Town meeting is four weeks from tonight, and depending on who you listen to, we’re anywhere from $230K to $300K over the “cap” — that’s the magic number we need to come in under if we want to avoid a Prop 2-1/2 override vote.
Reaching the cap would still leave residents with about a 4.6% increase on their tax bills next year. That’s an increase many town officials have said is too high. To get down to the 2% tax increase Selectmen have said they’d like to see, another $900K in cuts would have to be made.
So what now?
The Board of Selectmen meet tomorrow night to talk about just that. In a statement in the Metrowest Daily News, Selectman Bill Boland praised the school committee for trimming $420K from the K-8 budget last week, but said they’ll likely have to cut more. In the same article members of the Advisory Committee said they’re working on two sets of budgets to present at town meeting – one that represents a 4.6% increase, and one with more cuts for a 2-3% increase.
But some in town have suggested something a bit more radical. In a comment on this blog last week, Selectman John Rooney proposed passing a budget in excess of the cap at town meeting. That would force the town to hold a Prop 2-1/2 override vote at the ballot box in May. Rooney wrote in his comment:
Some in town have aimed toward getting the budgets down to obviate the possibility of an override. I do not. I believe it is time for the town to go to the ballot box and either agree to a substantial tax increase in excess of what Proposition 2 1/2 allows, or reject the way we operate. The ballot box is the primary means by which the will of the people affects the behavior of the government in a democracy. Given that we are about to impose a substantial tax increase, I am in favor of proposing a budget in excess of the cap so as to let all of the residents vote.
Others in the same comment thread have discussed what would happen if Town Meeting decided not to approve any of the proposed budgets.
The common theme for many this year appears to be a belief that the town is operating under an unsustainable business model. After several years of cuts and tax increases, some taxpayers and town officials are suggesting this is the year to do the difficult work of fixing what’s broken.
What do you think? Do you believe things are broken and need to be fixed? Or should we continue on the way we have in the past? Share your thoughts in the comments.
Many of you have heard me complain (or whine) that we have an unsustainable and broken business model. I would like to explain what I mean by that. The statement centers on 3 observations
1. The Cost of Local Government is rising faster than Personal Income
From 2006 to 2010 the cost of our government rose 16.3% during the same period personal income (the source of the vast majority of tax revenue) in Mass. rose 10.8% meaning that local government was taking an ever increasing bite of the taxpayers’ disposable income. Many of us open our property tax bills with dread wondering how much more we will have to pay this year and wondering if it will ever stop. In the last 3 years personal income growth in Mass had been flat. Social Security recipients received no increase in 2010 or 2011. Even Federal employees are experiencing a pay freeze.
Far and away the largest cost of local government is labor costs. For better and worse our employees live in an environment where regular wage and salary increases are the expectation regardless of performance, prevailing economic conditions, or productivity. The same is true for the costs of health care where not only are we locked into very expensive plans we cannot change but the employees share is very modest by private sector standards.
2, Unfunded Obligations
It is no secret that our pension and retirement obligations are underfunded. Some estimates suggest that the total underfunding of these obligations for all state and local governments in the US could be as high as $3,000,000,000,000.00 (Yes, $3 Trillion).
Some on these pages have suggested that public sector employees fund their own retirements with an 11% deduction from their pay packets. Regrettably you cannot put together a realistic scenario where that sum of money will fund a retirement given the current rules. We are collectively on the hook for the balance and we have not been making those payments but rest assured we will. Forcing us to chose between funding schools, roads and safety and retirees.
Further, we provide our retirees with health insurance and many of our public workers are entitled to retire at 55. While adopting Chapter 18 would provide a onetime relief we are still on the same inexorable heath care cost spiral.
The brutal reality is that is it fiscal suicide to promise our employees that they can retire as early as 55. In what rational universe can someone work for 30-35 years and then expect to be carried by society with a good income and health care for another 30? The parallels with the Auto Industry should be sobering for all parties.
3. Broken Budget Process
CEO’s are often criticized for only caring about the next quarter or 2 but every company that I have worked for also has a long term plan that guides where they are investing and not investing, growing and not growing. Our budget process never looks beyond the 4 quarters immediately in front of us.
This myopic view of town operations carefully avoids any controversial issue that can’t be resolved in a few weeks. The process is fundamentally bottom up and designed to assume that we will do what we have always done the same way we have always done it and to suggest any change is considered heresy or at least we are too busy to talk about it now, maybe next year.
We are not alone State and Local governments across this country are facing these same issues. The fury in Wisconsin, Ohio, Indiana, and Idaho is but the tip of the iceberg and only one of an array of possible responses. We have a choice as well but it has to start with telling the many fine people that work for us the truth. The world has changed and as a result the world of public sector employment will be changing. There is no other option that is available. If we continue to stick our heads in the sand we will only be prolonging the pain and making it worse.
Al, I may be a bit wrong, but if you check with PERAC, the commonwealth has established four groups that cover all state and municipal employees. Group 4 covers police officers, firefighters, corrections officers. This group is allowed to retire on an 80% pension, which is the maximum, at the age of 55 and after 32 years of service. Less years means less pension. This group was established by the commonwealth due to the fact that these occupations are inherently dangerous, are physically and emotionally highly stressful, and have the highest death rates at younger ages. Most in this group won’t be around in 25 years to reap the benefits you speak of.
First I do not want to make light of the real challenges of being a firefighter or police officer. Both are dangerous jobs.
The Social Security Actuarial Tables calculate that a Man at age 55 will on average live to 81 and a women to 84. That is 26 to 29 years.
There are 2 points I was trying to make. The first point I was making is that a deduction of 11% of pay is not enough to fund a pension for that period of time. I tried to make the numbers work and the money always runs out well before the expected life span. (Sorry, any time you get involved in an actuarial calculation it is a little gruesome.) It is the tax payers that are on the hook for the difference and we have not been setting aside the money to cover this obligation at an appropriate rate. This will lead us to a crisis in the future.
The second point, which I know is controversial, is that retirement at 55 is fiscal insanity. Yes, the occupations you cite are dangerous and physically demanding. So are the professions that put food on our table and a roof over our heads. Logging, Farming, Ranching, and a number of building trades are all physically challenging and more dangerous professions than being a firefighter or police officer according to the Bureau of Labor Statistics. Retirement at 55 is not an option for any of these professions.
It is because I respect teachers, firefighters and police officers that I think we owe them the truth. The truth, as far as I can see is. The deductions from your paychecks are not enough to fund your retirements. The sums to fund the difference have not been set aside in adequate amounts. There is no plan to set aside an adequate amount.
Public sector workers view their pensions and retirement benefits as an iron clad guarantee. They plan their financial lives around them. So did the Auto Industry retirees. They ran into the reality that the economic assumptions that made their retirements promises feasible did not come to pass. I fear that we are on the same path.
Al and John, If there is one group and one group only I agree with a 55 year old retirement and 32 years in it is the police. It is absolutely true the stress is horrible. I bet even in our little town. I dont think any other public sector employee should get this benefit. And they should not be rpotected from being fired at all. No one. And as far as the benefits we are paying to them all, it all has to go away and now. As I have siad it is an unsustainable business model. We are broke and can not pay for it. We can not afford even a $200 tax increase to pay for teahcers days off for professional development, their retirements and their medical insurance. And for the unioins and the treachers who work for them. At this time, they know, we the parents and tax payers, can not get rid of several underperformaing and out right arrogant teachers in the systm now. Because of job protection by the unions. It has to be addressed. I am certain, if the system is replaces, and teachers negotiate on their own, great or better teachers will perform and earn more than the underperfomring and troublesome teachers that simply can not be fired. We are experiencing this hugely at ARHS with teachers who sluff off parents, dont return calls, dont return emails, and are arrogant when challenged with concerns by parents, princilples that know how to appease parents and guidance counsleors who dont want to rock the boat. It is horrible. And they know they have most of the parents by the throat because the grades they issue and hold dominion over decide where a student goes to college. It all has to be dismantled.
I have posted to the Advisory Committee website a set of detailed draft budgets that first suggest how we might get within the tax cap by bringing essentially all controllable budgets down to a 2% increase and then implementing a lower rate of increase in warrant expenditures. An additional step is to propose keeping the tax increase to 2% by refunding $832,000 of the communications lawsuit settlement money. The draft and its development details can be found here: http://southboroughadvisory.shutterfly.com/26/612
Using the tools provided in these models it is possible to quickly see what would be necessary to achieve lower levels of spending growth
I will not defend every line of this draft, or even much about this approach, but then again, it is sometimes useful to see what kind of solution is necessary, even if some of the details are sure to change along the way.
No one appreciates your tireless efforts on our collective behalf more than I do. Your commitment to Town Meeting and open government is remarkable. But it is with the greatest respect that I have to ask the following question:
Why in the world should taxpayers and citizens be satisfied with yet another tax increase that takes more of their disposable income in return for less service when there is never any meaningful consideration of control of labor costs, productivity, reallocation of public resources or strategic consideration of the set of services offered by our government?
Why shouldn’t they just say NO go back and start fixing the broken system instead of applying patch after patch after patch.
I have been trying to ensure that Town Meeting attendees feel they have the information resources they need in order to act as truly reflects their will. I regard such service as more assuredly valuable than my opinion.
If Town meeting attendees want to vote “No” as you suggest, they don’t need any more information to do so. If they want to vote for lower taxes than the first draft I offered, then either I will provide, or Advisory will provide, a set of budgets that show what a zero tax increase might look like, but note that any citizen can download the budget spreadsheet and make any budget that they want to propose.
Despite this effort on my part to provide information as lubricant, I think most of us are operating on the theory that Town Meeting in raising taxes has been doing exactly what Town Meeting attendees want to do. If there are different views in Town, they don’t show up to vote, frustrating as that might be to you, Al. Therefore until we need a large Prop 2.5 override we won’t know if there is a different view held by a different, larger, set of voters here. That year will come, eventually. Until then the best thing to do is to ensure that taxes are not increased unnecessarily in order to fund high cash balances in Town accounts, such as, this year, in the overlay reserve.
I for one am grateful for your tireless efforts to provide accurate information about the budget process. But, we don’t decide in a vacuum and I for one would value your opinion, in public or private, you have changed my mind on a number of occasions or at least made me stop and rethink some of my dumber ideas.
I don’t think it is a good idea to try to redo/reduce the budget in an ad hoc way on the floor of town meeting, I think a lot of town meeting members are very hesitant to take that approach. In effect they are willing to take the deal worked out in advance rather than take a chance on some wild change which will be resisted by the powers that be with penny dreadful tales of no gas for the fire truck or ammunition for the police. That is the reason why I support just saying NO. It tells those who are more knowledgeable about the details of the budget and town operations to go back to the drawing board and come up with a better proposal. It is a blunt instrument.
I am also well aware that I am tilting at windmills. Town meeting has mostly accepted the status quo and seems happy to let taxes rise indefinitely . Until we different set of attendees or the current regulars change their minds, little if anything will change, we will get the government we deserve.
In the past few years your knowledge and your ability to “tell it to the people” as you have done it in small groups –I was able to hear you speak at Woodward last year–has not only enlightened me but has changed my mind and my way of thinking.
How about getting some small groups together before the town meeting and meet at the library? We still have a month.
Anyone know what the outcome was regarding recent teacher’s union contract?
By the way, Al, I second your question above:
“Why in the world should taxpayers and citizens be satisfied with yet another tax increase that takes more of their disposable income in return for less service when there is never any meaningful consideration of control of labor costs, productivity, reallocation of public resources or strategic consideration of the set of services offered by our government?”
I think they are still negotiating
For those following the budget deliberations, Advisory Committee met last night and continued its work on the budgets. The current state of its planning, not yet concluded, can be found now on southboroughadvisory.com. A summary is as follows.
The committee first agreed on a set of appropriations that would fit within the tax cap when using only a typical amount of money from the Overlay Reserve fund. This created a set of budgets that fall within the ongoing taxation authority of the Town.
The committee then decided to recommend refunding one half the remaining tax overpayment which sits in the Overlay Reserve account (originally collected to protect against the risk of the communications industry abatement lawsuit). This would leave the remaining half to be refunded next year, if not needed for the Northborough lawsuit. The refund would come as a reduction in taxation for debt repayment, a non-discretionary obligation. This reduces the tax rate without distorting the picture of how much money is available within the tax cap.
At this point the implied tax increase was 3%, an amount that a majority of the committee felt was still too high. The committee then decided to consider further pro-rata reductions to get the tax increase down to 2% and see what that looked like. The committee discussed exempting several spending line items from such pro-rata reductions and voted a list of such to be exempt. It then calculated that a further 1.4% in reduced increases applied to all the spending lines that it did not exempt from such cuts, would be needed to bring the tax increase down from 3% to 2%. It decided then to adjourn, so that these results could be considered before potentially voting them, or others, as recommendations, probably on Monday.
The net of all these reductions combined is that, at the 2% tax increase under consideration, the K8 school budget would be reduced by about $253,000 from the current level requested by the School Committee, and would be up 0.8% vs. the 2.1% requested, and the combined municipal budgets and warrants would be reduced about $189,000 from the level most recently requested by the Board of Selectmen and would be up 4.2% over last year, compared to the 5.9% increase requested. The exact numbers for each budget at this planning stage, can be found by downloading the spreadsheet from the website above and looking on the AdvisoryAutoCut tab.
I’ve been reading the posts on this forum (thanks Susan!), various articles, etc., and I think it’s time that I got my own perspective out there, nebulous though it feels.
Probably best to toss out a few observations with the hope of eliciting discussion… first all, I like a comment made by Al Hamilton, I believe, a bit earlier in the thread–what we’re doing now is cutting out paperclips from the budget. I agree that we need a top-down reevaluation of our funding mechanism, and that we need to make some big decisions around physical plant, personnel, and salary/benefits packages. I look forward to a healthy dialog about how this can take place.
I think any discussion around municipal budgets ought to presume a 0% salary increase for all employees for at least the next year or two. Many of us have lost bonuses, salary increases, and jobs in this economy, and precious few of us have gotten raises from our current positions. If any municipal employee is unhappy with a 0% increase, they are fine to seek employment elsewhere at their perceived true market value. There’s a huge market of talented prospective employees who would love to work for Southborough at the salary and benefit levels we currently offer.
This is not a slam on our teachers, firefighters, police officers, municipal employees at all–simply a truism of the economy.
While I’m thinking of it, much ado has been made on this board over the big concessions that our non-teacher unions have made regarding health care contributions. Am I wrong or is it 25% on the municipal side and 20% for the teachers? I’m not saying the imbalance is fair–but let’s work on fixing that small discrepancy rather than sabre rattling. What we can agree on, I hope, is that all town employees enjoy a benefit/retirement package that is both enviable and unsustainable. How do we fix that?
We’re in current contract negotiations with all of our major unions. I may have misread this, but I believe Dr. Gobron is on record stating that his best guess is that the teacher’s union negotiation results will not require additional budget supplement from the school side. I’d imagine that means he’s got a number in mind, and has built that increase into the budget. What number might that be? If it’s more than zero, I’m unhappy…
I’ll circle back to my appreciation for the teachers and the work they do. This is not about overall performance, it’s about our ability to pay them.
I do think, salary negotiations aside, that the school budget is probably as low as it can be without layoffs. Does anyone doubt that? I’d be interested in hearing that rationale. So…school side is as low as it can be without layoffs–and let’s stipulate the same thing is true on the non-school municipal side (I’m not as convinced of this, but fine).
Our elected school committee is unanimously saying they won’t advocate a [further]staff reduction in the schools. Our BOS is saying that they won’t advocate any staff reduction in the non-school departments under their control (at least it looks like that from the budgets they’ve endorsed). My observation is that we’ve elected our School Committee (I believe I’ve personally voted for each and every member of the committee), and that they think the schools are as lean as they can be, staffwise. Agree or not, these folks were elected to manage a huge portion of our budget, and they’ve drawn that line.
In the past, a majority of townspeople have stood by the School Committee–either by electing them, or supporting overrides when override failure would cost the schools funding. It looks like we’re heading there again. Much has been made about the “show up and vote down the budget” effort, which would most affect the schools (look at John’s post above–under Advisory’s current recommendation, a .8% increase against a 2.1% recommendation for the schools; for municipal, a 4.2% increase against a 5.9% suggestion.)
Who’s worked harder to reduce budget?
Also, harkening back to my earlier comment regarding salary increases (and again, I think they need to be zero for this round, sorry folks)…I believe Dr. Gobron has built some number into the schools’ budget, but my cursory read (I hope I’m wrong and please correct me) is that the municipal budgets have no such provision built in, another disparity in comparison.
I am a strong supporter of Mr. Rooney, though it looks as though we’re differing on this one. I’d also add that there are a lots of folks on this forum who loudly disagree about school policy–whether that’s funding, class size, numbers of schools, numbers of computers, activity fees, etc. The School Committee recommends how to spend two-thirds or so of our budget–by that number alone, it may be our most important elected group. Run for office, get elected, and make your voice heard!
OK. A few other points and I’ll fade into the background for a while…I’ve read lots about increasing class size, but no serious discussion about limiting Transfer Station Hours, Town Hall Hours, Library Hours, Senior Center Hours, etc… I guess that’s to be expected given that the Schools occupy such a big part of the budget, and it’s very easy to say “just add a few kids, close a building, let them use older books and computers…” I for one am not at all convinced the solution should be that easy.
One more thing about the school budgets–it’s usually instructive to pull out the state-mandated special needs dollars (including transportation) from the rest of the school budget. We can’t control that amount, it’s risen lots over the past years, and we have to pay it…though who knows what would happen if we whacked into that budget, too?
Finally, to echo what my friend Al Hamilton has said repeatedly: we have an unsustainable model here, and we have to have a rigorous and candid analysis of how to fix it.
John Butler has designed an excellent Excel spread sheet that can produce the affect of any or every suggestion that is made regarding budget amounts. This tool has allowed the Advisory committee to fine tune every element of the budget in response to the various budget scenarios and then calculates the affect it has on the tax rate. The serious discussions regarding transfer station hours, town hall hours (already reduced), senior center hours etc. were discussed or considered by the department heads in their budget negotiiations with Selectmen or Advisory. Making cuts in the budgets you refer to would do little to solve the overall budget issue.
Thanks to everyone for engaging in this forum. These are tough issues and require some tough decisions. I agree that we are working on an unsustainable model and major changes are needed.
One area I believe would help the taxpayers to understand the financial picture would be to have a better understanding of what our revenues are, how dollars are allocated, budgets that are requested with details and actual expenditures. I know people will state that all this information is available, but frankly, it is presented in a very confusing and many times “biased” way making it very difficult for the average taxpayer to make sense out of all the information.
Seems like it might time for a detailed external audit review line by line of all of the major budgets, including schools. An audit team should sit down with department heads to document expenditures in requested budgets and compare against actual spending. the results of this process should be made public as these are public funds.
Some will say we have no money (understandably) to spend on such a review, but I think it would be well worth the expenditure to help develop a common footing for all and a beginning of a road map for the future of our town. Our past and current approach doesn’t seem to be working.
There is a lot of information at the Advisory Committee website: southboroughadvisory.com. The main document is the current draft budget which includes the current position of both the Advisory Committee, as it is developing, and the Board of Selectmen. It is an excel spreadsheet available for download. It is not biased, in that it has everyone’s bias. However, I admit it is a bit like drinking from a firehose, especially at first.
State law requires audits of both the Town and the Schools and those are carried out annually. Audits however do not focus on efficiency or necessity of spending, which seems to be more what you have in mind.
Thank you for the tireless work that the Advisory Committee puts into this process every year and for taking the time to engage folks on this forum. Appreciate the volumes of information on the Advisory Committee website. It is helpful but somewhat intimidating.
You are correct that my point was more about efficiency and necessity of spending. There are lots of numbers on the various spreadsheets and budget requests but no real explanation as to why these expenditures are needed or the consequences that will happen if they are not approved. Many times there is too much emotion/rhetoric which clouds the actual facts and figures. Thanks for trying to keep the facts and figures as the prominent issue.