Monthly Archives: November 2014

Sunday Notes November 30th 2014

Story

“Those who cannot remember the past are condemned to repeat it”

The City Manager wants to eliminate the protection provided by the state in the section of Ch. 17 that requires the City to maintain at least $4.2 million dollars in reserves. This was put into place in 1992 after former City Councilors didn’t pay enough attention to budgets and spending, when state aid was reduced and when City Manager’s used reserves to keep taxes down and help get councilors re-elected so they could keep their jobs.

When this was first brought up it was sent to the Fiance sub-committee who wanted to meet to discuss and review. This is so important that they allotted a whole 30 minutes on Tuesday Dec. 2nd at 5:00 to talk about it. Can you say BAG-JOB!

Let’s look back to a State Summary supplied in 2007 reminding everyone why Ch. 17 was needed in Lowell.

By the end of FY1991, Lowell’s finances were in serious trouble. Property values and new construction had declined and the city was levying to its property tax limit. Because the city’s state aid had declined almost $5 million since FY1989, Lowell aggressively estimated its local receipts and drew down its reserves to balance the operating budget, which contributed to the city’s negative free cash certification (as of 7/1/91) of over $4.46 million. Yet despite these factors, there was a general reluctance to cut services and Lowell ended up with accumulated deficits of nearly $13.2 million by FY1992.

Without resources to address its fiscal situation, Lowell had to get special legislation (Chapter 17 of the Acts of 1992), which authorized the city to issue up to $15 million in deficit bonds to be paid back over 10 years. As a condition of this special act, a finance advisory board, made up of three state and two local appointees, was created to review and approve all city appropriations, transfers, and debt authorizations. For three years, the Lowell Advisory Board existed. Under its oversight, tough decisions were made, Lowell’s budget was balanced annually based on realistic revenue estimates, and the city’s management practices were overhauled. By FY1997, Lowell’s free cash was certified at over $3.6 million, and the city levied almost $2.7 million below its available property tax levy limit.

Skepticism, like chastity, should not be relinquished too readily.

We have seen already this Manager’s “Financial team” miss putting out bonds for Capital projects (and blame the treasurer) hire a Treasurer who wanted to do 2 jobs and who quit the night before he started by email and miss taking a timely vote to pay the over spending of the 2013/2014 snow and ice account (Council Agenda 11/18) and blame the State law setting the Jul 15th deadline and not knowing what the MEME reimbursement would be.

Based on these early actions, what makes anyone confident they won’t spend the reserves?

The 2007 report reminds everyone how the City of Lowell in 2003 had reserves of $17,000,000 (17 Million) and how by 2006 with City Council approval City Manager John Cox spent down reserves.

Look when this was done, at a time when we had former State Rep. John Cox as City Manager and a Council which included Rita Mercier, Rodney Elliott, Bill Martin and Jim Milinazzo.

Why does anyone think that now that we have former State Rep. Kevin Murphy as City Manager and a Council which includes Rita Mercier, Rodney Elliott, Bill Martin and Jim Milinazzo this won’t happen again?

Just like it did in the John Cox era, the Lowell Sun is hiding negative stories about finances and only showing positive stories on this Manager and his Administration. They were complicit in allowing the reserves to be drained without reporting the fact it was taking place and just showing that Administration in a positive light just as they are doing now with this Administration. The biggest difference is this Manager doesn’t go to Saratoga with the Editor (as far as we know).

Back to the report-(BOLD MINE)
Having returned to fiscal stability from the brink of destruction, Lowell’s prosperity grew over the years that followed. The resurgence of the area’s technology industry and the growth of new service industries once again revitalized the downtown. Lowell’s Tsongas Arena and LeLacheur Stadium, home to professional affiliate hockey and baseball teams, attracted visitors and other economic development to the community. Even the housing market blossomed, attracting home buyers that were unable to afford area suburban prices.

By FY2003, Lowell’s free cash was certified at a high of over $17 million, it had unused levy capacity of over $10 million, and the city bond rating was upgraded to A2 by Moody’s Investors Services, a bond rating agency.

At about this time, the state once again had fiscal problems as a result of an economic downturn that translated into state aid cuts for Massachusetts’ communities. Lowell was able to weather the FY2003 mid-year state aid cuts, but going forward the city did not adjust its spending patterns or make budget cuts necessary to live within its available recurring revenues. Instead, Lowell aggressively estimated its local revenues and used its reserves to fund the operating budget, repeating its mistakes from the past.

As a result, problems began surfacing in FY2006. During the tax rate setting process, it was discovered that Lowell made an accounting error, double counting almost $2 million in school building authority funds. To balance the budget, Lowell opted not to make any budget cuts. Instead, the city requested an update of its free cash and used its available reserves to fund operating expenses.

Consequently, because of these accounting and budget issues, the Director of Accounts informed Lowell officials on January 3, 2006 that a completed FY2006 audit must be submitted and reviewed prior to setting the FY2007 tax rate and before certifying free cash as of July 1, 2006. A few months later, Moody’s Investors Service’s downgraded Lowell’s bond rating from A2 to A3, citing the use of one-time reserves for operating purposes and the city’s deteriorating financial position.

A fool and his money are soon parted

So while this Manager wants this council to vote to take away this Safety net that may leave Lowell again subject to State Financial Control (we came close in 2006) we see a similar State atmosphere developing that took place in the 2003-2006 era. Right now we see a State budget shortfall that might require the state to use some of their reserves. There is no assurance that State Aid won’t be cut in next’s year budget. This Council will be running for re-election and will be facing the possibility of another 2.5% – 3.5% Tax increase to maintain services.

Do we want to allow this council the opportunity to draw down the reserves again without this Safety net in place? They want to get re-elected and will kick the can down the road for the next Council to clean up just as Rita Mercier, Rodney Elliott, Bill Martin and Jim Milinazzo did in 2003-2006 allowing Manager COX to raid the reserves.

This Manager wants to eliminate one reserve and now have an item on this week’s agenda creating another reserve fund: 6.7. Vote – Create a Capital Debt Service Stabilization Fund and Transfers from free cash

Included in the Council Packet for 12/2 is a letter from the CFO who outlines his recommendations on how the Council should spend this years “FREE CASH” (not paying back the $2 million used from Chap. 17 last year that by Law must be repaid) instead creating another reserve account after paying off the debt from last years snow and ice and providing the schools another 1.2 million dollars toward net school spending requirements.

If the Council votes this week to spend FREE CASH before voting on eliminating Ch, 17 then the City is creating a shortfall of 2 Million dollars because they didn’t repay the chapter 17 money they used last year. So this action would force them into eliminating chapter 17!

Think the Murphy Administration planned it that way??

While setting aside money for the much and many needed Capital improvement projects is important, Lowell owes it to its citizens and taxpayers to not take away this guaranteed safety net supplied by Ch. 17 and risk Lowell once again be taken over by the state.

PLEASE Contact your favorite Councilor (if you have one) or any City Councilor and urge them in the entire 30 minutes they are devoting to this serious topic at the Fiance Sub-Committee meeting, to keep this critical financial section of Chap.17

I don’t get why when the State is facing a budget shortfall, Gov. Patrick moves hundreds into protected union jobs with raised and DeLeo okay’s a pay raise.

Just as I don’t get when Councilors who know or should know, Lowell has a very tight budget, bring in motions to hire more Police or explore possibility of hiring more Inspectional Service staff without ever having the backbone or courage of conviction to suggest to the Manager areas that could be cut to meet these goals.The Council can make cuts but can’t add to a budget and showboat, election grandstanding motions to spend money without either suggesting or understanding where to make cuts to achieve these goals is disingenuous and political grandstanding only.

Does anyone else remember the The city’s “Problem Properties Task Force,” created at the City Council’s urging, will share existing information on properties requiring extra attention and develop criteria for buildings to be considered problems? It was first suggested in 2012 by City Councilor Marty Lorrey ” To help Lowell officials bolster their ongoing efforts to address such properties so they don’t drag down the neighborhoods, Lorrey has filed a motion for Tuesday’s meeting calling on City Manager Bernie Lynch to establish a problem-property task force similar to one Boston has.

Isn’t that what Councilor Dan Rourke is now proposing? C. Rourke – Req. City Mgr. explore possibility of hiring more Inspectional Service staff with an emphasis on working with police and fire departments.

School Committee member Kristin Ross-Sitcawich was informing the public via Social media of a serious incident in the public schools after the school involved (The Bailey) had been dismissed and notes sent home with the students. The reaction by Supt. Franco was poor to say the least has was the initial reaction of the Lowell Police and School Committee member Jim Leary was 100% wrong for attacking Ross-Sitcawich for sharing the information.

As a parent I am OUTRAGED that this trouble individual was let go after “voluntarily” agreeing to go to the hospital and when I heard the Mayor and other elected officials were willing to accept that because he was known to them and considered in their opinion harmless I am even more upset.

History shows us that High School or Middle School students would have been arrested or detained, their homes searched, their friends questioned and the students expelled or suspended. Just look back last year when 2 middle school girls “threatened” to poison a teachers drink and were suspended and forced to move to another school even though they never followed through on the supposed threat. This guy showed up at the school!

Yet this man who posted a public threat is being let off with a “warning of trespassing” and a summons for a “misdemeanor charge of threatening”! Oh wait students can’t vote and this guy is a Veteran who has political friends. This is wrong and there is nothing to say this guy won’t Post another threat.

Only next time he may not post and just walk in and take hostages at the Sullivan, LHS or Robinson and then we can watch the elected officials and police try to explain why they “never saw this coming” because he seemed like a nice guy who just had a few issues but was harmless.