Mark Tully: At ceiling, Pittsfield confronts reality
To these people, I have bad news. Proposition 2.5 does not allow for a voter supported override.
A Proposition 2.5 override is not permitted to increase the tax levy beyond 2.5 percent of the "Full and Fair Cash Value" of the community's property. This is the levy ceiling which cannot be surpassed. The only way to increase our levy is to significantly increase the "Full and Fair Cash Value" of the community through growth.
Is there cause for concern? Yes, we must all become aware of the financial dilemma facing our city. At the joint City Council /School Committee meeting at the end of January, a five-year financial forecast was presented by the Collins Center for Public Management at UMass Boston. This study, paid for by a grant, forecasts conservatively what the city's spending will be for five years, based on historical trends and current contractual obligations. Of course, the inevitable increases in health care, salaries and retirement benefits are the main cost drivers. Then the study looks at revenues where property taxes account for over 50 percent with very little growth in sight.
The comparison of revenues to expenditures is shocking. Next fiscal year, we will be more than $3 million short. For FY 2019 we will be more than $7 million short, FY 2020 more than $10 million, FY 2021 more than $14 million and FY 2022 more than $18 million.
These figures represent our cost overruns of doing business in the same manner as we have been doing for last 14 years. Except now, because of the Proposition 2.5 ceiling, we are not allowed to raise our taxes and cannot continue "business as usual."
We must make smart reductions this year and every year in the future. If health care increases 5 percent, we need to either cut a service by the same amount or decrease the health care benefits to employees. If the school department is to receive a contractual $1 million in salary increases, then we need to cut more services in the city budget or discontinue popular but not required school programs. This is not hypothetical, it is our new reality.
An opposition argument I hear often is that we must increase our tax base to solve our revenue shortfall. Yes, increasing our tax base IS the only solution. However that is similar to me saying I need to win the Powerball lottery to plan my retirement. The forecasted spending would require Pittsfield to find second home owners to build 1,000 luxury condos each year. Or a project on the scale of the MGM Casino that Springfield is building. We need to understand that in order to increase our tax levy by $1 million, (which is only a fraction of the annual levy increase), Proposition 2.5 ceiling mandates that we build $40 million of new growth into our value. Growth on a scale of this magnitude is not possible.
Are there other communities in Massachusetts at or near their ceiling? Yes, Springfield is at its ceiling, but it hopes the MGM Casino project stimulates growth. In addition to Springfield, Avon and Holyoke are the only other communities that have been at their ceiling. Pittsfield is next in line, Holbrook and Longmeadow are close but can still increase their tax levies by 6 percent, staving off the inevitable for a few years.
Last year, I had the good fortune to tag along with my wife, [Ward 1 City Councilor] Lisa, to Holyoke. Lisa made an appointment to meet with the Holyoke treasurer and auditor to learn how they operate without being able to increase the tax levy. Holyoke has many challenges and its underperforming school system was a major problem. When the Holyoke school system was taken over by the state last year, ironically, it financially helped the city. This year, to meet budget constraints, Holyoke had to close a fire station; consolidate department personnel and reduce staff by not replacing retirees. These are just a few of the savings Holyoke has to implement each year.
Diet and exercise
So how does Pittsfield move forward in the face of such financial challenges? There isn't a quick solution, this is a way of life change. I think of a Type 2 diabetic when the only way to reverse the disease and regain a high quality of life is through diet and exercise. We must put ourselves on a strict diet, but not a starvation diet because we must also exercise. Any increase to a department's budget must be determined if it will help the city grow and any decrease must be judged on if it will cause the city's growth to shrink. For example, would foregoing school department raises create a negative impact to the city? Or, would foregoing popular school department programs to pay for the raises have a negative impact on our city?
These are the decisions now before us. We cannot have it all. The credit card is max'd out and the savings account is depleted. We are all affected by this and are all in it together.
In closing, when we concluded our interview with Holyoke, Lisa asked the auditor if there is a bright side to being at their tax ceiling. He responded: Yes, because it forces public officials to finally make the unpopular but prudent financial decisions that they should have been making all along.
Mark Tully is a resident of Pittsfield and sales manager for Kidde-Fenwal Controls, an electrical/electronics manufacturer.
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