OMB flags $4.5M general‑fund gap, partial hiring freeze and reserves to cover shortfall

The Finance Committee heard an October monthly financial report showing emerging fiscal pressures and measures intended to hold the budget in balance.

Shannon McHugh, executive director in the Office of Management and Budget, told the committee the city is currently showing a roughly $4.5 million projected deficit in the general fund, with primary pressures coming from IT (about $2.5 million in overages), debt service and higher self‑insurance costs. "As of October, we're seeing a little bit of spending pressure in a variety of items," McHugh said. She said medical/self‑insurance is running high and identified an anticipated $1.8 million overage for that fund this year.

To mitigate pressures, McHugh said the administration has instituted a partial hiring freeze, scrutinizing discretionary hires while preserving public safety and revenue‑generating positions. She also noted reserves — a $1.4 million expenditure reserve and a $1.7 million labor reserve — and $3 million in state aid set aside to help the budget. McHugh warned that some Board of Education line‑item projections (tuition and transportation) can look large early in the year due to timing lags for reimbursements and that more accurate numbers will be available next month.

Committee members asked about prescription reimbursements (McHugh said those revenues are large, "tens of millions," and stay in the medical fund), vacancy‑driven salary savings and whether towing/booting for tax collection had resumed (it had not). The committee expressed support for the administration's approach to control discretionary spending while preserving essential city functions.

Next steps: OMB will continue monthly reporting and work with departments to identify targeted savings; the committee will review more detailed Board of Education figures at the joint education‑finance workshop scheduled later in the week.