Fortune tellers

Budgets require a balance between needs of departments and fixed costs

Rich Viscay sits angled between a flat-screen computer and an old-school calculator tapping out Salem's budget numbers as an R&B tune floats from the radio.

It's 2 p.m. on a May day, and the city's finance director is camped out in his sunny third-floor City Hall office with school business manager John Danizio. The two toss sums back and forth. Currently, Danizio is trying to get Viscay to agree that snow and ice removal funds can be cut from the school district's budget and absorbed by the city. Viscay spends a few minutes pretending not to listen, then acquiesces.

It's like this every year, and the scenario is pretty much the same in every town and city: Viscay meets with department heads and other numbers people - as do his counterparts in other municipalities - and tries to get the bottom line to add up. Competition is fierce and involves lots of haggling.

Figures are punched into a computer spreadsheet. The calculator's keys click-clack frequently.

"Obviously, revenues and expenditures have to be equal for a balanced budget," Viscay says. "People think we can tax, tax, tax. Well, we can't."

Answers aren't easy. Even the Magic Eight Ball on Viscay's desk isn't providing much help. When shaken, the hazy blue water reveals an ambiguous message: "Cannot foretell now."

On this day, the estimated fiscal year '09 revenue row reads $121,025,751. Expenditures have tallied at $123,612,638.

The rows must match soon. Mayor Kim Driscoll has filed a proposed budget to the City Council for consideration, and the public will have a chance to comment on the city's financial plan.

But right now, when the numbers are still being hashed out, it's not an easy process, even for a self-professed bean counter. Before Viscay can start doling out money to meet departments' needs, he has to account for Salem's fixed costs, which include health insurance, retirement assessments, Medicare, unemployment costs, pension payments and debt repayments.

All told, those necessary costs equal $37,875,459 - or just under a third of the coming fiscal year's projected revenue.

Every municipality must deal with the same thing. In Haverhill - a city with about 20,000 more residents than Salem - fixed costs total $58.8 million. That's about 40 percent of the total revenue amount approved by Haverhill's mayor, according to city budget documents.

Viscay has been working Salem's numbers since at least January, and today he's putting together a five-year forecast to present to the City Council.

Driscoll says she appreciates the dedication and long hours Viscay puts in; even when she e-mails him at 11 p.m. with a budget question, the finance director delivers a quick reply.

"It's really worth it to put in the extra time now, asking those questions and playing out the best case and worst case scenarios," Driscoll explains. "At the end of the day we have to live within our means even if we don't like it."

As he taps away at the calculator, Viscay says he's not sure how he'll massage matters to come up with the rest of the money city departments have requested for the year - maybe through some as-yet-unidentified new revenue, such as a higher harbormaster fee; maybe through bidding out another need, like the city has done with its trash service.

Chances are no one will get everything they want - in Salem or elsewhere.

With the economy hurting and gas prices rising, anything that can be hacked out of a community's budget has to go. In Malden, Mayor Richard C. Howard recently delivered a stark budget message, saying no department would be getting more money this year, and he hopes to implement a pay-as-you-throw trash fee to help raise revenue to close the city's budget gap.

"It's very difficult," said Malden's treasure-collector, Frank Vacca. "Cities and towns are very restricted in terms of revenue generation, and most cities and towns that I am aware of are pretty much at the limit. And it's hard to live within the means when gasoline is going up . . . 2.5 percent just doesn't cut it."

In Salem, the fiscal crunch means the city won't be fulfilling requests for things like new computers - especially if the old machinery can hang on for another year.

And because they knew money would be tight, Driscoll says she and Viscay issued an edict early on in the budget process: "No whining . . . we've got to make this work."

Even so, coming up with funding solutions is akin to asking parents to pick which child they favor most, and Driscoll says she's often telling department heads, "Look, it's not that we don't like you or that we don't like that project . . . but this is how much money we have."

So, how does Viscay do it?

"Basically you sit with departments and you go through their budget and you make hard decisions . . . this is a tough budget year," Viscay says. "You don't want to lay off someone to send another to training, even though that training might help them do their job."

That's why being the finance guy during budget season isn't popular, Viscay says. You rarely get to give good news.

This go-around is even harder, he adds, because of a multimillion-dollar deficit in the school district's current budget that auditors discovered several months ago. The shortfall has been blamed on bad bookkeeping and underestimated monetary needs.

"We're really trying to restructure the school budget so the expenditures actually match the appropriations," Viscay says. "They can't have $46 million of expenditures with a $43 million budget."

One thing's for sure: Viscay will be looking around to see what neighboring municipalities are doing and how much they're charging for whatever they provide.

"You always go around and check your local communities . . . your Beverlys, your Lynns," Viscay says. "You never want to be the lowest [fee being charged]. You really don't want to be the highest."

Whatever happens, Viscay knows he'll hear from taxpayers who think they pay the city too much for services like trash pickup. But, as Viscay explains, some fees don't cover what it costs the city to provide some services. For instance, Salem pays about $3 million to the company it contracts to haul garbage. Fees for the service generate only about $750,000 in revenue.

And that's why he and other finance officials usually have to get creative when figuring what their cities can live without for a few more months.

"Pay me now, pay me later. We're paying later. Most communities are," Viscay quips. "I haven't called anyone and said 'Hey, guess what: We're giving you more money.' "

Maybe next year - then again, looking at that five-year forecast, maybe not . . . cannot foretell now.

Erin Ailworth can be reached at eailworth@globe.com.