SUN’s story muddies Tax Increase..no clear explanation for RISE from 3.5% to 6.3%

TAX$

Today’s side story on the Front page of the Sun states: Lowell bracing for 6.3% tax hike doesn’t clearly explain or identify why a budget was passed with the Manager and Council stating the increase in taxes would be 3.5% but is now 6.3%.

Is the 6.3% an increase in the Tax Levy or the tax rate?

The budget presentation stated that cost savings from the GIC are done and because the city approved raises in contracts it “has necessitated an increase in the tax levy of 3.5%., as included in the “Preliminary FY15 Budget”, submitted to the City Council on March 4, 2014”

So is it a combination of increase in the Tax Levy and the Tax Rate that is causing a total raise of 6.3% and why isn’t this being made clear so that the average taxpayer/homeowner understands?

The story also muddies the waters by leaving an impression that no reserves where used this year and that the previous administration used reserves to keep taxes low. Both False!

When you read the story, you could be left with the impression that the previous Administration used reserves to keep taxes artificially low. The story claims “In recent years, before Murphy took over as city manager, Lowell took money from its stabilization fund to keep taxes down. But the city isn’t using any reserves for the upcoming year”.

In fact “In recent years” really doesn’t apply to the last 7 or to the previous Lynch administration. Manager Lynch and his fiscal team built up the stabilization accounts after former Manager Cox, like Murphy a former State Rep. with no previous Managerial experience, raided the $17 million dollars in reserves to artificially keep taxes low, while the Council at that time including Rodney Elliott, Rita Mercier and Bill Martin allowed it and the Lowell SUN ignored it!

So the story omitted the fact that is was two administrations ago that used the funds. By saying” before Murphy took over as city manager, Lowell took money from its stabilization fund to keep taxes down” they are telling the truth, only has they have done many times during the last two-three years when posting stories about the Lynch administration, it’s a half-truth or sin of omission on purpose to leave a false impression.

It has been and clearly was the City Council that in fact pressured Manager Lynch to have 0-1% tax increase in the last few years, crippling the city in coming years and ignoring warnings of that from Manager Lynch. A point highlighted by Manager Murphy’s Financial Guru Bob Healy in the budget presentation to the Council in June of 2014:

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.

In Fact, considering the restraints placed on Manager Lynch, Healy the well respected and highly thought of former Cambridge City Manager, gushed in this years budget presentation over what a great condition Lynch left the City in despite the restraints placed on him by the Council.

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.

The article also says “But the city isn’t using any reserves for the upcoming year.” when in fact Bob Healy made it very clear the City did in fact have to use a pension stabiliization reserve account this year (Bold Mine)

$3 million from the Pension Stabilization Fund is incorporated in this year’s budget

I pointed out yesterday that the SUN has very little negativity toward the Murphy Administration and although today’s story does state ” It is the largest year-to-year jump since 2007, according to figures provided by the city” and “The 2015 increase in Lowell, by percentage, is among the steepest of surrounding towns” it is buried in the body of the story and written in such a way to absolve Murphy.

The truth is Mayor Elliott, Ed Kennedy and Rita Mercier are three of the main culprits in artificially keeping taxes low and Elliott, Mercier and Martin also allowed Manager Cox to use up $17 million in reserves on their watch.

They along with the rest of the current Council have hid the fact taxes are going up 6.3% and not the 3.5% the taxpayers were told by them, the Manager and the Sun in June.

City Council approves $334M budget

LOWELL — The City Council unanimously approved a $334 million budget for the fiscal year starting July 1 that will increase the city’s property-tax levy by 3.5 percent.

The spending plan proposed by City Manager Kevin Murphy for fiscal 2015 was approved by the council, 9-0, without any cuts being made to either the general or enterprise funds

The Taxpayers / voters deserve to know why the increase reported in June was 3.5%, how and why it reached 6.3% and why the Council, Mayor or Manager have not clearly identified the reasons for the difference.

We know why the SUN hasn’t, they endorsed and wanted many of the current council and wanted Lynch gone, they got what they wanted and have worked hard at burying the fact that violent crimes and taxes have sky rocketed under this council while economic development has floundered. All items that many of the current council ran on and have failed at.

Advertisements

One thought on “SUN’s story muddies Tax Increase..no clear explanation for RISE from 3.5% to 6.3%

  1. Joe Smith

    Good questions, Gerry. We have been told the base levy was raised by 3.5%, and that the “new growth” came in higher than the budget, so it is natural to expect that the average tax bill increase would be less than the 3.5% if they applied the extra new growth to lower the tax burden as has been stated. However, notwithstanding the council vote for the maximum residential factor, there apparently has been a shift in valuation from commercial onto residential. But since we don’t see the actual data we cannot be sure that what is being said is true, and does it really result in the fairly large tax increase that the residents will see. As far as reserves, it appears they are decreasing for the first time in several years. Not only is the Chapter 17 reserve being eliminated, but the increase in tax levy in excess of 2.5% reduces the Prop 2 1/2 reserve by more than $1M, and I believe some of the health care Trust Fund was tapped in the FY ’15 budget.

    Reply

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s