| April 27, 2023 | |
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| Geoff Epstein | Framingham Patch |
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The Mayor's New Budget Steers Framingham into Troubled Waters: Part I
More tax breaks ignore Moody's warnings, imperil vital school district goals and operations, and worsen the infrastructure backlog.
Geoff Epstein
The Framingham Mayor submitted his new budget for FY24, (2023-2024), to the City Council on April 25, 2023. As has been detailed elsewhere: https://patch.com/massachusetts/framingham/framingham-mayors-sparse-fy24-budget-submission the budget submission fails, by a large margin, to meet the minimal informational standards laid out in the charter, and as a result a typical community member cannot be expected to reach any kind of reasonable understanding of what the budget delivers. The FY24 budget submission still has not been posted on the city website - another fundamental charter violation. Presenting a comprehensive, complete, understandable annual city budget is not rocket science and if anyone wishes to see very good examples, they can browse to the City of Newton financial information at: https://www.newtonma.gov/government/comptroller/budget Find out what's happening in Framinghamwith free, real-time updates from Patch. Despite the inadequate nature of the Framingham Mayor's budget submission, it is possible to paint a rough picture of what is going on. Backed up by extensive research, using Framingham municipal archives and the state Municipal Databank, the meager clues provided by the City of Framingham budget submission can be leveraged to create a set of budget impact predictions. The City Council may be able to help squeeze more details out in their public hearings on the budget, but they will be in the unenviable position of putting most of their effort into trying to extract what the budget information is, rather than asking critical questions based on a comprehensive budget book. If, once informed, the City Council were to intervene in any significant manner, some disastrous strategic decisions could be reversed, but that is also unlikely, as several influential members of the City Council have been almost entirely responsible for the financial decisions which have caused most of the problems confronting the city. Predictions First, here are 12 predictions, which will be followed by detailed justifications, 2 in this article and the remainder in subsequent articles: The city bond rating will be downgraded from Aa2 to Aa3 - 100% certain. The late school bus problem will get worse and possibly descend into complete chaos in the fall - 100% certain. The next submission for state funding for a new southside school will fail - 100% certain. Low income children will continue to suffer from poor access to pre-K for the foreseeable future - 100% certain. The roads will continue to get worse - 100% certain. New school solar roof and canopy projects will continue to be severely delayed - 100% certain. Water & sewer projects will be delayed as the city runs up against its self-imposed debt service limit of 5% of the total annual budget and the city maxes out its limited 0% interest loans from the Massachusetts Water Resources Authority (MWRA) - 100% certain. The city will have to increase its debt service beyond 5% of the annual budget - 100% certain. Water & sewer rates will be hiked substantially, as the community continues to increase water conservation (a good thing!) and city rate revenue decreases - likely. The Barbieri and Juniper Hill school roofs will need emergency replacement - likely. The high school graduation rate will drop from 95% to 85% in the next decade - likely. The city will realize that the source of all its problems is choking off most property tax revenue increases for 6 years, dropping city property tax revenue by almost $30 million/year - possible.
Arguments 1. Bond Rating Last July, Moody's Investors Service downgraded the city's bond rating by adding 'negative outlook' to its basic Aa2 assignment. See: https://www.framinghamma.gov/DocumentCenter/View/47447/11-Jul-2022-Moodys-Rating-PDF?bidId= Moody's further noted: "The negative outlook reflects the recent decline in the financial position due to a greater use of reserves and limited property tax revenue increases that have resulted in a structural operating imbalance." Moody's is calling out the property tax revenue the city loses each year by taxing below the levy limit increase allowed by Proposition 2 ½. These losses are shown in the chart at the top. They now have reached an amazing $40 million/year. Moody's is also calling out the fact that free cash is at its lowest level in 10 years: $6 million, down from a high of $16 million. The way out of this is to stop throttling back property tax revenue increases, but the Mayor/City Council response to this Moody's red flag is to make the structural operating imbalance worse by continuing the throttling. The Mayor's FY24 budget calls for a 1.9% property tax levy increase, not the 2.5% which would stop the property tax revenue losses increasing. Stop the throttling! With low property tax revenue increases, dwindling cash reserves and almost no ability to borrow further money, with the debt service to budget ratio at 4.6%, almost at the 5% city self-imposed debt service limit, the city has almost no ability to finance future infrastructure maintenance projects. Witness the city budget message that it is trying to get 0% MWRA loans for water & sewer work, in fierce competition with 350 other cities and towns for a small pot of state money. A desperate last ditch effort if there ever was one. Something must give in the next year. All it takes is one more school roof to fail early, or one more serious sewer system failure, or roads getting so bad the community revolts. Thus, comes the prediction that the city bond rating will be downgraded by Moody's from Aa2 to Aa3. The loss of $40 million/year is a huge financial threat to the city and the bond rating issue is the canary in the coal mine. There are real threats to the ongoing operational health of the education system, city infrastructure and city services. They will all be addressed in turn, but each problem will be shown to have its origin in the City Council throttling back city property tax revenue. 2. School Buses Everyone knows that Framingham Public Schools has a chronic late school bus problem. NRT, the school bus company, has a contract with Framingham Public Schools to provide 77 buses to transport students to and from the elementary schools, the middle schools, and the high school, but since the start of the school year, they have been only able to provide about 55 buses each school day. The issue has been discussed at length in: https://patch.com/massachusetts/framingham/framingham-must-boost-school-bus-driver-pay-avoid-fall-disaster Increasing driver pay is the solution, and that argument has been recently amplified by Adam Freudberg, the District 4, School Committee member: https://framinghamsource.com/index.php/2023/04/30/opinion-reliable-busing-to-from-school-is-a-human-right/ I know Adam well and believe me he tries the hardest of anyone I know to reach collaborative solutions, but even he is running out of patience with the Mayor's unwillingness to invest city money to solve the problem. It seems that this is another case of the city 'short of a dollar' mentality. The Mayor removed $10 million/year in city funding from the school district budget to replace school roofs, avoiding more debt service and thus hoping to help with the bond rating problem. It appears that he simply does not want to give any of that money back to solve what is obviously a supply and demand, market driven school bus driver pay issue. The Mayor is not perturbed at all by the downside risk of driver strikes, service disruptions, and a possible collapse of the Framingham school bus system in the Fall when drivers will be able to shift from Framingham to surrounding school districts for much better pay. On March 10, 2023, the Mayor had a breach of contract notice served on NRT, so he is adopting a combative approach, rather than recognizing that the marketplace is the driving factor here, not NRT incompetence. NRT should be able to make quite plain, in any legal action, that market forces can only be managed by increasing school bus driver pay. They have provided the Mayor a clear way to solve this problem for the greater benefit of our students. But he chooses not to engage. That is a huge error in Mayoral judgment. With no further property tax revenue throttling in FY24, there would be plenty of money to fix this. We will move on to the next set of predictions in Part II. The outlook only gets worse and worse.
This was Geoff Epstein last year. Next year will be the same. https://patch.com/massachusetts/framingham/framingham-more-same-or-new-day-city-decisionmaking |
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