This week was budget voting week in City Council. As you’ve read in the paper, I stirred the pot a bit with two actions: proposing a Prop 2 ½ override, and blocking the rubber-stamping of the mayor’s proposed budget.
Some of you are probably wondering what the heck I’m doing proposing an override. I’d like to explain. I want to control costs and I don’t want to raise taxes. However, I think a more important mission is ensuring the education of our kids. The school budget has depended on state and federal money to operate for the last couple of years. The election year federal ARRA stimulus money is now gone (no surprise) and the state has increased their contribution by only about 1 percent. With this drop in revenue and the increased costs associated with labor contracts, benefits, and operating expenses, the school faced a huge shortfall. The mayor was able to cover some of it by holding back money that could have gone to other departments (police, fire, public works, etc…) In total, the school department’s increased costs were larger than all the new revenue in the city budget – and that includes the withdrawal of $1 million from our stabilization account. The sum is all the other departments in the city had to take a loss in order to balance the budget. Even with this extra money, the schools were still short, so they ended up having to pre-pay some expenses, drain their tuition accounts, and schedule lay-offs. They won’t have this money next year and there is no sign that the state or federal governments are going to fill the gaps.
So, the common question is “why not cut expenses?” In the case of schools, where would you cut? The student/teacher ratio is already pretty high. The schools are “level 3” which means they are not keeping up with state educational expectations. There is a new set of standards that have to be implemented. Facilities are in poor shape. Educational materials are behind the times. Student fees are already keeping many needy kids from fully participating in activities.
One obvious option is to just slow down the rate of growth and eliminate some of the costly clauses in the labor contracts. This makes sense, but it’s proven almost impossible. I’m not picking on union members or making any comment about how much we all appreciate their efforts. This is about basic math. We can’t spend more than we take in, and we already have a ton of deferred obligations that we haven’t started paying for yet. It’s that simple.
The unions are well organized in Massachusetts and the politicians who negotiate and vote on these contracts are beholden in many ways to the members of the unions. There is no pressure to make substantial concessions or to rework contracts with such options as “for all employees hired after such and such a date, the deal is different”. The negotiating teams do their best to represent their positions. They know that the City Council and the public have little control over what happens.
So, if we can’t control the expenses, and the schools look like they will need about $2-$3 million next year just to stay even, I thought we should give the citizens the right to vote on an override. If you look back at what happened a couple of years ago, the threat of having an $800,000 school budget cut meant massive cuts in sports, arts, music, libraries, foreign languages, and specialists. What would a $2-$3 million cut do? Our schools are already “level 3”. Cuts of this magnitude would be devastating not only in the short-term, but in the long-term lives of the kids who are supposed to be getting a good education. I thought the public ought to have the option of supporting an override, and at least been given the opportunity to have this issue top-of-mind as we go through the next few months. Other councilors felt differently. The motion failed to get enough votes to be presented to the voters. These underlying problems will likely fade from public discussion until next year’s budget is presented. If you’d like to help, please put pressure on the School Committee, Mayor, and City Council to come up with a budget and plan well in advance of next year’s deadline. Ask for a multi-year budget. Ask for costs to be detailed. Make proposals to reduce costs or improve performance.
The other issue is the blocking of the vote on the Mayor’s budget.
Some people have asked “why”? In my opinion, the Mayor’s budget did not address the long-term underlying issues with the city’s finances, and the Mayor has refused to allow the Council to participate in helping control the spending. The City Council has the option to make cuts to the budgets, but the options were really very limited, and the Finance Committee and City Council as a whole ending up not making any recommendations for cuts. In order to help control the growth in expenses, we need to participate in the labor agreement budgetary approvals. The Massachusetts General Law gives us that power, but the mayor has refused to give us the option.
MGL 150E section 7B requires the Mayor to request appropriations for cost items contained in labor contracts within 30 days of negotiation. If the City Council does not approve these specific appropriations, the Mayor and labor organization need to renegotiate and resubmit their appropriation request. This procedure allows the City Council to be a critical part of the process, follows our concept of checks-and-balances, and it gives the Mayor a little more leverage when negotiating. It also requires someone to actually calculate the specific cost items and make them public. These are actual dollars – not vague statements like “it’s only 1 percent” or “zero salary increases”. There are a lot of hidden or subtle costs associated with these contracts. There are a lot of add-on costs (city portion of taxes, pension, and benefits), deferred costs (sick days or other forms of paid time off), and other specific clauses that drive costs, such as overtime. Having these calculated and disclosed before we approve the contracts would be a good thing. In order to give all parties time to do their job, this process should ideally take place months before the annual city budget gets created and submitted. So, instead of having the Council rubber-stamp the Mayor’s budget, I thought it was important to make a statement that all was not hunky-dory in budget land. I knew that if we didn’t vote, the Mayor’s budget would automatically take effect. Since there were no cuts by the Council anyhow, the results are the same.
By the way, when the Mayor was a Councilor in 2009, he complained about these very same issues. If you look on his website under the “Truth in Budgeting” section, you’ll find a letter to the public that details many of the same issues I’ve been discussing: lack of participation in labor negotiations, lack of approval of expenditures, giving raises we couldn’t afford, not giving the Council time to review and negotiate budget items, drops in state and federal aid, stripping of expense accounts, no coherent plan from the administration, and lack of long-term planning. This is nothing new. The problem is its three years later, and we’re still in the same position – except that annual costs are higher and the debts and obligations have grown considerably.
Some have asked “why couldn’t you have reduced the line items for salaries or individuals?”
City Council cannot cut specific salary line items. If we cut the department total salary line item, it likely would lead to layoffs of employees with the lowest seniority – not the renegotiation of the underlying contract as discussed above.
Layoffs are not good for anyone. They affect morale and our ability to hire great people. There is an added burden of unemployment insurance which means we have to cut more than the budget gap. They usually lead to the termination of the employees with the least seniority. That usually means more individuals headcount-wise due to their lower base salaries. That creates a high concentration of senior employees and leads to gaps in age distribution in the overall employee pool. This creates monster waves of future obligations (severance, pension, and retiree health care) instead of a nice even flow. You see that concentration in many of our union groups right now. Note: we have a lot of employees getting ready to retire. We don’t have any pre-paid accounts to cover the severance or retiree health care (estimated need of $234 million). We only have about 70 percent of the pension money. It’s not a pretty picture. Please get involved.
Let’s end on a good note. I hope everyone has a wonderful summer. If anyone has any questions or comments, please feel free to blast me an email at [email protected].
Dave Flaherty, City Councilor
Disclaimer: The views expressed in this column are those of the author and not the staff, editor, or publisher of the Westfield News.
