Chelsea’s Own Forecast Shows an $18.6 Million Deficit by 2031. The Pages Were Scanned Sideways

Chelsea’s budget balances this year and next. After that, according to the city’s own five-year forecast, it does not. The table the administration handed the City Council in February projects a $7.2 million gap in fiscal 2028, $12.4 million in 2029, $15.4 million in 2030 and $18.6 million in 2031. Nobody has reported those numbers, and there is a reason. In the council packet posted on the city’s website, the four pages that contain them are scanned in sideways, and the computer-generated text behind them is gibberish. We rendered the pages, turned them upright and read them. Here is what they say.

The numbers

The forecast is dated February 17, 2026 and marked draft. It covers the general fund, city and schools together. Revenue grows from $261.7 million this year to $294.4 million in fiscal 2031. Spending grows from the same $261.7 million to $313.0 million. The difference is the deficit line, which the spreadsheet labels SURPLUS (DEFICIT): zero in 2026, zero in 2027, then (7,242,436), (12,424,287), (15,351,437) and (18,636,555).

The two lines that drive it are the biggest ones. Education spending goes from $153.8 million to $184.1 million, about 4 percent a year. Public safety goes from $33.6 million to $41.0 million. On the revenue side, property taxes rise at the Proposition 2½ pace plus new growth, and the forecast assumes new growth of just $1 million a year through 2029, rising to $1.25 million after. Chelsea booked $1,002,862 in new growth this year; the City Manager’s spring presentations put that at the lowest level in a decade, down from about $4 million in fiscal 2022.

The state aid line

The forecast letter, signed by City Manager Fidel Maltez on February 18, says Chapter 70 school aid “will increase only 4% for FY2027, as compared to the 5% and 6% increases experienced over the past two years.” The table behind the letter shows something smaller. Chapter 70 goes from $130,754,505 to $131,350,567, an increase of 0.46 percent, and then is assumed to grow 2.5 percent a year. The Cherry Sheet total, all state aid combined, rises 1.47 percent in fiscal 2027. One line does jump: charter school tuition reimbursement, up 39.83 percent to $4.24 million, which is the state partly offsetting the $2.6 million more Chelsea is sending to charter schools.

The letter blames the enrollment drop. Chelsea Public Schools lost roughly 350 students this year, and under the state formula that shrinks the aid the Student Opportunity Act would otherwise have delivered. Superintendent Almudena Abeyta told the council’s Ways and Means committee in June that she expects enrollment to fall again in 2026-27.

The one-time money that runs out

Two revenue lines explain why the deficit appears in 2028 rather than now. Interest on the city’s cash, which came in at $3.1 million this year, is forecast at $4 million in fiscal 2027, $3 million in 2028, and $750,000 a year after that, as rates fall and the balances shrink. And the forecast balances fiscal 2027 with about $2.75 million of free cash, then zeroes that line out from 2028 on. The city has been telling the council since March that free cash, which started the year at $32.4 million, would end it near $5.3 million. Once it is gone, the structural gap is exposed.

Debt service is flat at about $3 million. The forecast does not assume any new borrowing, any new union contracts beyond the pattern already set, or any change in health insurance beyond trend.

What the council did with it

The forecast was written for the February 23 meeting, which was canceled, and came to the council on March 2. The letter says “this evening, we are excited to present our 5-year financial forecast” and offers Deputy City Manager for Finance Paul Sagarino to answer questions. The minutes record the item as accepted and filed under suspension of the rules on a motion by Councillor Calvin Brown. No presentation and no questions are recorded. Three months later the council adopted a $272.4 million budget for fiscal 2027 by an 11-to-0 vote after a public hearing that opened and closed at 7:36 p.m.

The letter is frank in its own way. It calls fiscal 2027 “a very difficult budget year” for the schools, says the city “must prepare for a more challenging fiscal landscape ahead,” and describes Proposition 2½ as “a measure imposed with good intention” that “creates significant challenges to the City’s budget.” Its answer is growth: “The strategic expansion of the City’s tax base provides additional revenue to fund services and infrastructure improvements, securing the City’s fiscal health with less reliance on residential tax increases.”

Why it matters tonight

Nearly everything on tonight’s agenda is a piece of that answer. The administration wants to hire a Chief Economic Development Officer, outside the adopted budget, to chase the new growth the forecast assumes at $1 million a year. It wants 20-year and 30-year solar contracts that it says will save money on the city’s own electric bills starting in fiscal 2028, the first deficit year. The master plan going to the Planning Board this month names four growth areas and says plainly that the city needs the tax base. And the housing ordinance the council fought over all spring was, in the City Manager’s telling, about the same $18.6 million.

A five-year forecast is a planning document, not a prophecy. Chelsea has produced one for years and has not run a deficit. But this one says the current path does not close, and the council accepted and filed it without a recorded word. The four sideways pages are worth turning upright before the next budget season starts. We have posted our transcription of the summary table below.

FY27-FY31 Financial Forecast Summary, as of 2/17/2026

Selected rows; charges for services, licenses, fines, federal aid, general government, public works, health and human services, debt service, other and capital projects are omitted from this excerpt but included in the totals.