The Murphy Administration under the direction of the City Council has done a good job with economic development, with public safety and with their commitment to education.
The Murphy Financial team has done an outstanding job with the city’s budget working with very little wiggle room and when you look at the city’s overall finances you see the administration is working dangerously close to the edge.
While it is noble to try to keep taxes under the 2.5 % increase allowed by law doing so leaves the city budget at bares bones and it is causing the state to keep a very close eye on city finances.
I pointed out yesterday the “Free Cash” for 2015 hasn’t been certified yet by the state, one reason is the concern that there is very little “free cash”!!
The notion that having over $1,000,000 excess in your budget means you are overtaxing people is laughable.
The overall budget for Lowell is $340,931,235 having a million dollars remaining at the end of a fiscal year is good sound fiscal practice. In fact even that falls far below what the MASS DOR suggest!
Attached is a Letter found on the DOR website freecash -DOR DLS that spells out what they think about “Free Cash” and part of it clearly states:(BOLD MINE)
The Technical Assistance Bureau (TAB) recommends that communities understand the role free cash plays in sustaining a strong credit rating and encourages them to adopt policies on its use.
Under sound financial policies, a community strives to generate free cash in an amount equal to three to five percent of its annual budget.
This goal helps deter free cash from being depleted in any particular year, which enables the following year’s calculation to begin with a positive balance. To do this, the community would orchestrate conservative revenue projections and departmental appropriations to produce excess income and departmental turn backs.
1 % of this budget would be around $3,000,000 that would still not follow suggested guidelines but at least provides some breathing room for the administration and the city finances.
What is easier on taxpayers, getting a 2% in crease this year, a 2.5% increase next year and the year after or getting a 1.5% increase this year followed by a 3.5% or 7% increase in the next two years?
No City Councilor wants to advocate for a tax increase and no taxpayer willingly says “tax me more” but Lowell has a history of financial valleys that have had us under State control once and close to State control a 2nd time and it is up to the elected council to make sure it isn’t headed that way again!!
The City Financial team has done an outstanding job of walking this tightrope, refinancing debt and paying items off sooner than later saving money but the well is drying up and there aren’t many tricks left. Do we really want to see Lowell have to have a repeat of the 1970’s when a State Control Board took over? If we do not stop the trickle that has started it could open a hole that can’t be plugged without a State bailout.
The proposed 2017 budget uses $1,000,000 of reserves, Lowell is still paying off the winter of 2015 and we are looking at what I think could turn into an ugly battle with the school department in the coming year.
In this years budget presentation the Manager is clear:
While many of the aforementioned initiatives and challenges represent a serious cost, my administration has once again worked tirelessly to limit the impact on the taxpayer. This budget includes a levy increase of 1.5%, a full percent less than the state allowed 2.5%. As history has shown, the City functions best with continuous, modest increases to the levy in order to fund the rising costs of goods and services, while not considerably raising taxes any single year.
I would be remiss if I did not stress the need to increase revenue streams in the coming years.
Funding the necessary levels of service our citizens deserve, coupled with investment in infrastructure and what very well may be the largest MSBA project in state history, will have a dramatic effect on the City.
However, it will not come without a substantial increase in costs. My administration will continue to limit this impact on the taxpayer by striving to increase efficiencies and by searching out additional funding
This City like most in the State has to find a way to generate more revenue and while it should try to keep cost to the taxpayer down it cannot wait and wait until we reach a point that we have to have an 8% or more tax increase!
That would not NOT fair to residents, especially when you have the ability now to tax up to 2.5%.
Excess Tax Levy is a nice thing to have but IF and I stress IF for some reason Lowell had to fund let’s say schools at $7.8 Million dollars more, the City would have no choice but to raise taxes to the full levy limit which would be close to that 8% figure.
That is something the Council cannot let happen.
The Council has increased public safety, they have shown a commitment to education and have been leading the economic development bandwagon and now they have to be willing to lead the city into a more stable financial footing. They have to direct the Manager to insure we have at the very least a 1% cushion in the budget.
I don’t think they can by law add to the budget but I believe they can vote to send the budget back to the Manager to re-configure with a tax increase for residents at 2% (if not the full 2.5%) and provide the citizens and the administration some solid financial footing.
This Council has to show the leadership required to provide not only a commitment to public safety – education and economic development but a commitment to financial safety and stability. Direct the Manager and his team to provide that fiscal stability!
Before the State mandates that you do!!