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As salaries went up, total payroll remained steady

May 9, 2016

Even as town employee salaries went up last year, and the number of employees earning more than $75,000 continued to rise, the total payroll stayed almost level last year from the year before, according to recently-released town payroll records.

The total 2015 town payroll was $53,172,522.37, up only slightly from 2014, when the town paid out $53,128,412.35.

School Superintendent Lincoln Lynch was the highest-paid employee in the town of Walpole last year, bringing in about $194,248. That compensation included a base salary of about $182,000 and stipends totaling $11,000. Lynch earned a total of about $183,000 in the year prior.

Town Administrator Jim Johnson earned $162,720 last year. Lynch and Johnson were just two of the 77 town employees who were in the $100k club last year. Dozens of police officers and firefighters, along with a multitude of municipal department heads and school teachers and employees also received more than $100,000.

The trend of Lynch’s salary over the past few years suggests that he, and at least several police officers, are likely to be the first employees in town history to break the $200,000 mark when 2016 payroll records become available.

Total overtime costs in 2015 were $1,720,055, up from $1,609,307.98 in 2014. Total stipends went from $2,958,147.52 in 2014, to $3,070,486 in 2015.

The total number of employees earning more than $100,000 in 2014 was 68. For comparison purposes, this number was just 30 in 2009.

In 2015, there were a total of 314 town employees who earned more than $75,000. Out of the 637 employees who earned more than $30,000, indicating a full-time position, that figure represents almost half. That is an indication of an unsustainable top-heavy payroll, further reinforced by statistics from the Mass. Department of Revenue that have long shown that Walpole’s payroll is substantially larger than other towns with a similar number of employees.

In 2014, the town had 650 employees who earned more than $30,000. As individual salaries have gone up, there has been less money to go around, resulting in a reduction of 13 employees earning more than $30,000 this year. The ever-rising individual salaries means there will be less money to hire teachers and police officers going forward, as town funds increasingly go to those at the top of the unsustainable payroll.

The salary data is exclusively available on 180.

In a departure from past Town Reports, the 2015 Annual Town Report only reports gross pay for each town employee, omitting base pay, stipends, and overtime. Town Administrator Jim Johnson told Town Meeting Representatives last week that the town decided to only report gross pay because it would be “less confusing.” But RTMs John Hasenjaeger and Ann Ragosta criticized Johnson, arguing the decision to omit the information about stipends and overtime was a reduction in transparency, and would only cause more confusion about the composition of town employee salaries.

Schools to pursue ambitious building plans

March 28, 2016

The Walpole School Committee is laying the groundwork for another override, but expects it will take at least a few years before voters will get their say.

The School Committee voted Thursday to submit “Statements of Interest” to the Mass. School Building Authority as the first step of what is expected to be a multi-year process to plan for and eventually combine the town’s two middle schools and construct a new high school. Selectmen will be asked to vote on the SOIs at their meeting Tuesday.

School Superintendent Lincoln Lynch said the town’s two middle schools, Johnson Middle School on Robbins Road and Bird Middle School on Washington Street, were identified by the Maguire Group in 2013, and by building and school officials, as high building priorities because they are over-crowded and out-dated.

Bird was constructed in 1961, while Johnson opened in 1967. Neither building has been renovated since their construction. During the School Committee’s March 10 meeting, Lynch said that they were both “outliving their useful life … and are no longer adequate for 21st century educational program for our students.”

The SOIs list a litany of concerns at both middle schools, including an “insufficient” number of parking spaces at Johnson, a computer lab that is “rarely used” because it does not have enough computers for larger classes, and science classrooms that are smaller than state standards require.

The School Committee said the high school, last renovated and expanded in the early 2000s, is too small for a student population of about 1,200, because of insufficient parking, narrow hallways, and small classrooms. The School Committee wrote in their SOIs that even with the 2001 renovation, education needs have changed in the 15 years since, which means the district needs more space for engineering and robotics classes. One area of concern is the media center, which was expanded and modernized as part of the 2001 renovation, but is now apparently too small and does not allow for “collaborative learning.”

The School Committee is hoping to construct a new high school at the site of the existing Bird Middle School, and to convert the high school on Common Street to a combined middle school. It is not clear at this time what Johnson Middle School would become, but the SOIs suggest that it would be “repurposed to meet the growing space needs of the Town of Walpole.” If the building can be repurposed for town needs, it is not clear why it is no longer suitable as a middle school.

The SOIs do not indicate whether the district would seek to relocate the existing high school fields, including Turco Field, to the new high school site, and what would happen to the existing fields at the Bird Middle School site.

The district’s enrollment projections suggest that middle school enrollment is on a decline, which the School Committee believes will boost the case for creating efficiencies by combining schools. Although common sense would suggest that declining enrollment and the resulting efficiencies of combining buildings would also correspond to a need for fewer teachers and lower school spending, that side of the issue hasn’t been discussed by the School Committee.

The SOIs by themselves do not cost the town any money, or create any commitment on the part of the town. But according to Lynch, about 200 SOIs are submitted to the MSBA every year, of which only about 15 will end up being approved each year. Lynch said he anticipates Walpole’s SOIs will not receive approval until at least 3 – 5 years from now. The MSBA requires all SOIs this year to be submitted by April 8. Although the School Committee had initially believed they might submit SOIs next year, they decided to move faster in an attempt to get into the MSBA’s queue sooner.

Lynch said the MSBA is funded from a portion of the state sales tax, which Walpole residents pay into, but should be looking to get money out of. The MSBA would potentially provide grant funding to pay for any school renovations or construction, but he said a local debt exclusion override will ultimately be needed.

The SOIs indicate that the School Committee is planning to conduct a study to examine the district’s space needs that “will create a master plan for improvements based on relative needs and cost effectiveness.”

Lynch said the SOIs will request the MSBA to “partner with us to study our current facilities, and synthesize our elementary projections, our educational vision for these buildings, as well as the physical plant, and the costs associated with that physical plant to determine the best course of action.” Lynch suggested that the only course of action the School Committee would seriously consider is to combine middle schools. Simply doing nothing is an option he wouldn’t recommend, he said.

Selectman David Salvatore became the first member of his board to publicly come out against the plan, objecting to putting all middle school students into one building. “Imagine your 6th grader being thrown into a school twice the size of the current middle school,” Salvatore said on his Facebook page, pointing out that middle school is a time in a student’s education when they are making the difficult transition from adolescence into their teenage years, and shouldn’t get lost in the shuffle of a large school.

Salvatore said the decision to combine middle schools is a question of educational philosophy, not an issue that should be decided by building consultants. “We paid engineers to make school policy,” Salvatore said.

“Both middle school buildings have a lot of life left,” Salvatore said. “As to the high school, clearly it does not need replacing as the plan is to move the middle school students there,” he said.

“Making the change to the middle schools is all about justifying a new high school – it is about creating a showplace. Excessively spending on replacing buildings that have a lot of life left will create budgetary pressures that will make it hard to recruit and retain great teachers. I will take an old building with great teachers any time,” Salvatore said.

Selectmen Chairman Cliff Snuffer, entering the final weeks of his term in office, has previously expressed opposition to the school department’s building plans, but has not offered public comment on how he will vote Tuesday on the SOIs. A majority of the Board will likely end up supporting the plan.

A few comments about 180

March 14, 2016

Recently, my life took a new direction, when I relocated from my childhood home in Precinct 4 where I launched my first RTM campaign, to Precinct 3. Under the terms of the Town Charter, I am permitted to continue to represent Precinct 4 as an RTM until the next regularly scheduled town election, which is when my three-year term in office is slated to expire anyway, but I would have to run for a new term from my new precinct in order to stay in Town Meeting.

Today I am announcing that I will not be a candidate for another term in Town Meeting this year.

I also anticipate discontinuing this blog, 180, this year, but have not decided a specific timeline. The responsibilities of my work in commercial real estate, which I love, do not leave me with as much time to devote to this blog as I would like. Blogs are only successful if they are regularly maintained. If my time commitments become more flexible going forward, I may choose to continue 180, but this remains to be seen.

I intend to continue to serve in the other civic capacities that I am involved in, such as Capital Budget Committee, Historical Society, and Historical Commission. These committees have given me the opportunity to channel my passions toward specific causes that I care about – on the Capital Budget Committee, directly having an impact on reforming town spending; and focusing on historical preservation as a Commissioner and Historical Society Director. I may also return to Town Meeting one day in the future, if the time is right, and if the chance to make a difference is available.

I came to the decision not to run again last summer, and spent the months since then wrestling with whether I had made the right choice. Over this time, I have concluded that I made the right decision.

First, I have become exhausted and tired of the pressures of Walpole town politics. The longer I have been involved in town politics, the more I have come to despise the backstabbing, grudge matches, vendettas, special interests, political games, and police intimidation. I want nothing to do with it anymore.

For more than five years, I have had a target on my back. I now want to step away from the limelight, stop making enemies, and work in a more behind-the-scenes role to advance the issues I care about. I will still be around, and active, but I’m not going to be on the front-lines.

I have also come to realize that while I love politics in general, I personally am not a natural politician. Politics is very much a bloodsport, and I know this first-hand. After many years of relentless campaigns, I have discovered that I actually don’t particularly enjoy asking people for their vote, or talking about myself to win political support. Instead, I thrive when I’m in the background, supporting others who are willing to make the sacrifices to run for office.

Not everything about Walpole politics is bad, of course. This is a wonderful town, and it has been good to me. There are many great people who have chosen to get involved for all the right reasons, which is why our town is going in a new, more positive direction now. I am proud to consider some of these individuals my closest friends, mentors, and confidantes. I wish them all the best in their continued fight for good government that is accountable and responsive to the people. I am not abandoning the cause, so much as I fully intend to work with them in a different capacity. The fight is worth fighting.

Walking away from this successful blog, too, is hard. I hope 180 readers will find alternate sources of information, and will continue to stay involved and informed. Only by continually asking tough questions, and holding decision-makers accountable, can you bring about reforms in your government. Don’t ever forget that government belongs to YOU, the citizen and taxpayer, and NOT the politicians.

I will do my very best to keep the people informed about their government as long as I live in Walpole.

I will sum up by quoting Teddy Roosevelt:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Thank you for everything!

— Sam

Moraski to run for Planning Board, Southwood for S & W

March 11, 2016

Longtime Walpole Precinct 8 Town Meeting Representative Joseph Moraski will make his first foray into town-wide elected politics, with a run for Planning Board in the June town election.

Moraski confirmed that he took out nomination papers yesterday.

Moraski, a resident of Buckboard Drive, is a leader in an effort in his neighborhood to reduce the impact of a proposed subdivision at the former Sunnyrock Farm on North Street. He was the author of a citizen petition at the Fall 2015 Town Meeting to impose a temporary moratorium on Open Space Residential Development, a measure that passed unanimously.

Moraski, who has bipartisan respect in Town Meeting even though he is a staunch fiscal conservative, enters the race as a clear front-runner for one of the two available seats, as incumbent Richard Nottebart has announced he will not run again, and incumbent Richard Mazzocca appears to be stepping down as well.

Moraski has been a member of Town Meeting off and on for several decades, and has also served on the Finance Committee and a number of other town boards. He is a current member of the Personnel Board.

Ken Southwood, a Precinct 5 Town Meeting Representative, took out nomination papers for Planning Board and Sewer and Water Commission. Southwood announced on Facebook that he intends to run for Sewer and Water Commission. Precinct 6 RTM James Paul Taylor and incumbent John Spillane also took out nomination papers for the one seat available on Sewer and Water Commission.

In other election news, Town Moderator Thomas F. Brady appears to be headed toward re-election without opposition.

Walpole 2016 primary results

March 3, 2016

Here are the precinct-by-precinct primary results for Tuesday’s presidential election, which saw 48.5 percent voter turnout in Walpole.

Businessman Donald Trump and Vermont senator Bernie Sanders won Walpole in their respective primaries.

Sanders’ opponent, former Secretary of State Hillary Clinton, did find favor in four of eight precincts, winning Precincts 4, 6, 7, and 8. Trump won all eight precincts handily.

Trump tallied 1,807 votes town-wide, for 45 percent of the vote, followed by Florida senator Marco Rubio with 847 votes and Ohio governor John Kasich with 810 votes. Texas senator Ted Cruz had a small, but loyal following, with 340 votes town-wide.

Walpole’s Maura Harding Clow and Dominick Ianno won Walpole in their races for Republican State Committee. Clow lost the race overall to incumbent Committeewoman Angela Davis, while Ianno defeated Attleboro’s Jeff Bailey overall. Clow’s strong showing in Walpole puts her in good position to run for town office. Her husband, Harry Clow, already serves as a Town Meeting Representative.

Walpole Selectman Jim Stanton won the most votes in an uncontested race for a seat on the Republican Town Committee, securing 2,031 votes town-wide. This is a strong sign for his campaign, as he will be on the ballot for re-election to Selectman in June.

Another Selectman candidate, Thomas J. Brown, won 1,714 votes, finishing behind four other candidates.

In the uncontested races for Democratic Town Committee, State Senator James Timilty won the most votes, with 2,655 town-wide.

Rejecting Siemens deal serves our town’s best interest

February 29, 2016

Last spring, the town of Pepperell, Mass. approved a 15-year tax-increment-financing (TIF) agreement with 1A Auto, Inc. to construct a 100,000-square-foot, $26 million headquarters on the site of a former mill. The plan called for the creation of 150 jobs and the retention of 95 jobs, and it would allow the growing company to remain in Pepperell instead of having to construct its North American headquarters elsewhere.

Pepperell’s agreement with 1A Auto, which averaged out to about a 70 percent tax break over the time of the 15-year agreement, represents exactly what TIF agreements are supposed to be used for – attracting private investment to blighted sites that need redevelopment, luring additional businesses to come to town to diversify the tax base and help pay off the town’s cost of the TIF, and promoting job creation and job retention in an area of the state that has had difficult economic conditions in its past.

As a privately-owned small business, 1A Auto also promised to invest the estimated $1 million in tax savings in building the company, not just padding shareholders’ pockets.

In contrast, Walpole Selectmen are seeking Town Meeting approval this month for a 20-year TIF agreement with Siemens that isn’t in the spirit of what tax breaks for economic development are supposed to be about.

The proposed agreement with Siemens sticks taxpayers with a big tab, and accomplishes very little for the local community. While Pepperell’s deal with 1A Auto ensures the revitalization of an abandoned property, Walpole’s deal with Siemens is for a property that is already on the tax rolls in a vibrant part of town. While Pepperell’s agreement with 1A Auto will entice other businesses to come to their town as well, the Siemens TIF won’t do that for Walpole. While 1A Auto will re-invest the tax savings in keeping people employed, Siemens’ TIF ensures that a multi-national billion-dollar corporation has more money to give to its shareholders.

Under the proposed agreement, Siemens will invest up to $300 million to renovate and expand their facility in Walpole, creating a minimum of 400 permanent life sciences jobs, and hundreds of temporary construction jobs. The town has agreed to give the company a 90 percent tax break on just the value of the expansion for the first five years, 80 percent break the next five years, 70 percent off the next five years, and 60 percent off the final five years of the agreement, totaling about $21 million in total discount. The state will also give Siemens about $20 million in tax incentives of their own, but will recoup most of that money through payroll taxes within the first ten years of the agreement. The town will garner a net total of about $6.6 million in property taxes, about $330,000 per year.

TIF agreements originated in 1952 in California to promote urban renewal, and have been utilized as an economic development tool in Massachusetts since the early 1990s. If used correctly, TIFs temporarily redirect government revenue in order to create tax revenue that would not otherwise exist, thus providing a net benefit to the community and state. As Rose Naccarato writes in a research brief for the Tennessee state government in 2007, any improvements associated with a TIF agreement are intended to “encourage private development and thus raise property values above where they would have been without the improvements.” With the higher property values, property tax revenues rise. Then, the “property tax revenue from increased assessments over and above the level before the TIF project began (the tax increment) is used to finance the debt” that came about because of the TIF in the first place.

During the early history of their use, TIFs were primarily used in economic target zones where the economy was depressed and governments had no other easy means to attract new businesses.

Nowadays, TIFs are used frequently by cities and towns across Massachusetts and the country even in cases where the local economy isn’t depressed. Their liberal use has been aided by more flexible rules by state governments that allow TIFs to be used in locations other than blighted areas, and towns are often pressured into giving out generous tax breaks because companies will play one state or town against another in order to receive the most savings.

Of course, TIFs, by their very nature, fly in the face of basic economic principles because they theoretically give unfair advantage to one company that will be able to reduce its operating expenses while their competitors still pay the same. That’s why TIFs need to be used sparingly, and only for the right reasons – like in cases where they are necessary to help rehabilitate a depressed area.

Not only does the proposed TIF for Siemens run against basic economic principles, and against basic tax fairness, the Board of Selectmen’s approach to the TIF has been flawed from the start.

When Siemens approached the Board of Selectmen last summer to discuss negotiating a TIF for their proposed expansion, Chairman Cliff Snuffer and Town Administrator Jim Johnson unilaterally appointed a committee to negotiate the TIF without the input of an independent TIF Committee, as required by the Board’s own policies and procedures, and from the Economic Development Committee. The framework for the agreement was developed before the completion of basic due diligence, including an independent appraisal of the property, a traffic study, and, most importantly, an economic impact study.

When the final product was finally presented to the rest of the Selectmen, the Board violated the Open Meeting Law twice to discuss the deal in two illegally-held executive sessions. The Town Administrator also signed a confidentiality agreement with the town in which he promised to actively obstruct all public records requests. Details of the deal weren’t released to the public until one Selectmen forced it out. As of today, Snuffer has not apologized to the public for the secrecy or for the OML violation.

Of course, transparency has never been one of Town Hall’s strong suits. It was the same with the 2014 facilities override and the Jarvis Farm purchase – Town Hall holds information from the people as long as possible, in order to force it through Town Meeting. Were it not for the efforts of one Selectman, the Siemens deal wouldn’t have become public until much later than it did. It is easier to stifle any opposition when the opposition has less time to conduct the necessary research and prepare opposing points. Information is power at Town Hall. Town Hall’s obsessive control of information is what is destroying the Representative Town Meeting form of government in Walpole.

It turns out, too, that the initial provisions of the deal were a moving target and couldn’t be trusted. In several Selectmen and Finance Committee meetings over the course of two months, as this YouTube video helpfully shows, both Siemens executives and town officials repeatedly claimed that the company expected to create “more than” 700 jobs as part of the expansion, and the tax break would be about $12 million. But when the rubber hit the road, and it was time for Siemens executives to commit to that jobs number in the agreement, they backed off. The TIF agreement being presented to Town Meeting only calls for a commitment to 400 jobs, and gives the company a number of outs in the form of ambiguous legal language, in the event they don’t meet those projections. The total tax break, too, widened, once the Board of Assessors hired an independent appraiser to look at the property.

So when the total number of jobs to be created actually went down, from 700 to 400 in just a matter of weeks, the extent of the tax break went up – not down.

Selectmen and Siemens officials also initially claimed that the addition of 700 Siemens employees would provide tremendous benefit back to the town through increased meals tax revenue. But as details of the TIF emerged, this claim turned out to be inflated as well. Siemens actually will be expanding its own cafeteria as part of the expansion, so they won’t be sending too many employees to local restaurants. And mathematically, even if every single Siemens employee went out to eat at a local restaurant every single day, the revenue generated to the town would still be minimal – less than $7,000 per year.

So, who is paying the $21 million that Siemens won’t be paying? The rest of us. That’s because the whole purpose of taxation is that it provides revenue to the government for services provided for the benefit of all taxpayers and citizens at large. When a taxpayer doesn’t pay its fair share, other taxpayers must pick up the slack because the same government services will still be provided and must be paid for. As a 2011 Cato Institute analysis suggested, the increased tax burden on everyone else in the community affected by a TIF can actually reduce economic growth overall and make the region less attractive for business.

If the town of Walpole is saying that $21 million won’t matter, and can be waived, doesn’t that technically mean that our tax rates are $21 million too high, because we can still provide the same services with $21 million less? In theory yes, but in this case actually the impact of that $21 million reduction will be seen and keenly felt by taxpayers.

At a broad level, Siemens employees will use our roads and bridges, paid for and maintained with tax dollars. Walpole DPW employees will plow Coney Street after every storm with our tax dollars. The Siemens plant will occasionally require the response of public safety officials, even for routine fire drills or fire alarm maintenance, the cost of which will be higher than for many other parts of town because of the company’s isolation in East Walpole and distance from the fire and police stations. There are many other town employees and services that will either directly or indirectly provide benefit to Siemens, just as they do every other business and residence. This all costs money – part of the social contract that every taxpayer agrees to when they pay their tax bill in exchange for services. The $21 million break equates to about $2,200 that will be picked up by each of Walpole’s approximately 9,600 other taxpaying businesses and residences. Just a cup of coffee per day?

At a more specific level, the impact is even greater. Siemens will put a tremendous strain on the town’s Building Inspection, Engineering, and Planning Departments because the agreement caps Siemens’ permit fees at $250,000 – a discount of about $1 million from what they would otherwise pay. The purpose of permit fees is to ensure that town staff can cover the costs of the inspections and paperwork they must contend with. Even though Siemens will be capping their fees, the expense to the town of following through with the Building Inspection services does not go away. Because of the complexity of the multi-year expansion project, the town has plans to hire an outside company to help town staff, at great expense. The more than $1 million worth of services that will be provided to Siemens without compensation will inevitably be subsidized instead by other taxpayers and by other fee-payers.

An economic impact study commissioned by the town and funded by Siemens shows that the deal will provide only modest economic benefit to the town. The study indicates that more than $2 million in consumer spending will be created from the Siemens expansion, but doesn’t specify how much will be focused in Walpole. Out of the roughly 600 employees currently at the Walpole facility, only about 32 live in Walpole. The majority of employees reside out of Norfolk County. With the addition of 400 additional employees, the number of Walpole residents employed is expected to increase only slightly, by about 15. The total net revenue to the town of Walpole over 20 years actually drops as the number of additional employees increases, because of the cost of servicing additional employees and their families.

But that also doesn’t account for the impact to the Building Inspectors, nor does it account for indirect expenses such as snow plowing and road maintenance affected by the 400 additional vehicles on the road near Siemens twice a day. It’s telling that Siemens isn’t even interested in contributing anything in the agreement toward road maintenance, evidenced by their apparent disinterest in subsidizing the construction of a Coney Street on-ramp to Route 95. That cost will ultimately be borne by the state, and possibly by the town as well. Although the state will provide more than $2 million in one-time payment for Coney Street road improvements, that money does not come close to paying for the cost of a new on-ramp. That’s also $2 million that will be diverted away from other road priorities in town, such as rebuilding Hitching Post Drive.

The study also projects modest economic gains to the local economy, but mostly through increased consumer spending. If most of the employees live outside of Walpole, this increased consumer spending will be mostly regional in focus, rather than local. Siemens’ isolated location in town, near two other towns and a major highway, also means the economic benefits, if any, won’t trickle out to downtown businesses or any economic corridors outside of Route 1. And isn’t it interesting that Siemens has never even been a member of the Walpole Chamber of Commerce?

The substance of the deal also poses many significant questions and concerns. For one, a majority of the additional construction at Siemens is for a parking garage. So taxpayers will give Siemens a break on what amounts to a luxury item. If the purpose of a TIF is to help boost job creation, the presence of a parking garage does not create one additional job by itself.

Siemens will provide several goodies to the town, including $160,000 for snow removal and equipment, $100,000 for new fields, and $250,000 to partially pay for a new ladder truck. These so-called “benefits,” which are really just window dressing, are all front-loaded, within the first five years of the agreement, leaving nothing for the town for the remaining 15 years.

All it takes is one bad winter to wipe out the $160,000 in snow removal costs. The new fire truck will actually cost a total of upwards of $1,000,000, which is another hidden cost to the town that has been glossed over during Selectmen discussions of the agreement.

None of the three “freebies” have ever been approved as a town spending priority at this time by the Capital Budget Committee. Selectmen overstepped their authority in unilaterally including the items in the agreement, apparently because they were on their own Board “wish list,” without the input of other boards as to what the true priorities of the town are. By earmarking the funds for specific purposes, Selectmen have taken power away from the Capital Budget Committee, Finance Committee, and Town Meeting, which are all supposed to decide the appropriation of all revenue into the town. A fairer approach would have been for Siemens to simply provide the total amount of all three items ($510,000) in the form of a check to the town, which can then decide how to spend the money through an appropriate and transparent vetting process as provided in the Town Charter and Mass. General Laws.

Support for the deal seems to come down to several seemingly logical, but flawed arguments. Some Town Meeting Representatives have publicly said that they believe Siemens would be more likely to leave town if the TIF is not approved. But Siemens executives have said repeatedly that they are not threatening to leave if the TIF is not approved. In fact, Siemens has already invested more than $100 million in their Walpole facility under their current 10-year TIF with the town. All RTMs are being given the opportunity to tour the Siemens plant, and will have the chance to see the many hundreds of millions of dollars in equipment that Siemens currently possesses right here in our town. The reality is that Siemens won’t be leaving Walpole any time soon. Doing so would require re-training hundreds of new employees. Siemens executives have said they want to do the expansion here, because the necessary personnel and equipment are all here.

Even on the slim chance they would want to leave, the TIF itself actually does nothing to keep Siemens in Walpole in the first place. Even while well-compensated Siemens executives in Germany look to spin off the company’s healthcare division that would include the Walpole plant, there are no provisions in the agreement that require Siemens to stay in Walpole for the duration of the agreement.

Don’t think it can’t happen in Walpole. Across the country, there are many tales of companies leveraging their position to get lucrative tax breaks, then bailing even before the breaks are about to expire. Since the agreement with Siemens lacks even the most basic enforcement mechanisms, there is little protection for the town’s interests. The agreement doesn’t even require Siemens to retroactively pay back any money if it fails to meet job projections.

If Siemens decides to leave Walpole before the TIF has run its course, there is nothing that would require them to pay back the tax break they gained from the town. Siemens’ own presentation to Selectmen in January indicated that the Walpole plant has had four different owners in the span of about 30 years, making it problematic for the town to commit to a 20-year tax break with little assurance of continuity in loyalty to the town. Those who are running the Siemens plant today will most assuredly not be the same ones running the plant 10 or 20 years from now. A lot can change in Siemens’ industry in just 20 years.

A fairer, more equitable arrangement would have called for Siemens and the town to agree to a 10-year TIF, which is also more in line with the length of comparable TIFs in other parts of the state, and then Siemens could choose to revisit the negotiating table with a new Board of Selectmen and Town Meeting to get another 10-year TIF after the first one expired. If a TIF is really supposed to create economic development that would not otherwise exist, it seems that 10 years would be sufficient to accomplish that goal.

The town of Walpole government should not be so dependent in the first place on one large taxpayer. Government spending in Walpole has grown from $63.2 million in FY 2009 to more than $80 million in FY 2016 – an increase of more than 25 percent in seven years. This is a recipe for un-sustainability in itself, but the budget’s apparent dependence on Siemens’ presence in town is risky given the current economic conditions facing our town and state in general. Going forward, the town would be better served if it diversified its commercial tax base and controlled spending to ensure more flexibility in the event that Siemens ever did vacate the town.

Other TIF proponents point to the supposed “new money” that the TIF deal would generate for the town that wouldn’t exist otherwise. Even while the company makes out like a bandit with $21 million, the town will generate a net revenue stream of about $6.6 million and just has to patiently wait 20 years to get a windfall. But the cost to town taxpayers is real because the $21 million must be paid by everyone else. And while the payoff after 20 years might be big, that’s also making a mighty assumption that Siemens won’t have left Walpole by then, or won’t be looking for another TIF at that time.

Meanwhile, as Siemens gets a big break in their taxes, Walpole officials will be constantly pushing more Proposition 2.5 overrides to help pay for the services that Siemens’ $21 million in property taxes is supposed to be helping to pay for. Why would Walpole residents support any override when not everyone is paying their fair share? Again, the basic principle of taxation is that everyone pays to get services returned to them. When $21 million is removed from the revenue stream, it must come from somewhere and that means from our wallets.

If the Siemens TIF will really be as beneficial to the town budget as town officials claim, the logic must follow that there will be no reason for overrides at all during the duration of the agreement because the revenue from Siemens is the equivalent of $330,000 per year in higher tax revenue without an override. We all know that the town will be seeking overrides anyway. Conversely, if it is really “new revenue,” then it doesn’t exist in the first place so its addition to the budget is not necessary. The town spends money recklessly anyway, so why are we giving the town more money to spend? The money does not exist, so if the TIF is rejected it has no impact.

Another common argument for supporting the TIF is that it is necessary to present Walpole as business-friendly at a time when corporate culture makes it easier for companies to play towns off of one another for substantial subsidies. But what does it say about Walpole when one large company can throw its weight around and get big breaks while Walpole’s small businesses get soaked?

A local Italian restaurant is currently having difficulty getting its approval from Town Hall to open its doors, while Siemens has been promised “expedited permitting” for its own project. While Southridge Farm and Nursery on South Street is investing $3 million and spending more than $20,000 in building inspection fees to create 10-15 permanent jobs and many construction jobs, they are not getting a tax break. The inequity between a large corporation like Siemens and small businesses like Southridge Farm and Nursery is what makes Walpole “anti-business.”

A core tenet of free market capitalism is the notion that government should not intervene in the economy, either to help or hurt businesses. Subsidies, protectionist tariffs, tax breaks, and similar policies are all intended to artificially support a company, just as regulations and tax increases will all hurt businesses in one form or another. Just as a tax increase hurts a business, conversely a tax break helps them. When the government gives tax breaks to a particular company, they are basically giving that company a competitive advantage and a financial savings unavailable to other firms. This makes the playing field unequal and hurts our economy overall when one company has an artificial government-created advantage over a competitor. This is equivalent to the government imposing a tax increase on one company, while keeping taxes stable for all other companies in the same industry. In other words, competition is not on equal footing. This is the essence of crony capitalism.

A 2012 white paper by the Public Interest Institute noted that TIFs are frequently “sold to homeowners as having no impact on their property taxes, as basically ‘free money.'” But “possibly the TIF area had not been developed by the private sector in the first place because the market had decided the area was undesirable.” The effect is referred to as a “moral hazard” by economists, because private and public funds are being diverted in a “detrimental manner.” TIFs disrupt the natural flow of the free market.

The nature of TIFs, of course, when done right, is that they can help boost economic development by luring one business into town to redevelop a blighted area, and then other businesses that follow suit to be near that first business will pay their fair share to offset the cost of the original TIF. Since Siemens is in an isolated part of town, it is not likely that any other businesses will be enticed to move here to be part of the Siemens-backed local economy. The town lacks clean industrial land for businesses to move to, making it even less likely that the Siemens deal will translate into tangible economic growth. So how “business-friendly” does it really make us to give Siemens this tax break? Not very business-friendly, because we do not have much to offer other corporations since Siemens is taking up just about the only prime industrial real estate that we have – and they are not even going to pay their fair share for it.

Being “pro-business” is about more than just handing out tax breaks to multi-billion dollar corporations. A town that makes itself “pro-business” through other means is a town that will have all the leverage when a company like Siemens comes knocking, because companies want to set up shop in a “pro-business” town where zoning is simple, the tax rate is stable and low for all, the permitting process is efficient, and town officials are cooperative. Walpole will not magically become “pro-business” because it gives away $21 million to Siemens, because there is still a lot of work to do to change the economic development mindset at Town Hall.

A more effective way to make Walpole “pro-business” is to lower spending and reduce taxes for all residents and businesses, not just for one large corporation.

The extraordinary generosity of this particular deal actually makes it more difficult for other cities and towns across the country to push back against extravagant corporate tax breaks. Data from the Mass. Economic Development Coordinating Council indicates that the time length of this deal (20 years) and scope (average 75 percent break) would be an anomaly, and not in a good way, among TIFs signed in the past 18 months in Massachusetts.

If Siemens receives this TIF, the race to the bottom is on for other local businesses to demand similar tax breaks from our town government. As a 2006 Reason.com article points out, some municipalities in other parts of the country have given tax breaks to retailers like Cabela’s, setting a new standard in the use of TIF agreements that will surely makes its way to Massachusetts eventually. “We may see the day when every new 7-Eleven and McDonald’s has its own TIF,” author Daniel McGraw writes. “That prospect may seem farfetched, but it wasn’t too long ago that cities wouldn’t even have considered giving up tens of millions of dollars in exchange for yet another store selling guns and fishing rods.”

The TIF itself just doesn’t serve the best interest of tax-soaked Walpole residents. As with previous override proposals, Selectmen have a tendency to develop poor concepts for the town and then use every means available to them to justify it in the eyes of the public, bringing in well-paid consultants to confirm their claims, and shutting down any dissent. Precious political capital and time is spent attempting to persuade the people that Selectmen know best, instead of spending that capital and time on getting it right for the people in the first place.

The Selectmen have shown an apparent inability to negotiate in the best interest of the town, when they gave away the store with the sale of the old Walpole Library in 2013 and the purchase of Jarvis Farm in 2014. Add that to the very one-sided town union agreements that the Selectmen have negotiated, which have created an unsustainable payroll that is higher than most other comparable communities, and the result is that the Selectmen are clearly in way over their head.

As Finance Committee member Kenneth Guyette asked at the January 5 Selectmen meeting, “If  [the deal] ended at [a] 90 percent [tax break], where did the negotiations start?” Apparently Selectmen never really negotiated.

If the Siemens TIF passes Town Meeting, it may be a cause for celebration for some, but for the majority of voters it really represents yet another reminder that our Selectmen have failed us. Our community deserves better than this, and they deserve better than a Town Meeting and Board of Selectmen that does not represent them.

RTMs to vote on $103M spending plan

February 16, 2016

Walpole town spending has officially hit nine digits for the first time in town history.

Walpole Town Administrator Jim Johnson proposed a record $103 million spending plan for the fiscal year that starts July 1, during his annual “State of the Town” budget address early this month.

Johnson’s proposed budget includes about $84.6 million in operating expenses, a $5.7 million water budget, a $5.3 million sewer budget, and more than $7 million in recommended capital budget expenses, totaling about $103 million.

The $84.6 million in operating expenses represents an increase of about $3 million from the current year’s budget, and a total increase of about $20 million in five years.

The budget includes funding for several of the Board of Selectmen’s key priorities, including hiring two additional police officers and one new firefighter. Johnson said the addition of the new firefighter is intended to help reduce overtime costs. The two new cops will bring the police force up to 42 officers.

Johnson is also proposing to allocate about $1.1 million from the town’s “free cash” reserves to help pay for a new fire station. After voters overwhelmingly beat back a $20 million tax increase in 2014 to pay for new buildings, including a fire station – the largest proposed tax hike in town history – town staff set to work and discovered that the town already has plenty of money for new facilities. Selectmen hope to fund the construction of the new fire station with a bond through the existing debt budget, a plan adapted from the Vaillancourt Plan first proposed by Precinct 5 RTM John Vaillancourt in 2014.

The water and sewer budgets will see minimal increases this year, of about $100,000 each. The water department’s retained earnings, which represents the department’s reserves, is about $432,306 – a figure that Johnson indicated might be too low. “Going forward, I would urge the town not to allow water retained earnings to dip below $500,000,” Johnson said. Johnson is not recommending using any water retained earnings to fund this year’s water budget, and is proposing that the Water Department utilize long-term borrowing to pay for their major infrastructure projects in the coming years.

The sewer retained earnings balance is about $2 million. The sewer department will appropriate some of their budget this year to repair some of their pump stations.

The town will spend $30,000 for storm-water management, as part of EPA regulations that will require the town to develop a Stormwater Management Plan in the coming years.

The town’s insurance budget will increase to about $9.9 million, an increase of about 2.8 percent. This represents a $1 million savings due to changes in the town’s health insurance program last year, initiated by the late Precinct 4 RTM Tom Driscoll.

The school department’s share of the pie this year is proposed to be about $41.5 million, an increase of about $1.2 million, or 3 percent, from the current fiscal year.

The town will collect about $66 million through the property tax levy – about $2 million more than the current year. In contrast to many other Mass. communities, the town traditionally raises taxes up to the limit of 2.5 percent each year, because they can. The remaining revenue comes from a variety of other sources, including fees, water and sewer rates, and state aid.

Johnson’s proposed budget will be reviewed by the Finance Committee and the Board of Selectmen over the next two months. Town Meeting Representatives will have the final say on the budget, at the May 2 Spring Town Meeting, when they have the authority to reduce or rearrange some of the expenditures in the budget. RTMs do not have the power to increase the total spending figure unless they identify a funding source.

 

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