North Adams institutes spending freeze

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NORTH ADAMS — The city has instituted a spending freeze across all departments.

Facing projected overruns in two main areas, the city hopes an all-encompassing freeze on nonemergency spending will allow it to finish the fiscal year, which ends on June 30, in the black.

The main drivers of the overruns are health insurance, which is projected to exceed the budgeted amount of $4.65 million by about $200,000, and snow and ice removal, which is expected to exceed its budget of $175,000 by about $140,000, according to Administrative Officer Michael Canales.

By instituting the spending freeze across all departments, city officials hope to have enough left over in those line items to cover the overspending on health insurance and snow and ice removal, Canales added.

Ideally, the city can close out the budget without drawing from another source, such as reserves.

"The only way you can do that is make sure the accounts that do have money, we hold them the best we can," Canales said.

The health insurance overrun is already impacting the way Bernard's administration is planning its next budget.

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The current fiscal 2019 budget projected the city's annual health insurance costs based on the average cost of the previous 12 months. But in the fiscal 2020 budget proposal, unveiled last week, Mayor Thomas Bernard's finance team based its health insurance projection on the costliest of the past 12 months.

Basing projections on the costliest month out of the last year is much more conservative, the theory goes, and more likely to ensure the account won't soar over budget. It's also an approach the city had used before last year.

"That's the approach we are going back to in fiscal 2020," Bernard said.

In the previous budget cycle, the city spent less than the amount budgeted for health insurance by more than $150,000.

Canales noted the volatility when it comes to budgeting for health insurance. Beyond rising premiums, the city's health insurance costs can shift noticeably if even a single city employee opts into a family coverage plan, which costs the city about $20,000 per year.

Spending more than budgeted for snow and ice removal is also typical, and happened in fiscal 2018.

In the new budget proposal, the administration has proposed increasing the allocation for snow and ice removal from $175,000 to $200,000.

Adam Shanks can be reached at ashanks@berkshireeagle.com, at @EagleAdamShanks on Twitter, or 413-629-4517.


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