CHRISTOPHER KEEFE
And so budget season arrives again.
This week the Westfield City Council Finance Committee reviewed the annual budget submitted by Mayor Daniel Knapik at our June 5th meeting.
The budget totals $122, 411,676 in spending and revenue for general city government, plus additional sums of $2,419,658 for the Ambulance Fund, $5,191,085 for Water, $5,392,118 for Sewer & Wastewater Treatment, $572,878 for Stormwater treatment, and $438,350 for Community Preservation. Outside the general government budget, all but the Community Preservation Fund are self-funding using operating fees; the Community Preservation Fund, which is used to fund recreation, low-income housing, and historical preservation in the city, was voted in at the ballot box in 2003 and is funded by a surcharge on real-estate property tax bills.
The majority of the general fund revenue is derived from property taxes. It was not always that way: at one point, the second largest source of funds – local aid – was high enough so that the property tax levy was only a plurality of funding for the general fund, but continuing cuts in local aid from the state have eroded to the point where the tax levy is the major source of funding today. At one point, the Commonwealth of Massachusetts allocated $38,374,572 in local aid to Westfield. This year? $35,754,775 – a 6.8 percent reduction from that fiscal year 2008 peak. Meanwhile, the state budget has grown from $26.8 million to a proposed $36.25 billion over that same period, for an increase of 35 percent. If local aid had kept up with better than 4 percent annual increase in the state budget, Westfield would receive somewhere in the neighborhood of $52 million dollars today – or to put it in more tangible terms, for the same level of services, your property tax bill would be 21 percent lower.
Instead, the state has consistently ratcheted up taxes and spending while starving local aid. Even if the Legislature had just kept their promise on lottery revenues, and let all of them flow through to the public school system through Chapter 70 monies as originally intended, it would add millions into the Westfield public school system. Instead, the legislature diverted a substantial portion of the lottery revenue to its general fund, to pay for skyrocketing health insurance costs created by its open-ended universal coverage promises, which has been far and away the fastest-growing section of the state budget since it was passed by the Legislature. Last year, while local aid stayed level, spending on health care increased ten percent. Your tax dollars at work… somewhere else.
The legislature is notorious for broken promises. The public passed a ballot question mandating that 40 percent of all state budget spending be returned as local aid. They ignored it. The Legislature passed the Quinn bill as an incentive for police officers to obtain higher education – with local communities required to pick up half the cost – and proceeded to walk away from it, sticking the cities and towns with the bill. The state promises every year to reimburse the city for land it owns within the municipality (Westfield State for example) and then proposes to cut the reimbursement every single year. All so the governor has enough money for a Cadillac and new drapes in his office that he can throw open after he returns from his “economic development” trip overseas….
I mention these things to point out that your local government is severely hamstrung thanks to our elected officials at the state level. What does this mean to you? Annual tax increases. Strained services. Marginal roads….
Okay, until we have a seismic shift on Beacon Hill, we’re stuck with the crumbs from their table. This year, to support the submitted $122.4 million budget, the proposed fiscal year 2015 budget calls upon a 3 percent property tax increase, an increase in the hotel occupancy tax, a new surcharge on restaurant meals, and an additional $2,140,000 in leftover cash from fiscal year 2014 to cover the remaining gap. Yes I said three percent: Proposition 2 and a half is still in place, but a couple of years ago I was able to negotiate on behalf of the Council a 1.5 percent levy increase instead of the de facto 2.5 percent we had been in the past. But that excess capacity we banked has been eroded in these past two budgets with back-to-back 3 percent tax increases, and we’re right back at the maximum levy again – and still over $2 million short of projected spending.
So where are the rising costs that are exceeding our revenues? Well for once, health insurance is not a culprit; in fact, we’ve had success over the past year keeping the costs level using a self-funded account. Rather, the biggest increases have been in borrowing costs, the school budget, retirement, insurance for retired teachers, and trash collection, in that order.
Borrowing costs soared this year as the bill for several major projects came due with the sale of a major bond package. While we were fortunate to sell the bonds for $4,000,000 less than anticipated, we still have annual borrowing expenses well up from last year, and they will stay there for a few years as the senior center bond gets sold in a couple of years. The additional borrowing has constrained the budget to the point of using leftover monies from previous fiscal years to balance the budget. Exacerbating the situation is the de riguer million dollar increase request from the school department, a $326,000 bill for an energy management contract for our recently-renovated municipal buildings, and a $152,000 increase for new trash cans.
The trash collection is a proposal from the DPW to switch your existing trash can to a single-canister recycling bin. In its place, the city is proposing a new smaller 64 gallon container. To be blunt: this is a gamble, and we’re gambling on you. If we get about 50 percent participation in diverting the maximum amount of recyclables into the single-stream container (which will hopefully leave enough room in your new smaller trash bins!) we should break even on the new program. Anything in excess should save the city money overall, so if you’re looking for something tangible to help save the city a few dollars, your recycling efforts will directly affect the bottom line. If not, you may need to order a second trash can.
Overall, the budget is balanced – if we implement two new taxes, raise property taxes by 3 percent, and draw $2.1 million in leftover taxes from this current fiscal year. It doesn’t bode well going forward. The City Council will vote the city budget next week, with an eye towards reducing expenditures where we can. However, much of the budget is constrained by state statute, city charter, judicial case law, union contract, and state regulations. For example, we cannot reduce the $8.4 million allocated for contributory retirement as that schedule is set by the Public Employee Retirement Administration Commission. Failure to adhere to it would risk a state takeover of our retirement fund, at which point they would compel the funds from the city, regardless of where we had to find it, or how much we had to raid our savings accounts, or lay off employees if we didn’t have enough cash on hand. Plus our Retirement Board has a better track record than state overall, so our costs are lower in the long run keeping the investments in-house. It’s a good example of a big-ticket item that looks tempting for budget cuts, but ends up being a cost center if reduced. The budget is chock-full of examples of wages set by union contract, positions mandated by the City Charter, salaries set by city ordinance, even our electric bills require budgeting up to at least the amount estimated by the Westfield Gas & Electric Light Department. It doesn’t allow a lot of wiggle room. Of course, nothing an extra $13 million from the state wouldn’t cure though….
So we look where we can, and will try to economize where possible, subject to the constraints mentioned above. Several Councilors have already approached me with ideas for potential reductions, so the final package agreed to by the Council may be lower than the $122.4 million submitted. The City Council has scheduled the final vote for the proposed budget for the regularly scheduled meeting of June 19.
Christopher Keefe
Chairman
City Council Finance Committee
Disclaimer: The views expressed in this column are those of the author and not the staff, editor, or publisher of this publication.
