At the start of the fiscal year Chelsea had $32.4 million in free cash, the surplus the state certifies each fall for a city to spend on one-time needs. By the end of this one, the City Manager told the council in March, it will be about $5 million. That is the frame around every spending story of 2026, and the city put it in writing.
The climb and the fall
Fidel Maltez’s March 23 update laid out the run: $14.9 million entering FY22, $17.1 million entering FY23, $20.2 million entering FY24, $33.8 million entering FY25, and $32.4 million entering FY26. “Free Cash has steadily grown since the pandemic,” he wrote. Free cash comes from revenue above projection and spending below budget, and for four years Chelsea had both.
This year it has neither. Local receipts are running about $2 million below the estimate. Snow cost around $1.5 million, most of it charged to free cash. The city fears FEMA will deny its second appeal on roughly $1.3 million of COVID-era food distribution costs, which would land on free cash too. The capital plan before the council draws $8.2 million. And in January the council moved $10 million of free cash into stabilization accounts, $7 million into one and $3 million into another, which is prudent and also gone.
The FY26 free cash ledger in the same packet pencils in the year-end deficits the city expects to cover: snow $1.5 million, FEMA $1,264,011.85, 911 $500,000, fire overtime $400,000, and a $2.5 million draw labeled “Balance the Budget.” The projected balance on June 30 is $5,280,494.60.
What the money bought
The ledger also shows where the FY24 surplus went in the two months after it was certified: fire and E911 salary deficits, year three of a five-year police body camera contract at $171,354 a year, a MUNIS software upgrade, and the draw to balance the FY25 budget. In 2026 the list is longer and more visible: $745,000 to reimburse Enterprise Rent-A-Car’s site work, $53,000 for the Denver trip, $625,000 for the teen center, $300,000 each for a library rooftop air conditioner and a police locker room, $950,000 for snow, and $48,000 in decade-old Eversource bills.
Why it matters
Free cash is what a city uses when something breaks. A $5 million balance on a $272 million budget is under 2 percent, which is the low end of what the state’s Division of Local Services considers healthy and well below what Chelsea has had since the pandemic. The five-year forecast the administration produced in February, which we reported here, shows structural deficits beginning in FY28. Free cash is the cushion between now and then, and it is being spent.
The state will certify the FY27 free cash figure this fall. That number, more than any vote the council takes this year, will say how much room Chelsea has.