Wu asks to tap city reserves to cover $70 million budget shortfall

Boston Mayor Michelle Wu submitted a letter Monday to the City Council, asking the body for permission to dip into the city’s “free cash” reserves to close a budget deficit.

The mayor said the city needs $47.1 million for the operating budget — mainly to cover the winter’s snow plowing, plus $22.8 million for Boston Public Schools. It’s the first time Wu has asked the council to approve such a measure in her five years overseeing the budget.

“Even as revenues have come in at or above target in this current fiscal year,” Wu explained, “historic snowfall levels in early 2026 resulted in a deficit in the snow removal budget that surpassed what could be managed through standard adjustments.”

There is currently just over $600 million in the city’s so-called reserve fund. Wu emphasized this is a “one-time” expense in response to “extraordinary” circumstances; like many Massachusetts cities, Boston overshot its snow removal budget this year.

But looking ahead, the city also is projecting a 1% budget gap for fiscal years 2028 and 2029 — to the tune of $50 million for each of those years, according to Boston's Chief Financial Officer, Ashley Groffenberger.

City councilors are currently working through an amendment process for the mayor’s proposed fiscal 2027 budget of $4.9 billion. That represents a 2.1% increase over the prior year, with deep cuts to grant programs and some city departments. Some councilors have explored rejecting the budget outright, urging the mayor to increase funding, which she said she would not do in a letter last week.

The city has until June 1 to close the $47 million deficit, which was originally expected to be more than a million dollars higher. Across the board, the city faces rising costs — dominated by police overtime and health insurance premiums, driven largely by coverage of GLP-1 weight loss drugs. Coverage will now be limited.

Councilor Ed Flynn said he needed time to look into the issue before he would decide on how to vote and criticized Wu for the city’s financial position.

“It's clear that we have challenges in the city budget, I believe,” he said, “based on lack of fiscal discipline and fiscal responsibility.”

The city introduced spending controls in December — namely, delayed hiring and spending freezes — which escalated in March. Groffenberger said the city plans to maintain some level of spending cuts through June and into the next fiscal year, though she didn’t offer details.

Still, Boston’s on “solid financial footing,” Wu wrote in Monday’s notice. Earlier this month, Boston touted a AAA bond rating from S&P Global Ratings for the 13th straight year.