Ways and Means hears FY26 budget preview as officials flag $88M surplus and rising public-safety costs

Boston City Council Committee on Ways and Means Chair Brian Worrell convened a Feb. 27 hearing on the city’s preliminary budget outlook for fiscal year 2026, where city finance officials described a strong year-end position but warned of recurring pressure from public-safety overtime, legal payouts and other fixed costs.

The administration reported that fiscal 2024 closed with about an $88 million surplus and a $177 million revenue surplus largely driven by investment interest and excise taxes, but said much of the overspending came from public-safety overtime and court-ordered payments.

“I think we agree the City is in a good financial position,” Ashley Grafenberger, chief financial officer for the City of Boston, told the committee. Grafenberger joined Budget Director Jim Williamson for the presentation.

“the bottom line, we had an $88,000,000 surplus, which is roughly 2% of expenditures,” Williamson said, summarizing year-end figures and explaining how surplus revenue converts to free cash after state certification.

Why it matters: The surplus gives the city flexibility going into FY26, but the administration warned that recurring liabilities — notably police overtime, court judgments and pension and health-care cost growth — will drive next year’s expenditure pressures. Committee members pressed administration officials on which balances are reliable and which are volatile.

Key points from the presentation and Q&A:

- Revenue drivers and free cash: Williamson said FY24 revenue exceeded budget by roughly $177 million, with interest on investments the primary driver. The administration noted interest is less predictable because it depends on the interest-rate environment. The city’s most recent free-cash certification was cited as about $515 million; total fund balance was described as roughly $1.8 billion.

- Public-safety and execution-of-courts spending: Officials said required public-safety spending and court-execution costs produced much of the year’s deficit in appropriations. Williamson and Grafenberger broke the $89 million of FY24 overspending into components the administration presented as roughly $70 million for the Police Department, $15 million for the Fire Department and a $19 million deficit tied to execution of courts; in a follow-up exchange Williamson also referenced a $24 million figure when asked for clarification. The committee requested department-level breakdowns of court-related payments.

- Police overtime and staffing: Members and administration officials repeatedly discussed police overtime. Williamson reported $43,500,000 in Boston Police Department overtime expenditures through Dec. 31, 2024. Councilors raised a staffing shortfall — described in the hearing as roughly 30 fewer officers than a year earlier — and asked how hiring and academy class planning would affect overtime going forward. The administration said it is working with police management on class sizes, occupational-health initiatives to reduce injured-on-duty leave and collective-bargaining changes that affect deployment.

- Pensions and other long-term liabilities: Williamson said Boston’s pension plan is “over 80% funded” and that the city’s annual pension contribution is in the neighborhood of $400 million; he said the city expects to be on schedule to fully fund the unfunded liability by about 2028 and then shift focus to retiree health (OPEB). He added the city has increased the frequency of actuarial reviews to annual.

- Education funding: Councilors asked about Boston Public Schools financing. Committee members and the administration said the city covered an additional contribution to BPS last year (committee discussion referenced an $80 million supplemental amount last year) and that the schools had proposed roughly a $50 million increase for the coming year that the administration currently anticipates the city will support; the administration said final numbers will be confirmed as the budget process proceeds.

- Mandates and operating pressures: Councilors raised unfunded state mandates, including a recently enacted mattress-recycling requirement discussed as a new, unfunded expense. Williamson provided a FY24 figure for waste removal of $62.4 million and deferred mattress-specific detail to the streets cabinet. The administration said it has not received state funding to cover the mattress mandate.

- Federal funding uncertainty: Councilors asked how potential federal funding cuts would affect the city. Grafenberger and Williamson said most federal dollars the city receives are earmarked and targeted to specific programs (for example, certain public-safety preparedness grants, CDBG and Title I for schools, and HUD funds for housing). The administration said it would monitor any actual federal changes and rely on reserve levels to respond if a reduction materializes.

Committee requests and next steps: Councilors requested department-level breakdowns of execution-of-courts spending, mattress-recycling costs and details on amendment implementation from prior budgets (which several councilors said they had asked to see for the last three years). The committee was told the mayor must submit the FY26 budget by April 9 under state law; council review and action will follow in May and June.

Members’ concerns included the precision of revenue forecasting (interest income is volatile), the human impact of sustained police overtime on officers and neighborhoods, and the need for clearer tracking of council amendments so the committee can confirm whether funds approved by the council were spent for their intended purposes.

Ending: The administration emphasized preserving core services and maintaining reserves; the chair closed the hearing and scheduled continued budget oversight as the FY26 process proceeds, with formal submission of the mayor’s budget expected April 9.