Dept. of Revenue certifies City of Everett’s free cash

Special to The Advocate

EVERETT – Mayor Carlo DeMaria is pleased to report that the Department of Revenue (DOR) recently certified the City’s free cash in the amount of $25,105,861. Free cash is a revenue source which results from the calculation, as of July 1, of a community’s remaining, unrestricted funds from operation of the previous fiscal year. It includes actual receipts in excess of revenue estimates and unspent amounts in department budget line items, plus unexpended free cash from the previous year.

For the last several years, the City has retained well over $15 million in free cash, showing that the City is proactive in its fiscal management, something that bond rating agencies, bond buyers and the DOR all look favorably upon. The city strives to follow Massachusetts Division of Local Services (DLS) best practices, which recommends a city’s reserves total 5-10% of the operating budget. This year’s free cash of $25,105,861 represents 9% of the Fiscal Year 2024 (FY24) general fund operating budget of $288,621,894.

“I am pleased to report that free cash is over the $25 million mark,” said Mayor DeMaria. “Our diligent and conservative approach to revenue forecasting, our sound fiscal management of expenditures, and our financial reserve policies have served us well and have allowed us to retain our secure financial position and a AA bond rating with Standard and Poor.”

This year the impressive amount of certified free cash was a result of conservative budgeting by Mayor DeMaria and his administration as well as appropriation “turn backs” by City departments. Diligent collection of tax titles also helped to boost the amount of certified free cash. One aspect of free cash comes from higher than anticipated revenue collections in such accounts as motor vehicle excise taxes, license and permit fees and meals taxes.

In addition to contributing to free cash, these increased revenue streams are also a good indication that the City is moving forward with new development and that the local economy is picking up. Licenses and permits, which were estimated at $1,300,000, came in over $4,500,00 – a clear indication that developments are thriving in Everett. Meals taxes were more than $1,300,000 higher than anticipated, showing that local restaurants and shops are benefiting from an increase in business.

As part of the FY24 budget process, Mayor DeMaria continued abiding by his prudent Financial Reserve Policies, which set forth specific use of free cash as a funding source for the City’s reserve accounts. These policies state that 50% of the certified free cash can be appropriated to various reserve accounts, including the Stabilization Fund, the City’s Other Post-Employment Benefits Liability (OPEB) Trust Fund, and the Capital Improvement account.