Northampton projects FY26 gap, pushes revenue assumptions to fold $2 million school increase into base

Mayor Scherer and Finance Director Nardi presented the City of Northampton’s fiscal-year 2026 budget forecast at a joint meeting of the City Council, the Northampton School Committee and the trustees of Smith Vocational and Agricultural High School on Jan. 30, saying modest state aid increases and rising fixed costs will force the city to rely on aggressive local revenue projections to meet a committed 4% increase for schools.

The mayor framed the presentation as an effort to “do the work for the people we serve” amid what she called “a new period of uncertainty” about federal funding and other outside revenues. “We are greatly, greatly, greatly pushing revenues,” she said, describing the administration’s approach to folding a $2 million recurring increase for Northampton Public Schools into the city’s base budget for FY26.

Why it matters: Northampton gets most of its general fund from local property taxes, which the presenter said supply about 68.4% of FY25 revenue and are constrained by Proposition 2½ annual growth rules; state aid now accounts for roughly 14% and has trended downward as a share of the budget. That combination, plus rising retirement and health insurance costs, left the mayor and finance director warning that the FY26 plan carries material risk if anticipated revenues fail to materialize.

Key numbers and assumptions - Taxes: 68.4% of general-fund revenue in FY25; real estate comprises about 62.3 percentage points of that total. - State aid: the governor’s cherry-sheet increased net state aid to the city by $375,374 over FY25; chapter 70 (school aid) rose by $205,575 for both districts combined in the governor’s budget. - New growth: DOR-certified new growth added $993,237 to the tax base for FY25; the administration used an $875,000 new-growth assumption for FY26 projections. - FY26 preliminary revenue plan: the city is projecting an overall $4.0 million revenue increase for FY26, of which roughly $1.9 million is expected from real and personal property tax growth (within the 2.5% Prop 2½ cap) and the balance from stronger local receipts (motor vehicle excise, hotel/motel and meals taxes, parking, ambulance revenue, cannabis excise and investment income). - Committed school increase: the FY26 projection includes a 4% increase to the Northampton Public Schools, about $3.9 million in aggregate. - Cost pressures called out: a 10.5% health-insurance increase was used as an estimate (the presentation noted this would add about $1.5 million), and retirement contributions were estimated to rise by $293,985. The mayor said only about $95,497 of the preliminary gap remained after those estimates and the 4% school increase. - Federal funds at risk: officials flagged roughly $1.75 million in federal funding for Northampton Public Schools, $481,000 for Smith Vocational, and about $2.0 million of non‑school city grants and federal funds as potentially vulnerable to changing federal guidance.

Discussion and directions Councilors and school committee members probed the administration’s choice to rely heavily on local receipts and one‑time reserves in recent years, and asked for clearer, apples‑to‑apples comparisons of school and non‑school operating budgets. Several speakers urged a transparent, needs‑based assessment of city department budgets and recommended a formal, joint review of trade‑offs between school services and other city priorities.

Mayor Scherer said the administration has reviewed departmental trends annually with directors and will continue to do so. She described ongoing work to fund additional fire‑rescue staffing (an increase that requires adding eight personnel to meet minimum shift requirements) and said the city is pursuing a federal staffing grant that would phase in personnel over three years if awarded.

The mayor and multiple councilors asked the school committee and city departments to continue collaborative planning through the spring calendar: school districts must submit adopted budgets to the mayor by April 16; the mayor’s proposed FY26 budget is due to the council by May 16; and the council must hold a public hearing and vote by June 30.

Reserves and fiscal stability plan Officials reiterated the city’s reliance on multiple reserve accounts and the fiscal stability stabilization fund (created in 2014) to smooth year‑to‑year pressures. The presentation noted that Northampton’s free cash and stabilization balances were built up in part from one‑time federal pandemic relief and that the city is maintaining a 3–5% free cash target while the DOR best practice recommends 5–7%.

School funding and chapter 70 The presentation showed Northampton Public Schools receives a smaller share of required net school spending from chapter 70 than most comparison communities (about 17% for Northampton Public Schools, the presenter said), leaving the city to cover the lion’s share of local school costs. Trustees and councilors repeated calls for state formula changes and for local advocacy to seek higher chapter 70 funding.

What officials said next Mayor Scherer and Director Nardi asked department heads and school leaders to continue detailed budget work over the coming months and to prepare contingency plans that assume federal grant reductions. Council members asked for scenario analyses that show what the city would do without one‑time federal funds so elected officials and the public can see concrete trade‑offs.

Votes at a glance - School Committee: motion to adjourn moved by Member Agna, seconded by Member Davis; roll call recorded unanimous “Yes” from present members (names recorded in the meeting roll call). Outcome: approved. - City Council: motion to adjourn moved by Councilor LaBarge, seconded by Councilor Elkins; roll call recorded “Yes” votes from councilors present. Outcome: approved. - Smith Vocational and Agricultural High School Trustees: motion to adjourn moved by Trustee Spencer Robinson, seconded by Trustee Bonner; roll call recorded affirmative votes from trustees present. Outcome: approved.

Ending note Mayor Scherer closed the meeting by thanking councilors, school committee members and trustees for participating in a lengthy budget review amid “incredibly hard uncertainty,” and asked the bodies to continue the joint planning work over the spring budget calendar.