Sunday Notes May 24th 2015

When the Manager states their is no money for raises and no raises in the budget, does he not count Step Increases and COLA “adjustments” has raises? Some may see it as semantics but the general public see’s any increase in salary regardless the name as a raise. Something many of us in the private sector haven’t seen ourselves in many years.

Much has been written about City Clerk Michael Geary and his $7,620 raise approved on a 5-4 vote. Yet the public has heard very little about the 5.7% raise listed in the 2016 proposed budget for City Manager Murphy taking his salary up by $10,000 to $185,000 !

Is 5.7% what a Step and COLA increase works out to be? Are all city Dept. Heads getting that increase? If you recall when the City Manager was hired and reached his “employment agreement” with the Mayor and City Solicitor,

The council voted 8-0, with Councilor Edward Kennedy absent, to appoint Murphy as city manager effective Monday, with an annual salary of $175,000 to be accrued hourly and paid on a weekly basis.

According to the Memorandum of Understanding, a copy of which was provided to The Sun, Murphy’s employment is governed by the personnel ordinance as it sets forth certain benefits including vacation time, sick leave, holidays, personal days, family leave, bereavement leave and personal leave. Murphy is also subject to the city’s grade and step schedule, but he will not be entitled to compensation for unused accumulated sick leave. Murphy will have full use of a city automobile and agrees to comply with the city’s vehicle-use policy.

While the $10,000 for the Manager seems to be high, many in his administration are also getting higher salaries (I’m assuming these are the Step/Cola raises) including :

Asst. City Manager (pos created last year) + $2,899
Chief Financial Officer (CFO) +$3,420
Asst City Manager /DPD Director – + $2,209
Deputy Director- Planning and Community Development + $1,681
Data Management Analyst – $2,989

The CFO’s letter in the Budget book states that these types of Step increases are adding $2 Million dollars to the City Budget.

What’s the difference between FY16 Request and FY16 Manager? I ask because the following line items are all listed HIGHER under FY16 Manager – Property Taxes, Local Receipts and Available Funds which needs to be explained.(Page | II-76 in the current Budget book)

A) What are “Available Funds” (I know they make up the General Fund but what type specifically?)
B) Why is the FY16 Request $70,000 and the FY16 Manager listed at $1,807,000

I’m no Municipal Fiance expert, nor do I play one on this blog however just being a GM of a small printing company and dealing with health insurance for the past year, I’ve got to hope the City Manager and CFO can offer a more fact filled explanation of how you add 11 staff (Number is straight from their budget) members to your organization and with more requirements kicking in from the The Patient Protection and Affordable Care Act can you project that the cost of Health Insurance can go down?

This is posted on the State’s GIC Website, so Lowell should be able to explain clearly if the cost has gone up or not based on the rates listed:

Fiscal Year 2016 Full Cost Rates Effective July 1, 2015


Other Municipalities that are part of the GIC are experiencing higher cost for health care, including Quincy, Dracut and Springfield MA which was one of the first city’s in the state to join the GIC. They are seeing their cost go up by almost 4%:

Springfield’s FY16 budget includes $23.6M for health insurance for City department employees representing a 3.99% increase from the FY15 projection. This amount pays for active and retired City employees.

Prior to 2007, the City’s health insurance costs were approximately 10% of the budget and increasing at a rate of 13% annually. This trend would have proven unsustainable because the City’s largest revenue source, real property taxes, can only increase by 2.5 % annually. The most significant measure to controlling costs was becoming the first Massachusetts municipality to join the GIC. The GIC purchases health insurance for 265,000 state employees and retirees. The City also requires employees to contribute 25% of premium costs and eligible subscribers to join Medicare Part A and B. By joining Medicare through Chapter 32B of the Massachusetts General Laws, the City shifts a portion its retiree health care costs to the federal government. Retirees are eligible if they paid into the Medicare system for 10 years or if a spouse contributed to Medicare

However Cambridge MA where Bob Healy has some experience (Our current budget format now matches theirs and PS: They won an award for their Budget book) also has a zero increase in Health Care cost but they are NOT part of the GIC. At least their City Manager / CFO explains a little more clearly as to why there is no increase in the budget book:

The 0% increase in health insurance is due to fewer high-cost, chronic claims and employees taking advantage of preventative programs.

While numbers have been added to the Police, Fire Dept. staffing remains the same with their Salary and Wages permanent going down by $165,151 and the OT account will be funded at $800,000 Hopefully a Councilor will ask if ALL stations will stay open or if the Administration plans to close 1 or 2 at a time.

Lowell reacted to increase in shootings by adding more police, yet after the worst fire in decades on Branch St. Lowell continues to treat Firefighters like 2nd class 1st respondents!

Interesting (at least to me) is that in the Worcester MA. Budget they have a couple of notes listed that I would like to see broken out and shown here in the Lowell City Budget:

State Owned Land
The Commonwealth provides a reimbursement to cities and towns for tax revenues lost due to state owned land. The reimbursement is based on state calculated values and is based solely on the value of the land itself, not the structures on the property. This receipt is estimated at $212,335 for Fiscal 2016, level funded from Fiscal 2015.

I’ve not seen that item specifically listed in the Lowell Budget but given the vast amount of land that is State Owned, I think the citizens and Councilors would like to see what that figure is and where in the budget does the Administration list it.

Veterans, Elderly and Disabled Tax Exemption aid
Under Chapter 59, Section 5, clause 41C of Massachusetts General Laws, as amended by Section 5 of Chapter 653 of the Acts of 1982, persons who meet statutory criteria including age, status, and income thresholds will receive a state-funded flat tax exemption of $500-$1,000. The Fiscal 2016 budget includes a Cherry Sheet allocation of $561,527 for these exemptions

How much does Lowell receive for this?

In Non-Budget related matters, the City Council will be asked to enter into what I think may be the Largest and Longest (20 years) TIF in the City’s history. Vote-Approve TIF Agreement Markley Group LLC

The deal gives Markley an 80% reduction in taxes on Real Estate and Personal Property for the 1st TEN (10) years, a 75% reduction in the next 5 years and a 70% reduction in the last 5 years for the old Prince Spag Factory.

While this looks excessive, if you take a step back and look at the “BIG Picture” Markley is promising to invest $100 Million in improvements during the first 10 years and another $100 million in the next 10 years. They also will hire 100 people of which 25% will be Lowell residents OR UMASS Lowell graduates.

Given the length of time this property has been vacant, the neighborhood it is in, the size and usability of the building and the prestige of having this company in Lowell, this is actually a good deal for the city (IMHO).

More important to me is that the Murphy Administration wants the okay to Vote-Auth CM Transfer Approp. per MGL c.44 s.33B. Basically they want to take all the unused money in all city depts. and put it towards the snow and ice deficit without having to show the amount from each dept. That way is lessens the questions asked during budget debate. (In my opinion). Time the Councilors are told is of the essence.

I’d like the Council to okay it with the stipulation that the Administration supply a breakdown of where the funds came from so that the public is aware.

The Administration needs to better explain the reason for the “Global Settlement” it reached with Enel that allows them to purchase some bridges and results in switching Enel from a top ten taxpayer to a member of the PILOT program.

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