NORTHAMPTON — A $3 million Proposition 2½ general budget override scheduled for November for the school district is likely to be rescinded after the city received an unexpected jolt of money at the end of the last fiscal year from local tax receipts and “record-high” interest revenue.

Mayor Gina-Louise Sciarra is recommending that the City Council rescind an order approved on June 20 that would have placed the override question on the ballot for the Nov. 5 election. The council is expected to take up the request at a special virtual meeting scheduled for Monday morning at 9.

Even though the order will likely be rescinded for this fall, Sciarra is describing the move as a “postponement,” and she notes in a memo to the council that an override “will still be necessary eventually.”

“While this surge is positive, the fluctuation also underscores the inherent volatility of undesignated fund balances, which is why DOR (Department of Revenue) does not recommend using them for recurring expenses,” the mayor wrote in her memo.

Sciarra described being “pleasantly but quite surprised” to have a highly unusual uptick in fourth-quarter revenues to close out fiscal 2024 that were not anticipated by third-quarter numbers, which were tracking just on target.

“This includes a particularly sharp increase in motor vehicle excise tax revenue as well as higher-than-expected hotel/motel tax revenue, which are heartening indicators of a strengthening economy and a vibrant city that continues to attract new residents and visitors,” she wrote in her memo.

City officials declined on Thursday to provide specific numbers about how much revenue those taxes generated during the fourth quarter, saying they will be unveiled at Monday’s special council meeting.

Additionally, the city has also accrued roughly $2 million in interest from existing cash balances which, combined with the other income sources, has added support to the Fiscal Stability Stabilization fund, which in recent years has been used to fund the school budget. This unexpected money will allow city officials to “monitor the economic trends for the next few months” and “navigate past the presidential election and its associated uncertainties before deciding when the next override referendum should be placed on the ballot,” according to the memo.

The positive financial news comes on the heels of a contentious school budget season in which the city’s schools, after nearly six months of debate, received a $40.7 million budget for fiscal 2025 that is about 8%, or $3 million more, than in fiscal 2024.

The schools had been in line for a 5% increase, but late in the budget process the council approved a mayoral recommendation to transfer $737,556 from the Fiscal Stability Stabilization Fund, along with an additional $200,528 from a newly created Special Education Stabilization Fund and $166,666 from Smith College.

The council at the time also supported placing the $3 million override for the schools before voters in November. Sciarra had said that amount would be necessary to maintain the school budget going forward in coming years.

The override had originally been requested because it was seen as necessary to generate a tax base that would make the $2 million recently appropriated from the Fiscal Stability Stabilization Fund for the Northampton Public Schools budget “permanent and recurring.”

It has been determined that an override is not currently necessary to meet those needs.

“Just as former Mayor David Narkewicz extended the original Fiscal Stability Plan from four to seven years due to higher-than-expected new growth revenues, I am hopeful that I can extend the time to our next required override,” she wrote.

The fiscal stability fund was created with funding from a $2.5 million override approved by voters in 2013 and implemented in fiscal 2015. The understanding was that it would provide predictability along with periodic, planned overrides. It was seven years until the city implemented the next override after voters approved another $2.5 million in the spring of 2020. That override was implemented in fiscal 2022.

The mayor warned earlier this year that in fiscal 2024, “we’ve begun to use more than we’re putting in.”

The Northampton Association of School Employees and others, however, maintain that such an override is not necessary, and that the mayor could instead continue to fund the schools using undesignated free cash it receives each year.

While Sciarra anticipates that the Fiscal Stability Plan will still need regular overrides in order to maintain services, she notes that these overrides will only go into effect “when absolutely necessary,” as “excessively frequent overrides increase the cost of living in ways that are difficult for many residents in the city.”

Alexa Lewis can be reached at alewis@gazettenet.com.