The most interesting and important part of Tuesday’s 3 ½ hour Lowell City Council meeting was a relatively brief presentation on the proposed FY2023 city budget by City Manager Tom Golden and CFO Conor Baldwin. The budget document is hundreds of pages long and is packed with interesting information. For the first time in the city’s history, the budget exceeds half a billion dollars ($502.5 million) with $228 million going to the schools.
Golden and Baldwin highlighted perennial budget busters such as the cost of pensions and health care, and the state-mandated assessment for charter schools (a cost that increases more rapidly than the state’s reimbursement). Those come as no surprise. But a new twist this year is the effects of inflation. As anyone who has filled their gas tank recently knows, the cost of gasoline has skyrocketed and city departments that are dependent on vehicles that run constantly are now concerned that allotments for the cost of fuel that have been adequate in the past will now leave the tanks dry in mid-fiscal year.
Then came a discussion of how much taxes will increase to fund this budget. Golden explained that to simply maintain services at their current level, an increase of 3.5% would be needed. However, he then took the bold (and I think correct) position that taxes should be increased 5.5%. He explained that in recent years, the city has had a “structural deficit” in its budget with the city depending on reserves and one time infusions of money (like free cash) to keep taxes artificially low. Not only is this unsound from a budgetary perspective, it will also have an adverse impact on the city’s bond rating so that when the city seeks to borrow money to fund capital projects, the rate of interest the city will have to pay will be higher if the annual budget is not fully funded by new revenue and if financial reserves are used for annual operating expenses. In the recent past with interest rates near zero, this was of less concern, however, now with interest rates rising significantly, keeping the interest rate on borrowed money as low as possible will be critical.
Golden also said that with regard to the 82 employee positions in the city’s table of organization that are now vacant, “we have to change the way we’re doing business” and discuss how many of those positions can be eliminated.
Understanding the city’s finances requires some knowledge of Proposition 2½ which limits the amount of money a city can raise through property taxes. That amount is called the “levy.” The “levy limit” is a restriction on how much can be raised. There are actually two limits: The first is the “levy ceiling” which is the full value of all the property in the city. Second is the “levy limit” which is a constraint on how much the city’s levy can increase from year to year.
To illustrate how the levy ceiling works, if all the property in Lowell is valued at $100 million dollars, the levy ceiling is $100mil x 2.5% or $2.5 million. That’s the total amount the city can raise each year in property taxes. The levy ceiling can change from year to year as properties are added or removed from those that are taxable and as the value of taxable properties increase or decrease.
To illustrate how the levy limit works, if the levy ceiling in FY22 (i.e., the example above) was $2.5 million, then the levy limit for FY23 is $2.5 mil plus 2.5% of that amount (which is $62,500) for a total levy limit in FY23 of $2,562,500. The amount of new growth also increases each year’s levy limit.
For Lowell’s purposes, it’s important to understand that the levy limit is based on the previous year’s levy limit and not on the amount of taxes that were actually assessed. If the city chose not to raise all the money that Proposition 2½ allowed it to raise – which has been the case in past years - the next year’s ceiling is based on the maximum amount that could have been raised, not the amount that was raised.
If a time comes when the city wants to raise taxes substantially – as seems to be the case this year with a 5.5% increase – the city may do it because the city has excess levy capacity. In other words, the city is not restricted to a tax increase of no more than 2.5% because the 2.5% limit is on the increase in the amount of the levy limit which is based on the amount of taxes that could have been raised in prior years, not the amount that was actually raised.
According to Conor Baldwin, Lowell has an excess levy capacity of $18 million which means that the 5.5% increase recommended this year is well within the amount allowed by Proposition 2½.
However, just because a 5.5% increase is allowable does not make it easy for those who have to vote for it. Like many other Americans, Lowell has a full quota of citizens who will take every government benefit they can while at the same time resisting paying anything in taxes. People of that mindset also tend to be vocal in their opposition to taxes.
This city council has shown no hesitation to spend money. A majority of the dozens of motions filed each week require some outlay of funds and I’ve never once heard a councilor this term say, “Can we afford this?” when it comes to a motion he or she made. Now the bill is coming due. Too many past councils were quick to spend money but hypocritical when it came time to pay for the expenditures. Historically that has led to fiscal tricks and shortcuts that have harmed the city’s finances in the long run.
Although it was very subtle, City Manager Golden pre-emptively addressed this risk by saying that this council has made clear that providing more and better city services is a priority and this budget reflects that. The part he left unspoken was that if councilors want more services, they have to pay for them.
The budget was referred to a public hearing on Tuesday, June 7, 2022. Based on the comments made by councilors last Tuesday, it seems that a large majority will support the budget as proposed and the resulting tax increase.
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An interesting exchange took place during the “motion response” section of Tuesday’s council meeting. At a prior meeting, Councilor Dan Rourke had made a motion to “Request the City Manager have the DPW reset the traffic lights at the intersection of Varnum Ave and VFW Highway.” On Tuesday night’s agenda was a written response to that motion in the form of a memo from Interim DPW Commissioner Mark Byrne to City Manager Golden. Here’s the text of that memo:
The City of Lowell’s Electrical Division contacted the State Traffic Control Supervisor to have the traffic lights at the intersection of Varnum Ave and VFW Highway reset. The traffic controller was reset and we then notified the Lowell Police Department within a short time period that the lights were functioning properly.
The City of Lowell’s Electrical Division and the State Traffic Control Division have a great working relationship to resolve the flashing control signals within a timely manner.
If you have questions or concerns, please don’t hesitate to contact me.
Thank you.
When Mayor Sokhary Chau reached this motion response on the agenda he called on Councilor Rourke who sounded apologetic for filing a motion about such a simple matter but also sent a subtle message to his colleagues about the quantity of motions being filed. Here is what Rourke said:
So this, by the response, is a very simple answer, basically a phone call that was made by Mr. Byrne to get it reset. I guess in the bigger picture of things, this is something I called in the past year maybe three or four times and it wasn’t done, thus filing the motion. A lot of the motions we do have, and a lot of responses we do have, involve traffic and stop signs and striping and things like that. I do see a position on here for later on this evening, Mr. Manager, for a facilities or infrastructure or project manager, or is there going to be somebody in your administration where a councilor can just reach out to that person to say, “We need to do a stop sign, or a four-way, or fix a traffic light somewhere”? You know, number one, to maybe knock down some of the responses that I’m sure take time for your department heads to write, but number two, to give you time to work on the larger issues, the things that are required of a city manager.
No motion doesn’t deserve to be filed and spoken about, especially when there are [registered] speakers, but take my response, for example. This is something that could have been taken care of within five minutes on the first phone call rather than three or four tries and then a motion to be filed.
This is just a suggestion. I don’t know if it’s a motion that has to be filed or talked about, but do you plan on having somebody in your administration who works for DPW or the traffic engineer or [somewhere else]? - there are eleven city councilors - will there be someone we can call and whether it’s done in a week or not then we can file a motion about it? But again, something where we are not bogged down with responses about four-way stop signs and striping an intersection.
Manager Golden responded by saying:
Councilor, yes, there is an answer and it’s pretty direct. Right now, I first want to say thank you to the [DPW] Commissioner, the Assistant City Manager, and all the department heads because they’ve indulged myself with a lot of phone calls, a lot of text messages, which we welcome from the council and, of course, from all of our residents. But currently we are down four spots just in the manager’s office as a whole. It is my hope that before the end of June we will have pretty close to a full team. . . but to answer your question directly, yes, it is my goal before the end of June to have at a minimum, two other people on that team to ensure that this is going to be a little bit smoother. . . If there’s something from councilors that has to be dealt with rather quickly, there’s going to be a point of contact and that should be happening before the end of June. . . Let’s put a time frame on it. By July 1, the council will have someone they can call. They can always call me, they can always call anybody up here, but we will have one point of contact where everyone should feel comfortable calling.
Councilor Rourke responded:
[We have] eleven city councilors now. These motions don’t come out of thin air. They’re filed on behalf of residents who have concerns . . . and I’m sure Assistant City Manager McCall loves writing reports about four-way stop signs but we want to focus on the bigger picture of bringing businesses to the city and outreach and hiring and to do all the important stuff – not that this isn’t important – but if we could establish someone who we as councilors can contact to get something done without going directly to the manager and if it’s not done on time or done to our liking, then we can file a motion and you (the city manager) know it wasn’t done.
Finally, a member of the council has spoken up about the avalanche of motions collectively filed by this council since it took office in January. There’s nothing inherently wrong about a councilor filing a motion but here’s the problem: Every motion that is filed requires a written response researched and written by a department head and then reviewed and OK’d by the city manager. With 20 or more motions filed every week as has been the case with this council, it diverts an enormous amount of the time of those hired to manage city government from managing the city and its workforce to writing innumberable motion responses. Every minute spent writing a motion response memo is a minute taken away from the things that Councilor Rourke identified.
There may be some concern that having a councilor call a city employee crosses a Plan E boundary but if the councilor is merely reporting something rather than instructing the employee to do it, there’s no problem with the Plan E chain of command, especially if the employee keeps the city manager informed of such calls.
In the long term, a better approach would be to have communications from councilors on these type of things done by text, email or through some kind of app so that the communication could be made public. That way, residents would see that councilors were responding to their concerns (which might ease the sting to councilors of losing the performative aspect of filing a motion) but residents could also see that the problem they reported weeks ago was being neglected because councilors were dominating the time available to the city work force. This is another instance where transparency would be helpful.
In any case, Councilor Rourke performed a good service by raising this issue. Time will tell if it alters the behavior of his colleagues.
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The city council and the city’s Veterans Service Office have a new way to honor veterans just in time for Memorial Day. Inspired by a motion by Councilor Paul Ratha Yem, Veterans Service Officer Eric Lamarche has obtained a dozen banners that contain the photos and names of Lowell veterans. These are supposed to be displayed on JFK Plaza this weekend and more will be obtained as time goes by.
Also for Memorial Day, please check out richardhowe.com for several veteran-related posts this week including:
Dean Contover’s account of “Operation Duke”, a mission in which he participated while serving in the U.S. Army in Vietnam (posted on Thursday)
The story of William Callery, a soldier who was killed in Vietnam for whom Callery Park is named (posted today)
The text of remarks I gave several years ago at the Greater Lowell Veterans Council Memorial Day program (posted Saturday)
The stories of the men listed on the Keith Academy World War II monument at St. Patrick’s Cemetery (will be posted tomorrow on Memorial Day so please visit the site again then).