Mayor Gary Christenson’s Budget Letter to Malden City Council

Mayor Gary Christenson’s Budget Letter to Malden City Council

Presenting the FY2026 Municipal Budget Proposal

Dear Members of the City Council,

I am pleased to present the Fiscal Year 2026 budget for your thoughtful review and consideration. Let me waste little time in getting to the heart of the matter.

Year after year of trying to do more with less is finally catching up to us, and we have reached a point as a community where we must identify additional significant revenue or be faced with making extremely difficult decisions relative to service delivery and costs.

This year’s budget uses the last of the ARPA funds at our disposal in the amount of $3.2 million, PLUS an additional $5.2 million from free cash. Looking forward to what this means as a starting point for next year would tell anyone that this is simply not sustainable, yet these increases simply fund ongoing government operations at their current service level. There are no new initiatives, no staff additions, and school spending is at the minimum level required by law.

I have been Mayor for almost 14 years now, and in that capacity have become used to the realities of the limitations of our local finances. As a largely developed urban city, the opportunities for large-scale transformational development are virtually non-existent. We are overly reliant upon property tax revenue growth to fund ongoing cost increases.

Throughout much of this time, we have had the benefit of low-inflationary environments, which have helped contain costs in many areas, from health insurance to wage growth and everything in between. This combined with the recognition that Malden must ‘do more with less’ has allowed us to operate with balanced budgets while largely protecting our rainy day fund (free cash). However, the post-Covid inflationary environment is simply wreaking havoc on municipal budgets, which aren’t setup to be able to accommodate these types of cost increases. You have heard this from many of our surrounding communities, and we are not immune from these pressures.

This year’s budget finds several significant factors adding to an already fragile budget and creating a problem that will require some significant action to chart a more predictable course. The multi-year trend in double-digit Health Insurance increases continues, with a 17% increase in premiums for active insurance plans for FY2026. Our consultants tell us this is expected to continue as the costs of everything from nurses to weight-loss drugs and everything in between drive health insurance costs higher. Our team is looking at every available option to contain these costs while providing our employees with quality health care. Any potential mutually beneficial changes would not yield dividends until the next annual budget.

On the education front, our schools continue to see benefits from the Student Opportunity Act (SOA), which has increased both Chapter 70 Aid and the amount we as a City are required to contribute. I’ve covered in depth the lack of equity in the school funding formulas and won’t belabor that point here. However, this is certainly a significant factor in the structural deficit. Make no mistake about it, SOA has provided valuable additional funding to our schools, while putting additional pressure on an already out-of-balance local contribution requirement.

We must be aware of the impact of the end of SOA in FY2027 and the difficulties school districts will face in adjusting to a ‘new normal’ with annual increases returning to norms at the same time that contractual obligations have been locked in well above these levels.

Additionally, this year’s budget carries an almost $1 million cost associated with the NE Voke school building project. While of course much needed to provide a quality education to the students who attend from Malden, this additional burden is significant for Malden and simply adds to an already difficult budget situation.

The coverage of the challenges we face would not be complete without covering a couple of important components, despite whatever discomfort comes with recognizing them. First, numbers don’t lie. Malden generates fewer tax dollars per dollar of assessed value than all but two gateway cities. Put another way, our blended tax rate is lower than the norm, the average, and just about every other gateway city. This may present itself in different ways in each community on the residential rate side depending on the ability to shift the burden to the commercial side.

The realities of Prop 2 1/2 have ensured that absent overrides, communities are set to stay in a tight band from where they started. Consider Malden as compared to Everett, Fall River, Taunton and New Bedford. All four have assessed values at or below that of Malden, yet on average, they generate $39 million more in tax revenue! This sits at the very foundation of our challenges.

Where to from here? Immediately upon the conclusion of this budget, it’s my intent to work with the City Council to establish a working group to look holistically at the structural deficit to chart a course for the future. Everything will need to be on the table. That we are not alone in this predicament is of little consolation.

We must identify a solution that works for us as a community, and do so taking into account the great knowledge of this community that we possess. It’s difficult to predict the future, but we can see some things coming, and that will play an important part in trying to develop a long-term plan to address the current structural deficit.

Respectfully submitted,

  Mayor Gary Christenson