Worcester's 2025 Budget: 3% Increase, Future Debt Cost A Concern

WORCESTER, MA — Worcester City Manager Eric Batista's 2025 budget will hit city council Tuesday, offering a $893 million spending plan for the next fiscal year shaded by a looming Worcester Public Schools deficit, and the prospect of future borrowing to replace two outdated school buildings.

Batista's new budget — his second official budget as city manager — is 3 percent higher than fiscal 2024 due to a variety of cost increases, everything from debt service and union and non-union pay increases, to the resumption of $500,000 annual payments to Discover Central MA.

The Worcester City Council on Tuesday will formally accept the budget, kicking off a series of meetings that will likely lead to a council vote on the budget before the 2025 fiscal year begins on July 1. Councilors can move to reduce the budget, but cannot increase spending.

Here are some key things to know about the fiscal 2025 plan, and future spending:

Budget Increases

In fiscal 2025, Worcester is anticipating 3 percent cost-of-living pay increases for city workers represented by unions. The approximately 500 workers not represented by unions are also getting 3 percent COLAs, plus 1.5 percent increases to bring pay rates up to date.

The city manager's office budget will rise just under 34 percent, partly due to select technology department staff moving under the manager's wing to oversee the city website. The city council's budget will also rise about 28 percent because a staff position previously paid for out of the manager's contingency fund will now be paid for out of the council fund.

The police department will get a 9 percent ($5 million) increase due to pay and benefits increases in new contracts with the two police unions that were funded in the 2024 fiscal year through the city manager's contingency fund. The department is also funding new initiatives in fiscal 2025, including stings of "Johns" ($10,000), the Quality of Life team ($44,000) and a gun violence reduction team ($188,000).

The Administration and Finance department will see a nearly 14 percent increase due to pay increases, but also due to the addition of a grant officer, a position that was cut in the fiscal 2024 budget. The Economic Development department will see a nearly 25 percent increase due to the reabsorption of the Discover Central MA funding.

School Budget Deficit

Worcester Public School is, has always been, and will forever be the largest single source of spending in the city budget. In fiscal 2025, the city will contribute $533 million to run the schools, or about 60 percent of the total budget. WPS is facing an estimated $23 million shortfall in its fiscal 2025 budget, in part due to a state budget proposed by Gov. Maura Healey that is using a much lower inflation compensation rate of 1.35 percent, less than half the national inflation rate last year.

But the state's budget contribution is still in the works, with the state House passing a budget last month with an increase in state aid. The state Senate is working on its version of the state budget before it goes back to Healey for a signature — or potential vetoes.

Worcester's contribution to the school district budget is largely based on the prior year's revenue growth, and the city has for years kept its contribution right at that amount. Revenue growth was about 5 percent in fiscal 2024, and the city increased its contribution 5.2 percent compared to the last fiscal year.

Burncoat High School, Middle School

Worcester has entered the state process to qualify for funding to replace Burncoat high and middle schools. Although construction could be years away, Batista's budget anticipates a big increase in debt service if Worcester borrows the estimated $250 million (an estimate the city received in 2018) needed for the replacement, adding about $20 million per year in to the city's total capital debt payments. Batista said the $20 million per year could eat up the city's excess levy capacity, bringing the city close to the line for a tax levy override. Batista said he would not be in favor of using the excess levy capacity, preferring to reduce capital borrowing in future years instead. Worcester's excess levy capacity in fiscal 2024 was about $23.7 million, according to the state Department of Local Services.

2025 Capital Budget

Speaking of capital borrowing, Batista is proposing a $136 million capital plan to fund a variety of hard projects through 2029. Some of those include paying for a new roof for the shuttered Worcester Memorial Auditorium ($1 million), new police cruisers ($745,000), $8.6 million for DCU Center renovations, and $7.3 million for parks improvements — some of those include new features at city dog parks like water spigots, and the renovation of the Tacoma Street Playground.

The city council has to approve the budget with any reductions by June 30, otherwise the budget goes into effect as presented by Batista. The council is set to kick off a series of four budget hearings beginning May 14.