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Town Meeting approves unsustainable spending

October 28, 2013

Walpole is about 430 miles from Washington, D.C.

But when you hear about the spending, higher taxes, and unwillingness to come up with common sense solutions to the country’s fiscal ills in that city, you probably wish you lived even further.

Unfortunately, it seems that some Walpole politicians would like to see us move even closer to Washington – at least philosophically, if not geographically.

If it was not clear before, it should be clear now: the town of Walpole has a spending problem. This has manifested itself in many forms over the years. The latest occurrence came at last Monday’s Fall Town Meeting, when Town Meeting Representatives approved more than $250,000 in more unnecessary permanent spending funded from a sudden windfall of what appears to, in large part, be one-time revenue. And yet rather than return the surplus revenue to taxpayers, who have been bombarded with numerous tax hikes over the last decade, Walpole RTMs funded seven new town employees in three different departments, five of them in the School Department.

It sure sounds a lot like the way Washington does things.

Town Meeting voted to hire a new police officer, at a cost of $23,287 (for a half fiscal-year, the full year cost for FY 2015 will be funded at the Spring Town Meeting), while crime is going down; hire a new library staff member for $7,448 (again, for a half fiscal-year, we will fund the full sticker price only in the spring) to increase operating hours, even though the new library has significant efficiencies over the old library in terms of staff utilization that were not even discussed in detail; and shoveled $237,613 to the School Department even after the School Superintendent and School Committee Chairwoman both suggested, when pressed, that they may not even need the money but would happily take it.

When asked by an RTM what the school district planned to do with their appropriation, School Committee Chairwoman Nancy Gallivan informed Town Meeting that the district had hired five new staff members during the summer, including a so-called Transition Coordinator at the High School, without a clear understanding of how those five positions would be funded.

The Town Meeting appropriation would help pay for the five new teachers, she said.

Gallivan said it was more difficult to hire employees in October, after they received the Town Meeting funding, than in the summer.

So, Town Meeting was being asked to retroactively fund five new employees in the school department. That sure doesn’t sound like very prudent budgeting to me. Town departments should not be creating positions before the funding for those positions is appropriated by Town Meeting.

Yet when pressed as to how the district would fund the five new positions if Town Meeting had, say, not come through with the appropriation, Gallivan admitted that the district had already identified an alternative revenue stream from the state that could help pay for the positions. That money would pay for the positions for one year, at which point the School Committee understood that the positions would be eliminated. Which then, of course, begged the question of why the appropriation at Town Meeting was needed in the first place. And, if the appropriation was indeed approved, what would this other “one-time” revenue source, whose existence was only confirmed after being questioned at Town Meeting, be used for? Does the school district then get an extra one-year slush fund?

So, the whole situation didn’t make a lot of sense.

In the end, Town Meeting voted to approve the money for the schools, despite efforts by some RTMs to stop it.

But here’s the scary part: all of the money for the seven new employees on Monday evening came from “unanticipated” revenue, made up of a $117,608 boost in state aid, a $142,075 increase in local car excise taxes and building permits, and $200,000 of unexpected growth in the property tax base. Since it is “unanticipated,” certainly some alarms should be going off in the minds of most RTMs – is this really recurring revenue? A specific revenue increase that is not projected ahead of time is not likely to recur again and again.

Town Administrator Michael Boynton and Selectmen Chairman Mark Gallivan, of course, attempted to claim that the revenue was actually recurring and called their revenue estimates “conservative.” Boynton said that state aid was not expected to go down, with legislators up for re-election next year. Growths in the property tax base, too, were permanent, he asserted. The excise tax and building permit revenue were similarly expected to increase accordingly, helped in part by more construction and more automobile sales.

First, whether or not they are correct about it being recurring revenue, here’s a reminder: unsustainable employee payrolls, combined with an over-reliance on annual state aid and other revenue increases are what got Walpole into so much trouble in 2012, forcing a $3 million override. Officials have readily admitted that increases in state aid that did not keep up with increases in the town budget were a direct cause of the school district’s gaping annual budget deficits. When the town was flush with cash, employees were hired with the expectation that the money for those positions would keep coming – whether it be from state aid, or other sources.

Now, it’s déjà vu. The town hired seven very expensive new employees with the expectation that state aid and other revenue will continue to go up the same amount that the cost of the positions will go up each year. Unfortunately, history tells us that it just doesn’t work that way. Town Hall should know this by now.

In times when the town is flush with cash, like now, Town Hall would do well to save that money instead of spending it. Then, in tough times, as during the depths of the recession or in a year when the state decides to underfund state aid, the town would have money available to preserve its school system and other essential services. That’s what prudent budgeting is all about.

The Town Administrator’s own budget presentation at Town Meeting showed that motor vehicle excise tax revenue has never really been consistent, and seems to be difficult to predict. That revenue stream has actually gone down some years, while going up dramatically the next year. It’s also hard to see building permit revenue being consistent over the years or increasing as the costs of those positions increase. Do we really want to tie our personnel funds to the whims of revenue streams like that?

As far as state aid, most of us who have followed town politics over the past decade have learned, the hard way, that it is risky to depend on state aid to go up each year.

Here are some rhetorical questions to ponder:

Even if the revenue appropriated last Monday really was recurring revenue, as town officials say it is, why did town officials rush out to spend it? Why was there no apparent interest in returning this surplus money to taxpayers? When does the town plan to start taking its staggering $40 million unfunded OPEB obligation seriously, and spend down a big chunk of that? Why is the town only funding its stabilization fund at 2.4 percent of the operating budget, far from the range of 5 to 10 percent that debt rating agencies would prefer? Is there an emergency reason why a new police officer and library employee needed to be hired immediately, as opposed to next spring’s Town Meeting when all other budget expenditures will come up? Why were two town departments, plus the schools, given preferential treatment for extra funding when surplus revenue came up, instead of being put on a level playing field with all other departments when next year’s budget is put together in the spring?

The seven new positions created by Town Meeting last Monday are now added to the budget baseline – meaning that town officials can never get rid of these positions without crying about the pains of “cutting back” and “reducing services.” That means the only possible way to pay for these positions, barring more “unanticipated” revenue, is by continuing to raise taxes. Yet, very compelling arguments could be made that these new employees weren’t even necessary in the first place – which makes this whole scenario even more infuriating.

Remember the events of the Fall 2013 Town Meeting next time Town Hall proposes another general operating override. The spending that the town is doing currently is simply not sustainable.

Ironically, so many of our town officials, and the residents who voted them into office, are hardcore Republicans and vote for, contribute to, and campaign for fiscal conservatives in state and national elections. Do they realize that they are themselves turning into the very same Washington-style liberals that they seem to be turned off by? Is the irony lost on them?

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