The FY11 Budget
by Keith Wright
Springfield City Councilor, Ward 6
Introduction
The Mayor proposed a $533.9 million budget in early May that called for a modest tax increase in order to support a 0.99% increase in spending. The Mayor felt that his budget would pay for many services that citizens of Springfield want, and that it reflected his five priorities of public safety, education, job creation, neighborhood revitalization, and financial management.
In addition to funding these priorities, the Budget would increase the City's reserve balance to $43 million, an amount considered in the middle of the range called for by City ordinance.
The City Council can either cut the budget or approve the budget. It cannot initiate new spending. In order to fulfill its responsibility the Council met on 3 consecutive Saturdays in May to ask department heads about their budgets and the services they pay for. Each department head was questioned for about a half hour.
When these three-hour Saturday meetings were over I had learned about the mission of individual departments and the amount of money needed to fulfill it. I came away from ten hours of budget hearings having received this same message from every department: "We need all of the money in the Mayor's budget or we will not be able to perform the services the citizens of Springfield expect."
The State of the City
So, at the end of May the Council was faced with cutting or approving the budget. Some Councilors, including me, were concerned that once again Springfield residents' and businesses' tax bill would increase if the budget was not cut. For me, this concern stemmed from a number of points:
� First, I am concerned that business tax bills are higher in Springfield than in many surrounding communities. Over the past year the Chamber of Commerce provided the Council with an analysis of tax bills for similar businesses in local cities and towns. For example, a car repair shop in East Longmeadow pays a property tax bill of $3,445, while a comparable shop in Springfield pays $6,971. This tax scenario does little to help the Mayor's goal of economic development.
� Second, during door-to-door campaigning last year, I heard too many elderly homeowners and others on fixed incomes tell me that their taxes had doubled over the past several years, and they were at risk of having to sell the home they had raised their family in because they could not afford to pay their taxes.
I also heard from a number of middle class families who can afford to pay their taxes but were considering moving to another community. Why? They add up the amount of money they spend on private school, higher auto insurance, and property taxes. They believe they could take that sum of money and spend it on taxes in another community in exchange for better schools and quality of life. I would maintain that the City needs to do what it can to preserve what is left of its middle class tax base.
� My third concern is Springfield's structural deficit. I became a City Councilor because I did not want to see the City of Springfield return to the era of fiscal irresponsibility that preceded the Springfield Finance Control Board. This issue was the cornerstone of my campaign.
According to the four-year financial plan published by the Chief Administrative and Financial Officer, "the city's revenues cannot support the City's services as they are currently provided."
Our two biggest sources of revenue, state aid and local property taxes, will probably not grow in the coming years. We are at our levy ceiling, which means we are unable to increase our property tax levy until values rise. The state, which actually supports 60% of Springfield's budget, has been forced to make cuts in state aid. Meanwhile, a number of costs continue to rise, including health insurance and retirement benefits, and the city faces $373 million in deferred infrastructure maintenance costs.
� Finally, my focus on taxes during the budget process stems from this past December. State law requires cities to pass a balanced budget by June 30, but they do not allow cities to pass the taxes necessary to pay for that budget until late fall. Last year, when it was time to pay for the budget passed by the Control Board, some Councilors and other taxpayers were surprised and incensed that their tax bills were going up. Councilors wrestled with this issue until 7PM on New Year's Eve before they passed the tax rate.
The lesson I learned from that night was that the budget, and the taxes that go to pay for it, should not be decoupled in public discussions. During a City Council budget meeting one of my fellow Councilors said that "We are not here to talk about taxes. We are here to talk about the budget." My intent was to ensure that we talked about both, so that there would be no surprises later this year when it came time to pay for the budget that we had already passed.
Why I Attempted to Cut the Budget
With all these facts in mind I came to the conclusion that it would be necessary to cut the budget. As the first group of City Councilors elected under the new ward representation system, a number of us believed it was important to represent constituent voices in Council deliberations. For this reason we decided to work for a budget that did not raise taxes.
Our first challenge was to figure out how much the Council would need to cut in order to affect tax bills. Councilors requested this information from the Mayor's finance team, and after several days of reluctance, they finally informed us that it was would take $2.5-$3.5 million in cuts to avoid a tax increase, and about $8.5 million in cuts to lower the tax rate by $0.50.
At first glance it seemed entirely feasible that the Council could at least cut $2.5-$3.5 million from a $534 million budget. However, this proved difficult for a number of reasons.
First, $310 million of the budget is spent on education, and that amount is fixed by state law. We spend the minimum that is legally required by the Commonwealth of Massachusetts on our schools in order to get state aid. The state provides $262 million of that budget under the condition that Springfield provides the rest.
Second, of the remaining balance, there are a number of obligations that the City of Springfield is legally required to pay. This includes $39 million in debt service, $22 million for employee insurance, and $24 million in pension benefits. These non-discretionary line items account for $113 million.
When all of the non-discretionary budget items are accounted for, there is $110 million, or about 20% of the total budget, on which the council is able to impose cuts. Here is how that amount is spent:
- Public Safety (Police, Fire, and Dispatch): $57.8 million
- City administration (Law, Assessor, Treasure, Human Resources, etc.) about $20 million
- Public Works: $9.6 million
- Health and Human Services: $8.5 million
- Parks: $8 million is spent on,
- Supplement the trash fee: $4.6 million
- Libraries: $4 million
From what I have seen, these expenditures fall into two basic categories: expenditures that taxpayers expect, and expenditures that are necessary for the proper function of the City of Springfield. And so, cutting $2.5 - $3.5 million from a $534 budget is actually quite difficult. Either the cut would debilitate City government, or it would take away basic services upon which our community depends.
Budget Votes
Our first budget meeting was on June 10. The votes that the Council took are contained in two separate files that you can link to. One file shows the cuts that the council made (because a majority of the Council voted for them). The other shows the cuts that were proposed but that did not receive a majority of votes. My goal at that meeting was to vote for small cuts in all departments. My logic was that each department could carry out its mission with 97% of its budget intact.
However, it became clear that this strategy was not going to work because some Councilors were not convinced that the budget needed cutting, while others agreed on some cuts and not others. The Council had to vote on each department line item separately. After about five hours reviewing the budget, the Council only agreed to cut $424,323 from the total budget. After seeing that we would not be able to vote for the $2.5 - $3.5 million in cuts that would have affected the tax rate, my votes became more selective. I voted for cuts to line items if the expense seemed inefficient and/or unnecessary.
Toward the end of the June 10 meeting a vote was taken to approve the budget. I voted against the budget because I wanted to be on record that I opposed a budget that increased taxes. The majority of the Council voted in favor of the budget. It was later determined that this was an unnecessary and meaningless vote. The Council had acted on the budget simply by voting for cuts.
On June 16 the Council met for a second meeting. I had called for a 2.8% spending cut across the board but I failed to get a majority of councilors to support this. I then proposed to cut the City Council salry increase for this fiscal year, and the majority of the Council agreed with the cut. We then voted on the entire budget one more time, and the Council voted in favor of the budget by a vote of 7-6.
Conclusions
The learning curve for a new City Councilor is steep. Nine out of thirteen City Councilors were new to the position this year. Over this past spring it has been an honor to work with my colleagues on the Council. We have accomplished a number of things.
First, we have shown a commitment to ensuring that the City Council is not a rubber stamp. Due diligence is the new norm in the wake of the Springfield Finance Control Board. We do not vote on items that we don't understand, and will request further information, and delay votes, until we have the information we need to make an informed decision. With no financial staff independent of the mayor, this task is challenging, but vital to the fiscal health of the city.
Second, we have renewed a community discussion about the budget and taxes. We have emphasized that the budget and taxes should not be decoupled during our deliberations, and we will continue to do so.
Third, we voiced the concerns of homeowners and businesses who are concerned about the amount of taxes they pay and the effect of those taxes on decisions to locate to and live in Springfield. Over the coming months I and other Councilors will be paying attention to savings that may emanate from unfilled positions and other cost savings, with an eye towards affecting the tax rates that we will need to set this fall.
As the four-year financial plan published by the Chief Administrative and Financial Officer notes, there are some difficult decisions that city leaders will need to make in the coming years in order to address our structural deficit. The questions that need to be addressed, according to the report, are:
- What are the core services that the City should provide?
- What is the most cost effective way to deliver these services and still be sustained solely by recurring revenue?
Over the next year, these questions will be a major focus of my work. Ultimately, I envision a city with an expanded tax base that relies less on the state for its operating budget. In the meantime, however, the city will need to continue to do more with less. To ignore this fact is fiscally irresponsible.
Thank you for reading this report. Over the coming years the City will need to continue to provide services more efficiently and cost-effectively. I welcome your feedback on my performance as a City Councilor, and on ideas about how we can alleviate the city's structural deficit in the coming years.