The Sarno Administration announced its plan to subsidize property taxes for the 2024 fiscal year thanks to an updated investment plan for city assets. Interest rates have climb significantly in 2022 as the Federal Reserve fought the highest inflation since 1982. As a result, the 1-year United States Treasury rate has climbed from 0.40% at the start of 2022 to well over 4% in 2023.
The administration, working in partnership with City Councilor Attorney Michael Fenton, who has worked closely with CAFO TJ Plante, will invest approximately $45 million from the city’s stabilization reserve account into safe, high yield Federal Treasury Notes, with a Return on Investment (ROI) of approximately $2 million by the end of the current calendar year with an interest rate of 4.676%. This total return on investment will be directly dedicated to providing continued tax relief initiatives and program.
Initial Investment | Principal Payment | Interest Payment | Total Payment | Total Return |
44,991,171.65 | 46,843,000.00 | 188,682.50 | 47,031,682.50 | 2,040,510.85 |
The City of Springfield is believed to be the first community in the Commonwealth to utilize this unique and innovated approach to provide continued and sustainable tax relief for residents by taking advantage of the high federal interest rates.
Mayor Sarno states, “Since taking office, one of my administration main focus and priorities continues to be practicing sound fiscal management policies that have brought us back from the brink of bankruptcy to having the highest bond rating in the city’s history, with a healthy reserve that prepares us for any unforeseen emergencies. This is a safe and prudent plan that we have researched and been working on for some time. With interest rates as high as they are, now is the time to take advantage and advance this beneficial tax relief initiative for our residents and business community. Springfield is believed to be the first community in the Commonwealth to utilize this unique and innovated approach. I want to thank City Councilor Attorney Michael Fenton for working with my administration on this innovated plan. Thanks to the efforts from my award-winning finance team, led by CAFO TJ Plante, and Treasurer/Collector Stephen Lonergan my administration will be able to utilize the return on our investment to continue to fund sustainable tax relief initiatives and programs, not one-time relief measures.”
CAFO TJ Plante stated, “We have always tried to be strategic with our investments and now we have a rare opportunity to generate significant revenue by investing in Treasury Notes. We are at the perfect time with the percentage of the yield being the highest in decades and having cash to invest, to be able to create a funding source for tax relief for our residents.”
City Councilor Attorney Michael Fenton said, “This is a shrewd, inventive, and unprecedented way to provide tax relief without spending a nickel of city reserves. I suspect this announcement will attract attention from across Massachusetts, the region, and the country. Over the last decade Springfield has emerged from bankruptcy to leading the region in fiscal prudence. Today, we reap the literal profits from over a decade of sound financial management.”
Councilor Maria Perez thanked Mayor Sarno and his administration for working together with herself and Councilors Tim Allen and Michael Fenton. She spoke positively about how this investment will benefit our residents by dedicating the approximately $2 million from the return on investment directly in to tax relief for residents.
