May 26, 2024

It’s budget time for the city of Lowell. At Tuesday’s City Council meeting, City Manager Tom Golden presented his proposed FY2025 budget to Councilors. Other than a brief statement by Golden, there was no discussion on the budget. That will occur on Tuesday, June 4, 2024, at 6 pm at a special meeting exclusively on the budget. But the proposed budget and supporting documents were included in the Council packet so that will be the primary topic for today’s newsletter. Rather than try to cover anything, I’ll focus on a few items that caught my attention. (For those interested, the full budget is also available online.)

One clear message, explicit in Golden’s remarks and implied in the content of the budget, is that the cost of everything keeps going up. As has been the case for many years, there are three big drivers of annual cost increases: (1) pension assessment; (2) health insurance premiums; and (3) Charter School assessment. Those are mostly out of the hands of city decision-makers so there is little that can be done locally to control or cut those costs. They must be absorbed which puts more pressure on the rest of the budget.

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The city does have more control over two other areas of significant increase in this year’s budget: waste disposal and employee salaries.

More than a decade ago the city separated certain services from the city budget and created stand alone “enterprise funds” for sewer, water, and parking. Each of these is supposed to be self-supporting with user fees covering the cost of the service. One of the attractions of these funds is that the fees can be imposed on some entities that don’t pay property taxes.

Trash disposal is not an enterprise fund but it is treated like one with a fee charged and city budget writers striving to ensure that the fees collected cover the cost of the service. They do not. In fact, the cost of the service exceeds the fee revenue by $4 million which means the rest of the city budget is subsidizing the cost of trash disposal by that amount.

Manager Golden wants to tackle that deficit by increasing the trash collection fee which has not risen for quite some time. Currently, the fee is $125 for a household and $32 for elderly residents. The proposed increase would make the fee $325 for a household, $50 for an elderly family, and $425 for a non-owner-occupied residence.  

As a percentage increase, the new fee is a big jump, but that’s only because the city has failed to keep the fee in synch with the cost of the service. Consequently, the increase seems warranted and reasonable. Still, there are already signs of pushback by city councilors on this fee increase. Although slight compared to the amount everyone’s property tax bill will go up, the simplicity of the jump from $125 to $325 carries the kind of symbolic weight that often prompts a reactionary response from councilors.

Perhaps a better response is to raise the fee so the service is self-sustaining, but then put more effort into reducing the volume of waste that must be collected. The reflexive reaction to this quandary is “more recycling” but recycling is not the solution it was once thought to be. That’s partly because the market for recycled materials is much diminished which makes recycling less attractive and more costly.

Another factor is “contamination” of the recycling stream. Every time a resident places a plastic bag of trash in the green recycling container, the city pays a penalty to the vendor. There’s been much talk on the council about how to increase compliance with the recycling rules. Better education and stricter enforcement are both desirable but non-compliance will always be a challenge in Lowell.

What else can the city do? Giving more attention to reducing the amount of waste in the first place should be one approach. The city has already done some things, most notably, banning the use of plastic bags in some retail settings, and installing more water bottle filling stations in some schools. Regarding water bottles, persuading residents that Lowell tap water is clean and safe to drink and urging its consumption might reduce the number of single use water bottles going into the waste stream. (And yes, I drink Lowell tap water all the time and think it tastes great.)

 A topic that might benefit from more attention is food waste disposal. MassDEP estimates that food waste accounts for more than 25 percent of the waste stream in Massachusetts after recycling. I believe the answer is composting, but I rarely hear that mentioned. I’ve tried composting in the past with mixed results. In theory it’s simple but the execution can get complicated (and messy). Getting more residents to compost organic waste might also reduce the volume of yard waste the city must also pay to collect.

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Employee salaries are also responsible for a significant amount of the budget increase. Driving this is higher salaries and rising benefit costs for existing employees, but also a substantial number of new positions that are being created.

In the past decade, Lowell has lost a significant number of valuable employees to other communities because those other communities offer higher wages and better working conditions. It does make sense, and seems a necessity, to bring compensation levels in Lowell up to and even higher than those for comparable positions in other communities.

Regarding new positions, City Manager Golden contends that to deliver the quality of life “that the residents of Lowell deserve” the city must spend more on employees and equipment. I agree with that but with the caveat that the increased expenditure must be sustainable. If the city retains all its existing employees and increases their salaries, then adds a considerable number of new employees, many of them at management level earning commensurate salaries, the resulting employment costs risk being unsustainable over the long term.

The approach that is needed is to increase the efficiency of the workforce while reducing its size over time. That requires very nimble management, but it also requires coherent guidance from the city council. We’ll see how much of that is forthcoming on June 4.

President Joe Biden is fond of saying, “Don't tell me what you value. Show me your budget, and I'll tell you what you value.” That’s certainly true, but there’s an important corollary that goes, “Show me your budget and show me how you’re going to pay for it over the long term.”

Too many times in Lowell’s past, city councils have sidestepped tough budgetary decisions. Whenever money is plentiful, as it has been recently due to Federal ARPA funds, spending increases. But government budgets always run in cycles that often don’t mirror the state of the broader economy. An unexpected dip in state revenue especially can trigger emergency cuts or lower annual appropriations than expected. When that happens, cities like Lowell face a financial crisis that requires fast and painful cuts.

In the budget now proposed by the city, the new positions proposed could yield great benefits. But rather than just lumping their cost onto everything else, there really should be some offsets found elsewhere, otherwise the risk of a future budgetary crisis increases.

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Increased fees for the water and sewer enterprise funds are also on the council’s docket. The proposed water increase would add $6.96 per quarter to the average water bill. The proposed sewer increase would add $14.21 per quarter to the average sewer bill.

The larger jump in the sewer cost is driven by a consent decree reached between the city and the Environmental Protection Agency which charged the city with violating applicable federal law on sewerage treatment. The city was in violation and the consent decree set a timeline for the city to do the work to rectify the problem. A big part of it is caused by “combined” sewer lines in Centralville. In that situation, waste water from houses and storm water drains run into the same pipe underneath the street. In times of heavy rain, the amount flowing into the pipe greatly exceeds the capacity of the city’s sewerage treatment plant and the excess “overflows” into the river untreated. Under the proposed project, the sewer lines would be “separated” so one would carry wastewater to the treatment plant and the other would carry stormwater, also to the treatment plant, but when a surge occurs, the stormwater stream could be diverted away from the plant. That water still carries pollutants but not to the same extent as the wastewater stream.

The new revenue from the sewer rate increase would help fund a large loan to pay for this work. In 2019, the city council authorized a $67 million bond for similar projects, however, under the consent decree, much more needs to be done and the existing loan would essentially be refinanced with a larger amount of principal - $175 million – authorized to be borrowed to meet the city’s commitments.

At the end of the City Manager’s letter to the council regarding the sewer rate increase proposal, there’s a good explanation of how these enterprise funds are supposed to work:

“The true purpose of enterprise accounting is such that the users pay for the costs of the service in a way that is proportional to their usage. This method is far more fair and equitable than the alternative: for the cost of the water operation to be borne by all taxpayers uniformly. By employing enterprise fund accounting, the rates are set commensurate with the operation and the city can be sure that entities which pay for utilities like water and sewer, but are exempt from taxes under state law are paying their fair share.”

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One area where I disagree with the use of “enterprise fund accounting” is for parking, at least at this moment in time. Theoretically, using the enterprise fund approach for parking makes sense. The people who use the garages and who park where curbside fees are in place should pay the cost of providing that parking.

But parking is not a strict fee for service operation. We provide parking in downtown to support businesses by encouraging people who do not live or work in downtown to visit there and shop, dine, or recreate. That’s something that benefits everyone in the city. The more downtown thrives as a business and cultural district, the more everyone in the city benefits.

This is especially true when it comes to the cost of a new garage such as the city’s Hamilton Canal District garage. Here’s what the city’s website says about this garage:

“A 900-space facility located within the Hamilton Canal Innovation District. Built in 2020, the garage is used to meet the needs of the growing innovation district. Points of Interest: Lowell National Park, Lowell Judicial Center, Northern Middlesex Registry of Deeds and 110 Canal.”

Right now, it seems like the only parking demand from the Hamilton Canal District comes from three of the entities cited: the registry of deeds, the judicial center, and 110 Canal Place. Even if all the users of those entities parked in the HCID garage, it would still be mostly vacant but at least it would yield a bit of revenue. Yet several years ago, the city transferred land to a private developer (the Lupoli Companies LLC) for the express purpose of building a parking garage right next to all three of these entities. Predictably, users and occupants of these facilities immediately migrated to the new privately owned garage and away from the city garage. While there may have been other reasons for allowing the construction of that private garage, doing so sabotaged the possibility of the HCID garage becoming financially self-sustaining.  

Perhaps in the coming years when more things are constructed within the Hamilton Canal District the demand for parking will put more cars into the HCID garage. But that hasn’t happened yet and so that garage is running a huge deficit.

To make up this deficit, which is within the Parking Enterprise Fund, the city council boosted the parking rates for downtown garages. This falls primarily upon downtown residents who are a captive audience. To me, if someone lives in a condo on Prescott Street or Warren Street and parks in the Lower Locks Garage, forcing them to carry the cost of the unused HCID Garage seems unfair, especially when the purpose of that garage is to attract development into the Hamilton Canal District, something that would benefit the entire city.

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Thanks to the 80 people (and 3 dogs) who joined yesterday’s Lowell Walk of the Hamilton Canal Innovation District.  I’ve just scheduled another walking tour, this one of the Little Canada neighborhood. The tour will take place on Saturday, June 29, 2024, at 10am and will start at the Coalition for a Better Acre at 517 Moody Street in Lowell. I will partner with Charlie Gargiulo to lead this tour. Charlie’s 2023 memoir, Legends of Little Canada recalls growing up in the neighborhood and the trauma experienced when Charlie, his family, and friends all had to move in advance of the Urban Renewal wrecking ball that demolished the neighborhood in the 1960s. During the tour, Charlie will point out places mentioned in the book and will supplement that with his own experience living there. (Legends is available from local publisher Loom Press.)

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My recent newsletter on the 1989 Lowell School Desegregation Consent Decree has generated considerable feedback. Many who are relatively new to Lowell either because of their youth or because they’ve moved here recently have mentioned that learning this historical context has helped their understanding of current Lowell politics.

Now, as the City Council begins the every-other-week summer meeting schedule, I hope to dig into my Lowell history files and write more newsletters on other past political issues during these “no meeting” weeks. There are plenty to choose from, but if there’s anything from Lowell’s political past that you’ve heard of and would like to learn more about, please send me a suggestion for that topic. My email is DickHoweJr[at]gmail.com.