NORTHAMPTON — The city exceeded its revenue projections by less than 1% last spring — the final quarter of fiscal year 2026 covering a three-month period from April through June — though some of the city’s key revenue streams are seeing a year-by-year decline.
Some of the quarter’s more drastically depreciating revenue streams include taxes collected on cannabis sales, hotels and motels, and building and plumbing inspections, according to Finance Director Charlene Nardi, who gave a presentation to the City Council at its Sept. 17 meeting.
“The city is still financially healthy,” Nardi said in an interview with the Gazette Friday. “We have just pushed the envelope with our revenues, and now we have to look at our expenses … we are coming to a place where our expenses are exceeding our ability to cover them.”
Nardi described the decline in cannabis revenue — from nearly $1.1 million in fiscal 2025 to less than $845,000 in fiscal 2026 — as among the steepest drops. She explained that cannabis tax revenue grew steadily from fiscal 2023 to fiscal 2025, rising from $846,000 to $944,000 before peaking at $1.1 million. In fiscal 2026, that figure fell back to slightly less than 2023 levels.
Noting that the city relies on cannabis revenue, Nardi attributed a growing marijuana market spread out across neighboring municipalities to the plummeting revenue seen between FY25 and FY26.
“Everybody has feelings about cannabis, but speaking financially, it’s a revenue stream that the city’s relied on. For me, that [drop] is of concern,” Nardi said. “Northampton was the first to have cannabis shops, and then other communities around us started getting them, so we’re spreading out the market share.”
Similar concerns, Nardi explained, exist with the city’s hotel tax revenue. Although the city’s $1.07 million collected from hotels and motels in fiscal year 2026 exceeded last year’s revenue projections by more than $95,200, it still serves as a $17,600 decrease from fiscal 2025.
Mayor Gina-Louise Sciarra noted at the council meeting that the decrease was likely caused by last year’s harsh winter serving as an impediment to travel.
Nardi explained that when the city begins to rely on a stream of income and it suddenly shifts, it is a cause for concern. “The more we rely on something, if it starts to be not consistent, that’s a problem for the city,” Nardi said. “Whether it’s investment income, cannabis, hotel, motel, meals, we need to make sure our downtown is thriving.”
Such a trend is also true of the city’s budgeted revenues for building and plumbing inspections, which decreased by approximately $100,000 from the last fiscal year, Nardi said. The city’s meals tax, however, experienced an approximately 10% increase over projections this year.
Downward trending revenue in building permitting, the finance director explained, can likely be attributed to inflationary increases driving up the costs of construction. She explained that the downward trend often corresponds to a decline in new growth, or the creation of new taxable property.
“Building costs are just so high and inflation is just so high — people don’t have the discretionary income and all building materials are just so expensive,” Nardi said. “If people are not building, if they’re not spending their money, new growth is going to drop … 61% of our revenue is from real estate taxes and personal property. If people are not building and we don’t have new revenue, that’s a problem.”
Discussing ways to reverse downward-trending revenue, Nardi said she was hopeful that the city’s new Fiscal Assessment Community Task Force (FACT Force) could find new ways to bring money into Northampton. She also encouraged residents to shop locally.
“Look at your local community to purchase the things that you really want,” she said. “All communities should do that. If you’re going to buy fresh vegetables, go to your farmers market. You want to buy a gift? Go to Thornes. I always want to encourage people to look to their community for the things that they need because it puts your money back into your community.”
