Committee recommends CIP appropriations, approves $200,000 short-term rental fund use and the FY26 capital plan as amended

The Salem City Council Committee on Administration and Finance on Wednesday recommended a set of Fiscal Year 2026 capital improvement appropriations and approved the mayor’s FY26 capital improvement plan and five-year CIP (2026–2030) as amended.

The package included a short-term CIP appropriation adjusted to $5,677,457 after the committee struck a duplicate $26,000 line for police license-plate readers; a $48,718 transfer from receipts reserved for the golf course to buy a John Deere Pro Gator; a $689,938 retained earnings appropriation for water/sewer capital projects; a $750,000 transfer from free cash to the short-term capital fund; and a $200,000 appropriation from the short-term rental housing and infrastructure fund for traffic-calming pilot projects.

Nut graf: The committee’s approvals combine several one-time funding sources — free cash, retained earnings, receipts reserved, short-term rental impact fees, and repurposed items — to fund prioritized FY26 capital projects while avoiding or reducing new borrowing.

Short-term CIP amendment: Councilor Stott moved to amend the short-term CIP appropriation by removing a $26,000 duplicate entry for police plate readers discovered during departmental reviews. Committee discussion clarified the $26,000 remains in the police department’s operating budget and should not be duplicated in the CIP; the amendment reduced the short-term CIP total to $5,677,457 and was approved.

Receipts reserved (golf course): Finance director Anna Friedman explained receipts reserved for appropriation are funds collected from golf-course users and that $48,718 will cover the purchase of a John Deere Pro Gator for course operations.

Retained earnings and free cash: The committee approved using $689,938 in water/sewer retained earnings — described by Friedman as “similar to free cash for the general fund” — to reduce future borrowing needs for water and sewer projects. The committee also approved a $750,000 transfer from free cash to bolster the short-term capital fund. Friedman said interest earned on the city’s ARPA grant has also been used to supplement short-term capital resources where lawful.

Short-term rental housing and infrastructure fund: Friedman summarized the city’s local-option short-term rental community impact fee, collected since FY23 under Massachusetts General Laws. The committee recommended appropriating $200,000 from that fund for traffic-calming pilot programs, consistent with the fund’s allowable use for local capital investments.

Revolving funds and FY26 CIP approval: The committee authorized annual revolving funds with total spending ceilings of $3,135,000 and approved the FY26 capital improvement plan and proposed five-year CIP (FY26–FY30) as amended. Friedman noted the sustainability and resiliency energy credit revolving fund has a higher ceiling this year because of credits expected to be reinvested; staff warned that the ceiling may be revisited if projected credits change.

Actions and next steps: Each appropriation and amendment was recommended by the committee and will be forwarded to the full City Council for final votes. Several councilors publicly thanked Friedman and staff for their work producing the CIP and identifying budget corrections.