The fix is in.. we will pay more no matter what
Thanks to G King, we now have learned what the Administration is proposing to fix the water deficit. Don't shoot the messenger, but we are it a bad spot and unless they find 2.5 million in savings somewhere, which is very unlikely, the water rate will go up and so will our taxes.
The administration late this afternoon released the requested information as to the water and sewer deficit. I have not read it in depth, but in general this is what they are “recommending”:
A 12% rate hike effective July 1, 2021. “Recommending” is an odd term to use, because the decision on the rate is the full and complete decision of the Mayor. The report adds it is the first rate increase in two years. This is made to sound like a bargain when it is described as only costing $25 dollars on the average quarterly water bill. Or $100 a year.
In addition, they are “recommending” the taxpayers subsidize the water and sewer fund again next year to the approximate level of $2,500,000. That is about $85 on the average tax bill.
What we speculated two months ago is accurate, the rates are about 20% below what is required to fully fund expenses. In the proposed scenario, a 12% rate hike results in still incurring a 2.5M deficit.
There is no mention as to whether they are going to continue borrowing $1,500,000 a year to pay salaries.
Lots to read and this problem is a result of many different inputs, not just one. High spending levels and inefficient rate setting have been compounded by the pandemic, making for a significant financial problem in the City of Framingham. Despite the desires of some, we cannot spend our way out of this.
For those who want to read I am sharing a link to my copy. I expect it will be uploaded to the meeting materials soon, but here it is in the meantime.
https://drive.google.com/file/d/1Zsjtc9fIgpks2wdt5Chb0-nFFtHjNkvX/view?fbclid=IwAR1sw3wX3R97nBpWnc5NVTV4MX1FtQznjpdnhCXfHr8TMH2ApAh_P5k50tw
posted by Jim Pillsbury @ 2:59 PM
21 Comments
21 Comments:
One quick question. Are we really borrowing 1.5M a year to cover salaries? If so, we are in a lot more trouble than water and sewer rates
Does the DC have any ability to disagree and override this proposal. If the 12% increase still leaves us with a deficit it seems like a pretty ridiculous solution. Is this really being supported by our CFO?
Can someone explain to me why our water rates have been "too low" for the past many years leading us to be in this positiion? Sounds to me like someone was not doing their job. At some point, with all the financial issues Framingham is facing, it should be time to look at whether our CFO is worth what we are paying her.
The BOS had the opportunity to hike the water rates, but for years, they just approved small incremental increases. Town Meeting followed suit. The lack of maintenance of the whole system goes back decades, which resulted in us having to spend a lot in the past decade, which we are paying off now. The CFO says that she will refinance some of the debt as time goes on.
The DC can reject any part of the Mayor's proposal, but we really don't have many choices.
If the water enterprise fund can't pay for itself, we have to borrow to pay salaries.
I know no one wants to think this, but we may have to go higher on the rate increase... say 20%, use a little of our free cash now.. so we don't increase property taxes to pay for the water deficit, leave the school alone and starting this year, use the revenue from the cannabis industry to shore up the water enterprise
fund until 2022 or 23 when we may be back to somewhat normal water usage.
Our property taxes are going up, the CPA, the Fuller School and who knows what the Mayor is thinking. I don't think we should be mixing property taxes with paying for water.
All good points Jim. When will we see the Mayor's budget proposal for Fiscal year 2022?
jim i agree with almost everything you have said except for not touching the schools. that should only be true for teaching staff. the school administration should be on the table just like the municipal side.
I think I heard the CC ask for the budget discussions earlier than last year, which was the very last day allowed under the charter. I'm guessing mid March early April. But the administration may drag their feet in hopes that the feds give cities a financial hand which may make a big difference this year and next years budget. But it looks bleaker every day, almost 400k people is the US have died, a new variant is now here thanks to a millennial who traveled to the UK and back.
We don't even know how many dosages there are already made... and how many will be made.
I thought the national guard should have handled the whole operation from the get go, instead of just dropping off boxes.
In thinking about it, your right to consider administration in all areas of the budget. I'm glad to see they got a new school bus contractor. New buses and a lower rate sounds ok to me. They better deliver though... if when we go back to full schools.
I agree about school being included in budget cuts, but only if other departments are cutting their budgets by the same percentage as they are asking the school to cut. this mayor had been a total failure on budget issues and even after more than 3 years as mayor she has done nothing to help the taxpayers or the city. She is blind to what needs to be done and unwilling to annoy anyone as she is obviously running for reelection. Will be an interesting year for Framingham
We need to come up with another 2.5M? I suggest the city buy some lottery tickets
hold on there buckaroo with making the equal cuts. municipal side already took cuts to their budgets while school budgets increased. so if you want to make fair equal cuts then the schools will need to take a bigger cut than the municipal side does in the next round of cuts.
this just in to the news desk. Our CFO has found 2.2 million is savings from refinancing some of the debt service. I wish they had done this to begin with. That's huge savings imo. Now this presents an interesting question... is that enough to stop the 2.5 million dollar grab from free cash? I assume the water rates would still go up by 12% and perhaps more next year depending on how fast we recover from covid.
Have a look at what the CFO put out today:
http://framinghamma.iqm2.com/Citizens/FileOpen.aspx?Type=14&ID=4710&Inline=True
She "found" 2.2 million? If you have not got your eyes on the money for the city then you should not be the CFO. I think she knew her job was in jeopardy and she scrambled to find a way out. Let's hope that scramble does not include cooking the books. Just for the record I am a former TM here in Framingham and always took the CFO at her word. But given what I have seen in the last 2 years, I have serious doubts about her performance. But maybe she is getting caught up in the mayor's games.
This whole thing is a mess and I agree strongly with Councilor King that we need to look at long term solutions and not just plug the immediate hole or we will be here again next year and the year after. We eventually will run out of "found" money or "free cash" so we need to fix the systemic issues that apparently exist here. Jim, does a 12% increase in rates address that systemic issue or is it just another stop gap fix?
So how much are our tax bills going up between Fuller, CPA and this mess?
And we need to get rid of Stewart-Morales who claims to be an accountant but pushes the city to do things no decent accountant would support. Spoken as a CPA myself.
I as well have relied on MEK to be looking out for the best interests of the taxpayers. Maybe she was waiting for the interest rates to go lower...how much lower can they go is not clear to me, but that's her game to figure out.
I agree with George as well.. it's the long term fix that needs to start now with a multi-prong solution. I think everyone can agree, the water&sewer departments must pay for themselves.
Now that MEK has found some real savings, it may be a little shy, but with a 12% increase and maybe just a small amount coming from free cash... to be paid back when we get back to normal, water usage wise, the rise in property tax to fix the water deficit may not be needed.
The bigger question is, will the CC be able to approve the plan without holding hostage the great "efficiencies" that are supposed to save us plenty, which is debatable.
Tune in tonight to find out how this will all boil down.
Referred back to fincom
Fincom? WHen do they meet?
tonight the 21st
the only thing on the agenda is the deficit
http://framinghamma.iqm2.com/Citizens/FileOpen.aspx?Type=14&ID=4721&Inline=True
last nights meeting.. http://207.172.210.8:5002/CablecastPublicSite/show/2197?channel=1
both sides are dug in... nothing resolved and another plan from the Mayor and the committee. Hard to see how this ends
It ends in all of us having to pay more to dig them out of a hole we did not create.
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