I am a long time Newton resident whose children attended our wonderful public schools. I will be voting NO on all three of Newton’s proposed override questions.
Why I am Voting NO and How to Make Me a YES
The clear fundamental issue in the City’s budget is the massive unfunded retiree liabilities. Unfortunately, the City has not yet done enough to address this fundamental issue in a balanced way. By focusing almost exclusively on property tax revenue and avoiding a discussion on costs, the City’s leadership is foisting the retiree liability problem almost entirely on the taxpayer. The Override is yet another temporary patch that allows the Administration to kick the retiree liability can down the road once again.
I love Newton. I admire our municipal employees and I want them to be treated fairly. I want the City’s services and the quality of its schools to be maintained. I do not think we should break our promises to the City’s current retirees. But I also think the voters are entitled to a long term solution before our taxes are increased further. When the City’s leadership comes up with a plan to share the pain of the City’s retiree liabilities between both the City’s taxpayers and the benefits to be provided to the City’s future retirees in a balanced and responsible way, they can count on me to provide an enthusiastic YES vote for an Override.
The Unfunded Retiree Liability — How It Impacts The Budget
In 2014 I wrote an editorial in the TAB entitled Promises and Implicit Promises. I highlighted the promise made by two of the City’s Aldermen to municipal employees that their retirement benefits would not be cut. I wrote “In making such a promise, the Aldermen were implicitly making at least one of two other promises. They were promising to deliver more positive tax override votes, or they were promising the rest of the city’s budget will shrink on an inflation adjusted basis.” Sadly, whatever the outcome of the upcoming Override vote, the City’s leadership will now be delivering on at least one of those two implicit promises.
There is only one part of the City’s budget that is growing meaningfully faster than the budget overall, and that’s payments on behalf of retirees. The figures speak for themselves, and they are alarming.
- In FY 2019, when our current Mayor first took office, revenues were $406M and payments on behalf of retirees were $39M.
- In FY2023 the revenues were $470M and payments on behalf of retirees were $52M.
- In FY 2028 the City’s revenues are projected to be $585M while payments on behalf of retirees are projected to be $78.7M.
From the time the Mayor started in office to what her office projects for 2028, payments on behalf of retirees will be up 102% while the City’s revenues are up only 44%.
The Unfunded Retiree Liability Problem Remains Unsolved Even If the Override Passes
Even with that increase in spending, we have not yet solved the problem. Before this year, the City said it would fully fund the pension liability by 2030 with no qualifications. In the most recent 5 Year Forecast presented in October 2022, a qualifier was added. The City now says, “Once we have fully funded our pension liability in 2030 (barring a dramatic decline in the stock market), we will be in a position to tackle our other, even larger, unfunded long‐term retiree obligation – retiree health insurance or OPEB”. At the time the forecast was presented, there had already been a significant decline in the stock market.
Further, even when the pension liability is fully funded, we still must fund the much larger liability for our health care obligations to the City’s retirees. The City currently projects funding this by 2045. It is overwhelmingly likely that there will be another down year in the stock market sometime between now and 2045. When that occurs, the City will almost certainly have to ask taxpayers to dig deeper into their pockets once again. The other thing taxpayers should note from the current forward projections is that even with the funds from the Override, the City’s budget deficit is projected to grow from $0.1M in 2024 to $12.5M in 2028. Those deficits will also need to be funded.
Mayor Fuller and her Chief Financial Officer, Maureen Lemieux, are very smart people who understand the numbers behind the pension calculations. They also know very well that the stock market does not go up every year forever and that there are going to be down years. Yet it was not until after we reached the inevitable down year in the stock market that they added a qualification to their projections for when the pension liability would be funded. They know the 2022 decline in the stock market means either significantly further increasing projected payments on behalf of retirees or changing the timing for when the liabilities will be funded in a more formal way. That will happen sometime later this year and after the Override vote has taken place.
Does the Override Fund the Schools or Retiree Liabilities?
The Administration pitches the Override votes as funding the schools. But money is fungible. If my children’s spending on videogames was increasing at a much faster pace than was their allowance, and they came to me saying “We would like to have a vote on a special extra allowance which we will use exclusively for school lunch”, I would say “Unfortunately, you are now spending too much of your existing allowance on videogames”. I think much the same way about the Administration’s suggestion that the Override money is for schools and not for funding our retiree liabilities.
How do YES and NO Votes Empower the Administration?
Addressing the fundamental budget challenge means making difficult choices. Successive Administrations in Newton have been able to avoid making those choices because the voters have been accepting of Override votes that have allowed prior Administrations to kick the can down the road. A YES vote empowers this Administration and City Council to postpone addressing the problem they were elected to solve while placing the burden of a near term patch entirely on the citizens whom they were elected to serve. A NO vote will empower the current Administration to have the tough discussions they need to have and gives them the political leverage they will require to solve the unfunded retiree liability problem in a balanced way.
Once the unfunded retiree liability is addressed in a balanced and responsible way, I will vote YES on the next Override request.
