What we found when we first started is that the previous administration did nothing to collect due personal property taxes,” City Manager Kevin Murphy said.
I was surprised to read that comment in the Sun from the current City Manager. One of the things that his predecessor Manager Bernie Lynch was most criticized for was his habit of referring negatively to his predecessor Manager Jon Cox. I thought at one point Manager Murphy declared he wouldn’t do that.
The thing that really surprises me is that he thought in the 7 years Manager Lynch was here, that he would have the time to deal with personal property. Unlike Murphy who walk into the Manager’s Office with a City in solid financial shape, Lynch inherited a City that was very close to State takeover and who had blown through 17 Million dollars of reserves in 3 years.
What Bernie Lynch walked into: 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.
What Kevin Murphy Walked into: The General Fund finished 2013 with certified free cash of $3,911,380, the second highest level in many years. Enterprise fund balances were also healthy. Stabilization Fund Balances now stand at $12 million and our Chapter 17 reserve balance is at $2.2 million, after the transfer to the school department to address the fiscal 2013 shortfall in net school spending.
Anticipating that the state’s fiscal picture would continue to slowly improve and that local aid would not decline, we predicted that we would be able to balance the budget in 2014 with no tax increase.
This marked the second year in a row, a feat that is nearly unprecedented in Massachusetts, especially in a tough economy. Only one sizeable community, Quincy, has voluntarily accomplished this since 2009, and they required a subsequent tax increase of more than $8 million. Despite this revenue limitation, our goal was to settle collective bargaining agreements with all unions. These agreements have included compensation increases offered in exchange for the concessions received from the unions over the past several years and for future concessions.
Not only did Manager Lynch have to rebuild reserves, he also had the fiscal discipline of Chapt. 17 and that 4.2 Million dollars to deal with. During his tenure the City also went aggressively after Property and Excise taxes, moved the city from Self Insurance to the GIC and instituted an energy saving program that saved the city hundreds of thousands allowing the city to be able to rebuild its reserves and improve on its Bond ratings.
Let’s not forget either that the current Manager’s “little brother” Mayor Elliott was the most vocal leaders along with Councilors Kennedy, Mercier and others to NOT raise taxes in the final few years of the Lynch administration which if allowed a slight increases, would not have put Lowell in the position of having to raise taxes 3.5% (plus increased property evaluations) this year, a point mention by Murphy’s Financial Guru Bob Healy in the budget presentation in June:
The City Council’s policy to hold taxes to minimal, if any, increases in Fiscal Years 2012-2014, while maintaining service levels despite increasing operating expenses, created a Fiscal Year 2015 budget gap that needed to be bridged.
Finally the article states clearly that Some of the bills date back as far as 1992. Why didn’t Murphy mention his fellow State Rep. /former Manager John Cox for failing to go after these taxes, or Jim Kennedy, Brian Martin or Dick Johnson.
Lynch was to busy cleaning up the fiscal mess from the last time a City Council hired a former State Representative to run the city and didn’t go after this small amount and that surprises Murphy?
If Murphy had to clean up from the last former State Rep. to be Manager than maybe he wouldn’t be so quick to blame the past Manager for not focusing on this small amount and instead appreciate the fact that Manager Lynch left his replacement on solid fiscal ground and in good state standing, with very high reserves…but how soon he and others are quick to forget.