The Boston Municipal Research Bureau regularly offers analysis and updates on city finances. The bureau, an independent and business-backed organization, last week released a memo on the fiscal 2024 budget, which went into effect in July. The following is a condensed and edited version of that memo.

The City of Boston’s FY24 General Fund budget strengthens basic, essential city services and operations—investing in education, public safety, and infrastructure. Driven by projected increases in revenue from property and excise taxes, the $4.3 billion budget is $276.9 million, or 6.9 percent, more than the FY23 budget.

As this budget plans more spending for core city services and improvements in other departments, the City must carefully monitor revenues, especially new growth revenue, and abatements. Because of increased office vacancies and an uncertain commercial real estate development market, property tax revenue might not be as strong as in past years of booming growth.

Additionally, state aid net of state assessments continues a long downward trend, as state assessments levied on Boston have increased more than state aid received. Net state aid is budgeted to decrease $12.9 million, or 9 percent, from FY23. These figures will change to $11.1 million, or 7.7 percent, based on changes in the final state budget.

On the spending side, eleven unions have yet to settle contracts, and seven more contracts are set to expire in FY24. One of the biggest unions, the Boston Police Patrolmen’s Association, has filed for state involvement, which might result in even higher costs, as has occurred in past arbitration cases. The International Association of Firefighters, Local 718, have reached a tentative agreement with the City.

Where the money comes from
The City’s primary revenue source, the property tax, is expected to be $3.1 billion. The City estimates the amount of property tax revenue driven by new growth at $60 million. At 39.3 percent less than the $98.8 million in budgeted new growth revenue in FY23, this conservative estimate accounts for economic uncertainty and is the same as last year’s initial budgeted amount of $60 million.

State aid is budgeted to increase by $5.1 million, or 1 percent, from FY23. The state budget was finalized after the City budget, so these figures do not reflect additional aid from the final state budget. Excise tax revenue is projected to increase by $102.6 million, or 67.8 percent, from FY23, driven by a rebound in room occupancy excise, aircraft excise, and meals excise, following decline during the pandemic.

Due to the strength of local revenue, the FY24 budget does not include American Rescue Plan Act funding for revenue replacement, unlike the past two fiscal years.

Where the money goes
Boston Public Schools’ $1.3 billion budget (not including health insurance) makes up 30.6 percent of the City’s budget. Even as student enrollment has continued to decline, the BPS budget increased by $75.8 million over FY23. This includes additional investments in strategic priorities, such as inclusive education, multilingual education, and equitable literacy. BPS also expects increased costs for salaries, facilities, and transportation.

A $9.1 million, or 2.3 percent, increase in the Police budget is intended to fund a recruit class to replace projected attrition, provide community listening sessions, and support the Youth Connect program, among other expenses.

The Operations Cabinet budget increased by $7.1 million, or 13.7 percent, from FY23 to support maintenance of city property and add staff in Public Facilities, Property Management, and Inspectional Services. Other notable departmental increases include $3.8 million for Boston Public Libraries that will enable expanded library hours, and $2.6 million for Parks and Recreation to support maintenance improvements and recreation planning. The City projects a large increase in the number of city-funded personnel—464.7 full-time equivalents (FTEs) by January 1, 2024. About half of the growth comes from BPS and Police.

Pensions are projected to increase by $36.7 million, or 10.4 percent, in order to maintain the City’s funding schedule; it is on track to fully fund its unfunded liability by 2027.

Boston’s $4.2 billion five-year capital plan represents a 15.2 percent increase over the prior plan, continuing a multi-year trend of increasing plan growth. There are 69 new projects planned, including energy retrofits in Boston Housing Authority buildings, a study and design to consolidate the Shaw and Taylor schools, a reserve for Green New Deal for BPS projects, and initiatives to calm traffic and make streets safer.