Peabody Finance Committee Budget Update Meeting, May 7, 2026
Peabody Finance Committee Budget Update - May 7, 2026
The Peabody Finance Committee, sitting as the Committee of the Whole, met on May 7, 2026, to receive a budget update from the Mayor. No agenda or minutes were available for this meeting; this summary is based on the raw transcript. The Mayor was joined by Finance Director Mike Jingris and City Auditor Mary Martin, and the only agenda item was the budget update and related revenue proposals.
Budget Drivers and Position Reductions
- The Mayor said the budget is primarily people-driven, with 70-75% of the budget consisting of personnel costs. He will present a budget with fewer budgeted positions than the prior year, including the business liaison position and stipend, though the exact number of reductions was not yet finalized.
- Major cost drivers cited were: health insurance up 11.1%, with the final cost expected between $3.8 and $4.1 million after a two-year union agreement, compared to a possible $6+ million without it; Essex Tech up over $1.25 million, an 18% increase described as the largest ever; retirement costs up over $600,000; prevailing wage impacts on trash operations up over $600,000; and liability insurance up over $100,000.
- The Mayor said that factoring in those drivers alone would mean over a $400 increase before budget reductions and tightening were applied.
Revenue Proposals
- The Mayor proposed a trash fee of approximately $200 per unit, billed quarterly at $50 on the water and sewer bill, projected to raise about $2.7 million. He noted Peabody is the only community in the area without a trash fee or pay-as-you-throw program, and that surrounding fees range from $100 to $500, with Melrose at $432 and Beverly moving to $425. The city has six years remaining on a favorable Republic Services contract, estimated around $2.5 million per year.
- Councilors expressed concerns about the trash fee becoming permanent, its effect on multifamily housing, and the precedent of opening a new revenue stream. The Mayor said it would be brought forward as an ordinance and could be reviewed or changed by the council annually.
- The Mayor also said he will propose a water and sewer rate increase, the first in three years, due to drought conditions that forced the city to purchase expensive MWRA water and to begin planning for SESD.
- The Mayor outlined a senior citizen tax work-off abatement program modeled after Salem, Beverly, and Middleton. Seniors 65 and older, veterans, and their spouses could work up to 100 hours per year from February through October at $15 per hour, earning a $1,500 tax credit per residence. Income qualifications and eligibility rules are still being developed.
- Councilor Welton suggested considering expanding the work-off program beyond seniors and veterans, and asked for comparative data from other cities and clear success metrics.
Property, Water, and Facilities Updates
- The Mayor plans to hire an auctioneer to sell city-owned property and is analyzing which parcels might be sold. The future of the Kylie School was discussed as a longer-term decision for the School Committee; a pre-COVID appraisal valued it at well over $2 million.
- The HQ3 public safety building is on track, with the police and fire departments expected to move in by the end of the calendar year and a ribbon cutting anticipated in late fall or early winter. The existing police station could become school administration and social services office space, saving over $100,000 in rent.
- The Rousselot water rights and land purchase remains under a signed contract at $25 million, contingent on environmental testing. Results are expected by summer. If successful, the water source could reduce reliance on MWRA and potentially allow Peabody to become a water distributor.
- The Rousselot factory site sale to Sandstone Group may fall through; the Mayor said rezoning of the industrial site could become a future discussion.
- The tannery site has been offline for nearly a year and was purchased by New Tray for warehouse use, reducing water usage and eliminating the previous 40B development plan.
- Regarding SESD, the Mayor said Peabody's 38% share was tied to Rousselot being the largest SESD customer and should decline on a three-year average. He called the 300-400% rate increase headline inaccurate and said no city vote was taken.
School Budget
- The Mayor said his school budget proposal is $101.2 million. The School Committee started around $104.9 million, made cuts including four high school teachers and 2.5 administrators, and is now at approximately $102.5 million, leaving a remaining gap of about $1.3 million.
- The Mayor said there may be some room to work with the School Committee, but additional cuts are still needed. Councilor Turko advocated for finding a middle ground to stabilize education.
Other Financial Updates
- On state aid, the Mayor reported that unrestricted general government aid is expected to rise; Chapter 70 funding was revised from $75 per pupil to $140 per pupil for Peabody; and Chapter 90 paving funds increased from a $200 million statewide allocation to $300 million, raising Peabody's share from $1.2 million to $1.8 million. Councilor Rosignal expressed the position that the state is still not doing enough.
- The Mayor announced a new three-year PILOT agreement with Lahey, increasing from $90,000 per year to $99,000 per year. Councilor Manning Martin asked for verification that all PILOT payers are meeting their obligations.
- The Mayor said he does not anticipate returning to the council for a supplemental appropriation for the current year and that revenues are in line with projections.
- On Proposition 2 1/2, the Mayor estimated about $4 million in levy capacity plus about $1 million in new growth, with up to $5 million available to work with. New growth has historically been $1-1.3 million per year. He said an override is not expected in 15 months, and the timeline depends on upcoming decisions including the trash fee.
- Councilor Welton requested an updated affordable housing inventory to assess the city's 40B threshold; the Mayor agreed to provide it.
Key Outcomes
- The council voted to receive organizational charts for every city department, which are part of the city's first Operations and Service Delivery Guide; no opposition was noted.
- No vote was taken on the budget, trash fee, or water and sewer rate increases. The Mayor said those items need to be decided before the mid-June budget vote.
- Next steps include a finance meeting with the Essex Tech superintendent the following week, a school budget public hearing, a presentation of the senior tax work-off program at the May 28 meeting, and distribution of the auctioneer letter for council receipt on Thursday.
Meeting Transcript
Good evening. Going to call to order the finance committee meeting, sitting as a committee of the whole of May 7th. The only item on our agenda this evening is an update on the budget. From that I will turn it over to His Honor the Mayor. Thank you, Madam Chair. Good evening to you. Good evening, Counselors. Hope everybody's doing well. I just wanted to continue our discussion from several weeks ago when we first met to start talking a little bit about the budget. I wanted to provide some additional information, kind of go through some of our work that we've been doing over the last few weeks uh to prepare the budget and uh certainly available to answer any questions. I'm joined today by our finance director, Mike Jingris and our city auditor Mary Martin, and certainly they're available for any questions as well. Um I figured I'd just go through a number of items. Um, Madam Chair, and and then at the end answer questions, or we can break it down into each individual part. But I kind of thought maybe I can just go through a whole bunch of things and then open it up. Is that okay? Yeah, I think that works, thank you. Great. So just in terms of a budget overview, I think all of you know um we've been working with our individual department heads to to look at first uh personnel and then expenses. Uh the expenses just like everybody's household expenses at home, uh heat, gas, water, things of that nature. Uh we've been looking at each budget line item, trying to see where there can be potential savings. Uh we've taken a real hard critical look at um positions um and uh where potential savings where it makes sense. Um the budget is primarily people. Uh I speak to that quite a bit. That um seventy to seventy-five percent of the budget is people. Um people providing top notch services to the residents uh in a variety of different departments. Um, but between salaries and health insurance, uh that's the the bulk of any budget uh for any city or town. Uh then it gets into those other items outside services and um from there. But it's primarily any budget is primarily people driven. Uh so uh I am going to be presenting to you um a budget that has reductions in personnel. Um I'll be presenting I don't have a number just yet. We're fine-tuning it. Uh, but without question, there'll be a budget presented that has less people working uh budgeted positions than the year before. But our budget drivers, I think all of you know, health insurance. I don't want to be a uh broken record, but eleven point one percent increase over last year is significant. Uh Essex Tech is over one point two five million over last year, eighteen percent, the largest increase that has ever occurred uh from Essex Tech is happening this year, eighteen percent. Uh cost of living adjustments which were negotiated through union uh bargaining. Uh that is something that I do have some control over, and I've always been very open that I felt that people that work in the city uh deserve a cost of living adjustment. Um as well as retirement went up over six hundred thousand dollars this year. Uh the trash fee because now we are operating under prevailing wage. Uh there was a significant increase in prevailing wage uh that had as a over six hundred thousand dollar impact on our budget. Uh and then our liability insurance um went up. And liability insurance, just to give a little bit of detail to that. It's like everybody has their homeownership insurance, car insurance. Uh we have insurance on all of our vehicles, our whole fleet of vehicles in every department, all of our buildings, all of our grounds. Uh, we have professional liability insurance as well as cybersecurity insurance. So all of that is under the umbrella of insurance, and uh that went up uh this year, uh well over a hundred thousand dollars. So those are the big budget drivers. Um, and I've said this before with my whiteboard, and I'll be doing that again during the presentation. Before we even look at the budget, uh we factor in those items, those increases, and this year, just between those items, that would potentially be a four hundred dollar increase, over four hundred dollars. And then we start getting into the budget and seeing where we can reduce and tighten things up, and that's what we've been working on now.
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