Medford finance director outlines fiscal 2026 revenue estimate, warns of rising costs and uncertainty

Finance Director Bob Dickinson presented a preliminary fiscal 2026 budget overview to a joint meeting of the Medford City Council and the Medford School Committee on March 19, saying the city currently has $28,343,997 in certified free cash and outlining revenue assumptions the administration will use for next year’s budget.

Dickinson said the city closed fiscal 2024 and certified free cash as of June 30, 2024, at $28,343,997, and that retained earnings in the Water and Sewer Enterprise fund totaled $12,653,475. "Free cash as of 06/30/2024 is $28,343,997," Dickinson said. He emphasized that prior-year balances reflected both planned uses of free cash and unexpected revenue: "We had $34,000,000 in free cash, roughly, but we used $14,000,000 of it to fund the stabilization funds," he said.

Why it matters: Dickinson framed the numbers as the baseline for upcoming budget hearings and cautioned that several large, variable factors could change the available revenue between now and final adoption — notably ARPA balances, investment income, state aid and health-insurance costs.

Key points from the presentation

- Sources and near-term assumptions: Dickinson said local receipts are estimated at $21,500,000 for fiscal 2026 and that the city’s current projection for net state aid (the so‑called cherry sheets, per the governor’s initial proposal) is roughly $22,358,418. He flagged an investment-income assumption of $2,500,000 but said that level is unlikely to recur, because high interest earnings in 2024 reflected unusually large cash balances and temporarily high rates.

- ARPA and excess local receipts: Dickinson told the panel that a substantial part of the unexpected excess local receipts in 2024 came from unspent American Rescue Plan Act (ARPA) funds sitting in the city bank account and generating investment income. He said, in effect, that those 2024 investment gains are not a reliable baseline for 2026 planning.

- Levy limit and new growth: Dickinson summarized the Proposition 2½ levy computation and said the assessor’s certified new-growth estimate is $2,200,000; the administration plans to treat some formerly pilot‑paying properties (a Mystic Valley/River’s Edge project) as new-growth on the tax rolls, boosting levy capacity over time.

- Cost pressures: Health-insurance costs are a major uncertainty. Dickinson said officials "have been told that health insurance is going up by probably 10%," and noted some municipalities reported 15–20% jumps at a recent municipal finance conference. He warned that long-term trends in health care, workers’ compensation settlements and negotiated contract steps could create a gap the levy and new growth may not fully cover.

- Reserves and one‑time vs recurring expenses: Dickinson described the city’s approach to separating capital and operating costs, keeping long-lived assets (for example vehicles) out of operating budgets and preferring free cash or other nonrecurring sources for capital purchases.

Questions and next steps

Councilors and school committee members asked for additional detail. Councilor Lemming asked whether the city could provide a year‑by‑year summary of federal funding; Dickinson and staff said they would compile a current snapshot and that the single audit and the finance department’s spreadsheet will provide the larger numbers. Councilor Callaghan moved — and the council later approved — a request for a breakdown of local receipts for fiscal 2023, 2024, the FY25 estimate and the FY26 estimate; Dickinson said finance will send the presentation and follow-up numbers to the council.

School Committee Member Graham thanked the administration for holding the joint session and framed the briefing as a transparency step: "We collectively, as the elected officials in Medford are proactively asking for this information and getting this information," Graham said.

The budget timeline the presenters described calls for continued meetings with department heads, a school budget hearing the week of March 24, a final city submission in May and an overall deadline around May 30 for materials to be ready for council review. Dickinson repeatedly cautioned that the governor’s cherry‑sheet proposal is only an initial figure that may change through the legislative process.

Votes at a glance: - Joint rules (motion to waive reading and approve joint rules): Motion by Councillor Callahan; second by Councillor Rosaro; adopted by both bodies (City Council: unanimous yes votes recorded; School Committee: 7 yes, 0 no). The motion adopted the joint rules for the meeting and moving forward. - Request for local receipts breakdown: Motion by Councillor Callaghan; seconded by Councillor Rosario; City Council vote recorded as 6 yes, 1 no. The motion requests Director Dickinson provide a breakdown of local receipts for FY2023, FY2024, the FY2025 estimate and the FY2026 proposed/estimated figures.

What's next: Finance staff will continue weekly updates to revenue estimates, meet with department heads through April and deliver detailed documentation (including the requested local‑receipts breakdown and the fiscal 2024 audit documents) to councilors and committee members ahead of May budget actions.