Public "town meeting" Forum ~ June 14, 2007
Transcribed Recordings of Discussion Points

 



FY08 Public Finance Forum
PowerPoint Presentation
(htm format, best viewed with
Explorer browser)
Additional general information at these Websites:
Massachusetts DOE Website
Massachusetts Department of Education information & statistics
Massachusetts Municipal Association (MMA)
Resource for municipalities including informative links about
the Municipal Partnership Act (MPA)
More insight cited during discussion (pdf files):
Summary of Municipal Partnership Act (MPA)
cited at above MMA resource Website ~ mpasummary.pdf
In anticipation of FY09
 


Discussion Point 1
Budget & Finance
Mayor John Moak presenting, engaging in public discussion/Q&A

 


[The Public "town meeting" Forum, moderated by John Altson, followed information format via PowerPoint presentation and an opportunity to relate "powerful points" during three open discussions. The Mayor assumed the introductory budget presentation and discussion about general budget and finance (also joining in the conversation during the other two discussion points).

The discussions were recorded by Karen Kelley; transcriptions provided herein are confirmed with other notes and recollections. Italicized text provides additional information/insight in context.]

Questioned about strategic planning:
The Mayor indicated that he is working with a volunteer financial group and a Strategic Long(er)-term Plan should be available in few months. These e
fforts focused more on stabilizing funds, along with analysis of revenues & expenses. Regarding the latter, the Mayor offering an example of future cost savings for trash disposal when that contract is renegotiated in a couple of years. Regarding the former, he cited a strategy under consideration: pulling predicted new debt out of operating budget by seeking a debt exclusion, thereby reducing debt payments from operating budget & funding "buybacks" of old debt.

Future discussion: Coordination/sharing or selling commonly needed services with other communities, evaluating feasibility/practicality (in practice as well as concept).

2-1/2 property tax increase:
- Assessments change but overall tax levy must be within 2.5%
- Tax bill may rise as tax rate goes down
- Tax bill itself may go up more than 2.5% because of allowed increases in levy limit

[Note/quote: "A community's allowable levy for a fiscal year (called the levy limit) cannot increase by more than 2.5 percent of the maximum allowable limit for the prior year, plus certain allowable increases such as new growth from property added to the tax rolls."]

Question/comment about the balance in the stabilization fund:
Balance in stabilization fund must be kept at 5% of budget or approximately $2.5M, per previous City Council resolution. Free cash was $400K at the end of FY06; spent $60K in FY07 thus is $340K.

Follow-up questions about budget commitment for union contracts:
Union contracts (salary, health insurance, retirement benefits) are 70-80% of the $45M budget; thus only 20% of the budget is flexible. Suggestion to be creative in restructuring contracts.
Mayor explained that negotiation/arbitration would consider City's free cash and stabilization funds in the decision, ultimately favoring unions.

Follow-up question about options for health insurance:
While acknowledging there is a long way to go, the Mayor retraced strides made in lowering the annual increase in health insurance costs this year. (With 6.1% increase versus an average increase of 14.6% over the past 5 years, had the status quo continued, that would have resulted in up to $400K to $500K higher operating budget.)

Cited were the Massachusetts Inter-local Insurance Association (MIIA, see Website at this link without) ~ a group with 56 communities who buy as a group. The Mayor explaining that a combination of this association along with implementation of a creative option for insurance deductibles implemented this year, was responsible for lower costs.

If the Municipal Partnership Act (view MPA summary as pdf file at this link within) is passed ~ (under Sections 4, 6, 7 and 8) the City can participate in the State Government Insurance Commission (GIC) program to (further) slow the rate of increase of health insurance costs for local municipalities. The bill, which has already been filed separately, stipulates that the decision to participate is conditional upon the outcome of contract negotiations (with unions).

[Note: Mayor Moak was one of the first municipal leaders to openly support the Governor's Municipal Partnership Act (MPA) ~ a comprehensive initiative to assist local municipalities. Newburyport's City Council recently introduced a resolution which was passed unanimously at the 6/11 City Council meeting. [See pro forma resolution (link without) as provided by the Massachusetts Municipal Association (MMA) MPA Advocacy Kit. ] With that resolution, Newburyport formalizes its endorsement of the MPA ~ and joins with other communities, leaders and citizenry, to encourage legislative approval.

If the legislation is passed ~ included in the myriad of benefits, reimbursements and disbursements (e.g., participation in the GIC mentioned above) ~ the City will be eligible to receive the following additional revenues, based upon MMA's Estimates for FY07 data (Newburyport is #206 on the detailed municipal data):

- Projected revenue from eliminating Telecom tax exemptions $68,683 (under Sections 23 to 27 of the MPA)
- At 1% Meals Tax $571,959 (under Section 29 of the MPA)
- Meals and Telecom combined $640,642
- FY07 Levy $35,419,336, thus potential new revenues at 1.81% of (FY07) tax levy

(In anticipation of the future development of a waterfront inn/conference center, Section 28 of the MPA will allow an increase in local hotel tax from 4% to 5% assessed the (occupied) room rate. Such examples and projections to be further examined during follow-up forum.)

Further note: The Massachusetts Municipal Association (MMA) Website offers a resource page for more information about the Municipal Partnership Act (MPA) at this link without. Watch for future forums and other information about the combined efforts to "hatch this 'golden egg' now quietly nesting in the legislative branch of government."]

 

Discussion Point 2
Tax Revenues & Economic Development
OPD Director Nancy Colbert presenting, engaging in public discussion/Q&A

 

City Assessor Dan Raycroft detained at the City Council's Budget and Finance standing committee's rescheduled final budget review meeting at the public library was unable to participate. Nancy Colbert, arriving from that B&F meeting, presented and addressed public comment & inquiry. A follow-up forum will be scheduled to expand the conversation about tax revenues and economic development and relationship to the budget process, which the OPD Director briefly broached during her presentation.

Citizen question/comment about Subdivision costs:
There should be impact fees assessed for water, sewer etcetera - in the order of $70K per lot.
OPD Director explains that Massachusetts State Law prohibits "impact fees" per se but the city can charge for direct cost of specific development (e.g., Maritime Landing, Woodman Way, charged for sewer improvements via betterment fees, such as those assessed on Low Street and Plum Island projects). Others use a system of equitable distribution. Previously, Newburyport had not considered such mitigation and thus missed opportunities, but will do (and is doing) so now.

[Note: Developers throughout the City do pay connection fees assessed per lot; while PI residents pay $3K per hookup, contractors pay $5K.]

MGL Chapter 40D Permitting:
"Quick" revamped tool for Industrial Development in Cities in Towns, processed within 120 days from completed application. Major advantage is that State markets City from State House. (See Mass Law Chapter 40D at this link without.)

Regarding the renewal to
Lord Timothy Dexter Industrial Green:
- H
eight restrictions must change to adapt development for newer "cleaner" industries
-
35 ft currently OK for industrial but not executive/office park
- Kept at 35 ft restriction - special permit would be required

Question re 40D Site: Who determines?
1. Property owner requests designation
2. City Council approves
3. Submit to State

Discussion about PowerPoint Chart citing increased payroll:
Citizen questioned: What relevance, what benefit to City, since City coffers not affected by payroll tax?
Response: Higher payroll and education translates to higher level jobs and cleaner businesses that do not ask for lots of services.
Office building = bigger = more tax revenue that older industrial buildings

Mayor referenced earlier discussion about higher income in Newburyport which translates to decreased state aid for education; Mayor indicates must continue to lobby for "fair share" - (further discussion deferred until Q&A about schools).

Discussion about encouraging more State Revenue Sharing:
- Working with State regarding creative solutions - these requiring (State) legislative action;
- Inevitable strain on property taxes as a basis for revenue;
- Must balance the need for property taxes with highest/best use of properties to retain quality of life;
- Municipal Partnership Act - tagged for future discussion. (The Massachusetts Municipal Association provides a resource Web page about the Massachusetts Partnership Act, see link without, also referenced above.)



Discussion Point 3
School Financial Issues
Gordon Bechtel of School Committee presenting, engaging in public discussion/Q&A

 


Gordon (Gordy) Bechtel, Chairperson of the School Committee's Finance subcommittee presenting and addressing public comment. Superintendent Kevin Lyons also engaging in public discussion.

Infrastructure needs:
Buildings old, excluding the newly renovated High School, which reopened after renovations in 2002. (E.g., Brown built in 1910s; Bresnahan in the 1950s.)

Capital needs:
- Window replacement
- Technology, especially at the elementary level; comment that even the new NHS PC's are now out of (5-year) warranty period
- Note: PowerPoint presentation chart for capital needs should be adjusted to exclude items related to the Kelley School

Trust:
Major factor when engaging the community regarding improvements in schools and financial constraints

Continued Q &A regarding budget:
2005 - 2007 there was a 10% increase in school budget, tax bills, but not in taxpayers income.
Trying to operate more efficiently, with City and community at large

Question about "No Child Left Behind" as an unfunded mandate:
Response by Superintendent Kevin Lyons conveyed that the costs were not so substantial because Massachusetts already had comprehensive testing programs before "No Child Left Behind." Comment that on a national level, MCAS exam standards are the "hardest tests" (MA and CA in this category). The costs associated are time-related, with the testing absorbing about 3 weeks out of the school year; requiring principals involved with execution to commit time away from other school management. A major drawback is that results are not received until well after a ½ year later. The advantage is that the testing identifies children who are learning as well, but there is no money to follow to aid those students to better achieve.

Meeting with School Committee, City Council and citizens to address what to do next:
At 6/4 School Committee meeting, Mayor strongly suggesting (with Chair of SC finance subcommittee Gordy Bechtel in agreement) that an ad hoc committee be established to look at finances and held School Department with curriculum: Strategic Financial Planning Committee - to look at revenue options (state, City taxes, fundraising). The item is on Monday's (6/18) school committee agenda. (See link within.)

Question concerning school population projections (past history, building permits, studies):
Response from Gordy that the student population will peak in a few years, then decrease (due to choice decrease) then level off.

Follow-up question regarding choice program:
Allowing Gordy to clarify that while the School Committee votes on the choice program each year, determining the number allowed per grade, once a student is accepted, the School District is required to keep the student until graduation (unless student opts out).

Question regarding the Long Term Elementary Building Needs Plan:
Answer clarified that the Building Needs subcommittee is currently reevaluating (new) building space based upon the new school configuration.

Citizen-participant made suggestion:
That the schools consider a creative alternative of selling the schools and leasing back the buildings as a means to bring in some revenue. Dialogue with Gordy ensued about creative solutions, with Gordy mentioning that the Schools had previously contracted out HVAC - but brought it back in-house which resulted in a $150K savings. (Note: The schools have also reduced KW consumption with oversight, but unfortunately with increased fuel costs these prior savings have evaporated as indicated in the PowerPoint presentation's charts.)

Question concerning the factors in per public cost/expenditure (PPE):
Comparing Newburyport to other communities, Gordy indicating that this was due to smaller class sizes, requiring hiring more teachers. With the recent reconfiguration, going from 20 to 24 students per class realized a big savings, but also did cut no core components. (FY08 cuts were to seriously impact Newburyport High School not only in programming, but that the school is at the maximum student enrollment.)

Issue/factor of School choice:
$5K per choice student is not enough to cover the cost of teaching these students; OK when there were empty seats, but not now as the School District was forced to create more classes, hire more teachers for choice students.

Per Pupil Expenditures declined in Newburyport with the FY07 cost less than the State average; Try to get as low as possible, lower than now, by continuing to look at ways to reduce overhead.

Discussion point regarding State Aid:
Question about "how we can get what we deserve" in State Aid (Chapter 70) since Newburyport receives far less when compared to other communities (even of equal demographics).
The Superintendent mentioned the lobbying planned by a newly formed group, directing a question to one of the group's principals present at the forum.

Further discussion about seeking more revenues and revenue sharing (with State):
- Mention of the meals tax option of the Municipal Partnership Act (previously cited above) as an example of revenue sharing.

- Seek out different ways than just the formula the State is presently using, such as pilot programs.

- Cited as an example by Gordy, a different way to be reimbursed for Special Education, allowing the State to pick SPED costs entirely, with the School picking up the cost for educating other students.

- Look at similar communities and form a bloc (which is what the group concerned with lobbying the State is doing.

In the end, the burden still rests on local property tax, but the new governor and others at the State level have become aware that this is not sustainable. Suggestion made that a percentage of sales tax go directly to education, along with exploring other and all alternatives.

In closing, it was reiterated that a combination of cost-savings and additional revenues (as well consideration of creative solutions) will be explored at the future sessions focusing on Strategic Financial Planning for the Schools (which will be open to the public and encourage public participation) --- continuing the public discourse as a course of action is planned.



 
 
 
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