INSTANT ANALYSIS: 6 Takeaways from Wu Budget Letter & Firestone Budget Memo - CORRECTED
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INSTANT ANALYSIS: 6 Takeaways from Wu Budget Letter & Firestone Budget Memo - CORRECTEDBPI has 6 Takeaways, including that City Hall's deficit can't be solved with spending cuts alone & Corporation Counsel Firestone's claim Council has little ability to stop Mayor's budget
BPI has the letter and memo that were sent to the Council yesterday - read more from the Herald and Globe. While the 2 documents’ apparent goal was described by Herald’s headline - “Boston Mayor Wu tries to quell rebellion, as City Council mobilizes to reject her $4.9B budget due to cuts” - they are not just a blunt threat to the Council. Together the letter and memo have a lot to say about future budget actions and how the Wu administration wants the Council, the press, City Hall watchers, and the wider public to view the budget process. Before getting into the takeaways, it is important to provide the context for these 2 documents: they appear to be a direct response to the pitch that Councilor Brian Worrell is making to his colleagues on the Council. This is not speculation: BPI live-blogged Worrell pitching this idea to his colleagues at the May 1 budget working session. What is Worrell’s pitch? He is making the case that the revenue forecasts in the current FY27 budget are too low, that the Council’s amendment power is too narrow and unwieldy to fix the various problems in the current budget, and that a blanket rejection of the current budget will force the Wu administration to have a wider-ranging budget conversation. Worrell has a way to get the budget changes Councilors want to see: simply reject the entire FY27 budget and invite Mayor Wu to re-submit a budget that better aligns with the Council’s priorities. One last thing about the legal memo before getting into the analysis. Corporation Counsel Michael Firestone’s memo should be read for what it is: a legal analysis written by an experienced political operative who is also an attorney on behalf of Mayor Wu. A memo written by someone with Firestone’s professional experience and background on behalf of Councilor Worrell would likely highlight different language and describe actions and outcomes that aren’t covered in this memo. BPI has 6 takeaways:
1. Boston’s revenue forecasts have emerged as a major bone of contention. Boston’s revenue forecasts have always been conservative, but the Wu administration has underestimated much more than the Walsh administration, and now the fiscal crisis is putting the practice into a new light. First: what does it mean that Boston’s revenue forecasts are conservative? It means that Boston underestimates how much revenue will be raised, giving the City a surplus that can be used to pay any deficits. As you can see from this table, the Wu administration underestimated revenues by a significantly larger margin than the Walsh administration. Not accounting for more than 2% of the revenue the City actually collects in a given fiscal year means the Council - and the public - aren’t being shown a complete picture of what taxing and spending will look like in the coming year. When the budget is growing, that disconnect might not matter. But in a year when a lot of budget cuts are large percentages but relatively small amounts - for example the $724k decrease to Veterans’ budget is a 14% year over year decrease. 2. Mayor Wu’s FY27 budget depends on a “higher revenue assumption” to avoid a deficit. Revenue isn’t the only thing the Wu administration has consistently underestimated: it has also underestimated consistent sources of deficit spending, like police overtime, to a much greater degree than the Walsh administration. Police overtime is the best example. Based on the historic spending pattern, City Hall will spend at least $30M more on police overtime in FY27 than is budgeted.
That means Mayor Wu is providing herself with exactly the kind of “higher revenue assumption to allow for increased spending” that she is denying to the Council. 3. City Hall’s deficit is worse than previously reported and apparently cannot be closed with spending cuts alone. While we have to wait for next week’s Council Agenda packet to be sure, Mayor Wu’s letter appears to announce that City Hall will need its own FY26 supplemental budget appropriation - more Council approved spending - in order to close the $48M deficit announced in March:
Boston Public Schools already decided that it cannot close the $50M+ deficit with spending cuts alone, so the Boston School Committee passed a $22M supplemental budget request on May 6. That supplemental also requires Council approval, but hasn’t yet appeared on their agenda. $18M of BPS’ $22M request is for healthcare costs, so it will be interesting to see exactly what deficits the City’s supplemental budget is paying for. This supplemental budget request also adds an important new element to the FY27 budget: healthcare costs were a major part of both the FY26 budget deficit and the increase in the FY27 budget. Healthcare costs are an expense that sees an enormous amount of time and effort - by City Hall finance staff, outside consultants, and union officials - but who knew what when hasn’t yet been explained. The lack of a budget hearing on either healthcare or the People Operations Cabinet that manages it is shocking, given how important and suddenly volatile the subject is. 4. Wu and Firestone are strongly opposed to returning to the pre-FY23 budget process and believe the FY27 budget can become law even in the face of Council opposition. Mayor Wu’s letter devotes one paragraph urging the Council not to reject the entire FY27 budget and instead to use its amendment power, but Mike Firestone’s entire memo is aimed at making the case that the Council should not return to the pre-FY23 process. Here is Mayor’s paragraph:
Firestone’s memo actually uses the term “April budget” which is how the first budget the mayor produced in April under the pre-FY23 process was referred to:
Under that old system, the “April budget” was always rejected by the Council before the 2nd Wednesday in June. Then the mayor would produce a second budget the “June” or “resubmitted” budget, which included enough changes that Councilors wanted to see in order to assure its passage. That means in this line Firestone’s memo is threatening to not negotiate with the Council - as all prior Mayors of Boston have done - if they reject the FY27 “April budget”. As a reminder, Mayor Wu has seen more than 99% of every budget she has proposed in April become law in June, which is very different from previous Mayors. Under the old system, Mayor’s routinely rewrote several percentage points worth of taxing and spending from the “April budget” for the resubmitted June budget. For example, in FY19 Walsh changed $139M or 4.4% of the budget. 5. Firestone’s memo makes the case that the FY27 budget can become law even in the face of Council opposition. Firestone’s memo details the various ways that the Mayor could get her budget to become law even if the Council is opposed to it:
Why is Firestone so focused on the calendar and timing? One reason is because the Council largely runs by consensus, which means that a single Councilor working on behalf of the Mayor could block action and run out the clock. Durkan’s weeks-long late file blockade is an example of how those consensus rules can force the body to wait days or weeks to take a specific action. Combined with the memo’s line that the Mayor is under no obligation to change her “April budget” if it is rejected, this memo is describing exactly what kind of hard ball the Council can expect if it strays outside the bounds of City Hall’s interpretation of the new budget process. All that having been said, this memo is not comprehensive: it does not delve into how the Council might use the City’s budget rules to get its budget passed. 6. Is 99% of the “April budget” becoming law and Firestone’s vision of a powerless Council what the 2021 Charter Amendment writers - now State Senator Lydia Edwards and now-Boston Housing Authority Administrator Kenzie Bok - had in mind when they wrote the law? Here is Edwards and Bok’s pitch for charter reform - read more from the Bay State Banner:
Edwards added - read more from the Bay State Banner:
Here is what then-City Councilor Kenzie Bok said about the charter amendment shortly after it passed - read more from Commonwealth Beacon:
In 2026 the budget process has become “more efficient” but not in the way that Bok or Edwards described when they were stumping for Charter reform on the campaign trail: Mayor Wu has seen more than 99% of every budget she has proposed in April become law in June. That is a far higher percentage, passed with significantly less back and forth between the Mayor and Council, than the Walsh-era budgets that prompted Edwards and Bok to introduce this reform in the first place. It seems clear that the 2021 Charter Amendment has not produced the change that its authors and advocates promised. Firestone’s memo makes the case that the amendment actually reduces the Council’s power even more than has been seen in the FY23 to FY26 budget processes. Bok and Edwards should give the public an answer: is Firestone’s vision of a powerless Council what they had in mind writing the 2021 Charter Amendment? NOTE: An unedited version of this email went out this morning. This is the correct version. 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.
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