehn said.

The mayor slammed the federal government, saying Medford has not received a "dime" of support. Smaller cities and towns like Medford were not part of the three COVID-19 stimulus packages passed to date, and "some Republican senators have suggested that states should declare bankruptcy instead of receiving federal support they could use to support local education, public health and safety, and other city services," Lungo-Koehn said.

"In spite of this, I remain hopeful that the federal government will provide meaningful aid to Medford to address critical gaps in our school and city service budgets," she added. "Our community doesn't deserve the lack of leadership we're getting from Washington and I will continue to fight hard for what we need and deserve."

Medford has to plan for uncontrollable costs such as fixed increases for pensions, health insurance and debt service, and the reality of mass furloughs and layoffs across multiple industries. Many ideas about how to improve services, which require additional resources, will need to be tabled this fiscal year, Lungo-Koehn said.

"When I do so, please know that I understand how painful some of these decisions will be," she continued. "While being frugal, I believe we should still try to focus on some areas where we can adjust our approach to services which may require cuts in some areas and new investments in others."

City officials will work with union leaders, parent-teacher organizations, business owners and residents to determine cost-cutting strategies. Lungo-Koehn said the situation in Medford is "less severe than many communities."

"I know that no matter how great the challenge, Medford is tough and we’ll find our way through darkness and to better times together," Lungo-Koehn said. "I look forward to working through our financial challenges with our local leaders in the coming months and share this as an update of what may lie ahead. During my campaign, I pledged to be transparent no matter what. I plan to keep my promise."