TODAY AT 10 AM: 6 QUESTIONS ABOUT $70M REQUEST TO CLOSE FY26 DEFICIT
tahir h
TODAY AT 10 AM: 6 QUESTIONS ABOUT $70M REQUEST TO CLOSE FY26 DEFICITCouncil has hearings on $47.1M City Hall supplemental at 10 AM and $22.8M supplemental at 2 PM
Today the Boston City Council is holding back-to-back hearings on Mayor Wu’s request for $70M in supplemental appropriations to close the FY26 budget deficit:
The morning hearing in particular is extremely important. That is because the Council and public know virtually nothing about the City Hall deficit. That lack of knowledge about what is going on in City Hall stands in stark contrast to the deficit at Boston Public School, which was driven primarily by healthcare, salary & benefits, and transportation. Thanks to BPS leadership’s frequent and detailed updates to the School Committee - particularly from CFO David Bloom - the size, timeline, and response to the FY26 deficit is much better understood. 2 of the 3 issues behind the BPS deficit - healthcare and salary & benefits - appear to also be issues at City Hall, but to what extent is unknown because City officials simply haven’t provided much explanation of what happened. The lack of understanding about what drove the FY26 deficit at City Hall means it still isn’t clear how - or even if - the FY27 budget addresses those issues. BPI has 6 questions for today’s hearings that seek to get a clearer picture of what happened in FY26, and what it means for Boston’s larger fiscal crisis. Here are the questions, and keep reading for more on each one:
1. WHAT IS THE FULL AMOUNT OF THE OVERSPENDING ON LINE ITEMS & MISSED REVENUE FORECASTS IN FY26? The City has reported $160M in overspending and missed revenue goals:
This $107M number at City Hall seems incomplete because it does not include overspending on health insurance. BPS is reporting $18M in overspending on health insurance, and BPS and City Hall are on the same health care plan, which means overspending in BPS very likely means there is also overspending in City Hall. City officials have also repeatedly referenced health insurance costs as driving Boston’s FY26 deficit, for instance in Mayor Wu’s letter to the Council requesting the $47.1M supplemental appropriation - p. 8 of 05.20.26 Agenda Packet:
The truncated list of revenue sources in that list and City Hall’s apparent decision to leave out their own health insurance costs raises questions about what other costs were left out. 2. CAN THE CITY LIST THE SPECIFIC CUTS THAT WERE MADE IN ORDER TO SAVE $39M FROM “CITY DEPARTMENTS” AND “FIXED COSTS”? Going back to the chart about the FY26 deficit provided by CFO Groffenberger, it also appears that City Hall had underspent in 2 very broad categories, with large credits for:
The amount of money the City was able to stop spending in FY26 is staggering, especially given the difficulty the Council is having right now moving around significantly less money in the FY27 budget. Exactly how those cuts were carried out has not been explained. At a hearing held on the FY26 deficit with CFO Ashley Groffenberger and others back on March 23rd, the City repeatedly declined to provide details on spending cuts. Here again, BPS has been much more clear about how its savings were achieved. Here is what BPS did in response to its deficit - read more in the Boston Herald:
BPS leadership also explained these cost cutting measures at a Council hearing held on the deficit back on March 2nd - read the transcript. 3. HOW MUCH MONEY DID CITY HALL OVERSPEND ON HEALTH INSURANCE IN FY26? “The spike in health insurance costs for City employees” was cited by Mayor Wu as a major factor in the FY26 deficit, but only a partial figure has been provided to the Council. That partial figure is again from BPS, where overspending makes up the lion share of the supplemental being discussed at 2 PM: $18,087,750 out of the $22,845,672 total. BPS pays its own employee health insurance costs because of state laws and city charter requirements, but its employees are part of the same health insurance with the rest of the City’s employees. That means overspending in BPS very likely means there is also overspending in City Hall. 4. WHEN DID FINANCE CABINET OFFICIALS FIRST BECOME AWARE OF OVERSPENDING ON HEALTH INSURANCE? City officials have offered conflicting accounts of when exactly they became aware that Boston faced a serious deficit in FY26. According to Mayor Wu’s letter that accompanied the City Hall supplemental appropriation, the first cost controls were put in place in December 2025. BPS leaders produced slide decks and gave testimony that they first instituted cost-controls on November 8, 2025. According to Boston Public Schools CFO David Bloom, he first became aware of possible overspending on healthcare long before this past November. He told the Council at a March 2nd hearing he first became concerned about health insurance costs in the summer of 2025 - 1:29:07 mark:
This timeline from Bloom tracks with what municipal healthcare experts told BPI: Boston should have been aware of issues with its health insurance number early. 5. WITH THE ACTUAL HEALTH INSURANCE COSTS IN FY26 TAKEN INTO ACCOUNT, WHAT IS THE REAL YEAR-OVER-YEAR INCREASE IN HEALTHCARE SPENDING IN FY27? Increased health insurance spending accounted for a large part of both BPS and City Hall’s budget growth in FY27, but now with new health insurance costs for FY26, those year-over-year increase numbers should be lower. As a reminder, here is what Mayor Wu wrote in her budget letter:
What is not clear from the budget hearings so far is how BPS’ $18M of new health insurance spending in FY26 affects those year-over-year increase numbers. 6. CAN THE CITY TELL THE COUNCIL THE LAST 3 TIMES - INCLUDING THE AMOUNT AND YEAR - A SUPPLEMENTAL APPROPRIATION WAS SUBMITTED TO CLOSE A BUDGET DEFICIT? This $70M in combined supplemental appropriations to close the FY26 appears to be historic: it is not clear when the last time a supplemental appropriation was even submitted, let alone one so large. It appears the last time Boston submitted any kind of supplemental appropriation to close a budget deficit was 2008. That means that based on BPI’s own review, Mayor Walsh’s did not submit one in FY15, when Boston got a historic amount of snow, and Mayor Menino did not submit one during the Great Recession. Boston Policy Institute, Inc is working to improve the public conversation - help us by following BPI on YouTube, TikTok, Facebook, Instagram, Threads, Twitter, and LinkedIn.
© 2026 Boston Policy Institute, Inc
|
