Mayor Dips into Stabilization Fund for City Budget

July 3, 2013
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The City Council agreed to allow Mayor Dan Rizzo to access $1.5 million of Stabilization Fund monies in order to shore up any discrepancies in this year’s City Budget.

Facing some major opposition, Mayor Rizzo told the Council that he may not need the entire $1.5 million, but he will likely need some portion of the money to help balance the budget.

He said they needed the authorization due to a conference call this week with the credit rating agency Moody’s.

“In order to help us, what we would like is to have authorization for up to $1.5 million from the Stabilization Fund,” said the mayor at the June 27th meeting. “We would like to know for sure prior to our conference call with Moody’s that we have the ability to balance our budget. We can’t balance our budget unless we get a favorable vote to take from the Stabilization Fund. In the spirit of cooperation, I would ask the Council to go forward with this vote. If I can’t get that vote, I will have to cut an additional $1.5 million from the budget that we’ve already just cut. It would put me in a very unfavorable position.”

Several councillors were not favorable to such a vote, and with Councillors Ira Novoselsky and Charlie Patch gone, it put the mayor in an even more awkward position. Getting an authorization to use the Stabilization Fund requires at least eight votes, and so that meant only one councillor could vote against the request – making the margins ever so slight.

Councillor Brian Arrigo was dead set against using the Stabilization Fund, and he was a guaranteed ‘no’ vote.

“The combination of adding new positions to the City’s bottom line while using reserves to fund the city’s day-to-day expenses is not only bad fiscal policy that could lead to a structural deficit in the city’s budget, but more importantly I believe it sends a signal to our residents, businesses and any potential investors that we are struggling financially,” wrote Arrigo after the meeting. “I do not believe it is ‘raining’ enough for us to dip into our reserves. In fact, this is a time that many cities and towns have been able to avoid the use of reserves and are actually replenishing their ‘Rainy Day’ funds.”

Councillor Bob Haas seemed to be on the fence with the vote, and he had been critical in the last several weeks. No one was sure how he would vote, but were he to vote ‘no,’ it would have blocked the request.

He asked if excess funds would be transferred back.

“Yes,” said the mayor. “We will only use what we need.”

In the end, the vote came down 8-1, just enough to pass, with only Arrigo voting against.

It was the first time that the Stabilization Fund had been tapped. However, that was a little misleading as Rizzo had just transferred $2.8 million in Free Cash to the Fund about one month ago – money he said he was only “parking” in the account for a short period of time.

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