My Statement on Water and Sewer Deficit

 I was stunned to find out this week that the administration needs $2.5 million more to bail out the water and sewer enterprise fund.  This is after an already $3.5 million bail out in the spring.  This means $6 million of taxpayer money is gone forever to prop up the water and sewer fund. 

The water and sewer fund has spent generously over a decade.  From about 2007 to 2017 the public utility operated by the City saw its rates double, creating a large burden on homeowners and businesses alike. Reacting to that burden, the administration has minimized rate increases the last few years to the 2% range.  The problem is nothing was done to slow the spending while easing the rates.  The combination of the artificially low rates and the unexpected pandemic wiped out all the reserves and then some.

 

Spending has been out of control in this fund since about 2007.  The City has hid behind an ill- advised administrative consent order that was hastily agreed to in 2007 mandating almost a quarter billion dollars of construction.  No question some was needed, but not to the extent and scale that was completed.  We are now burdened with huge upward rate pressure, large debt and no spending control.

 

One may say it is easy to criticize; I mean who expected a pandemic?  But the frustrating thing about this is many members of the City Council have been imploring the administration to slow the spending in this fund over the last few years.  Our concerns are not new, just unheeded.  We have asked multiple times for a construction plan that would control rate increases.  Many of us have asked the administration to stop spending capital funds (borrowed money) to pay about $1,000,000 a year in salaries.  

 

During just the last few months we have asked the administration to adjust spending to reflect we are in a pandemic, not normal times.  Some of us were astonished when a rate hearing was not even held this year after spending was set.  When we voiced fear about revenue shortfalls we were told there was a plan.  We just found out the plan doesn’t work.

 

Instead, the spending has continued only marginally abated by City Council efforts in both the general fund and the enterprise fund, with minimal reductions and no structural changes from the administration.  Now we are being asked to craft a solution within a week to ten days and make significant financial decisions that impact the City’s budget.  

 

The problem is not solved with the $2.5M solution being proposed.  First the solution takes 90% of the funds to bail out the water and sewer fund from free cash (the taxpayer’s savings account) or the school department.  It is likely buying your groceries with your savings account and your cousin’s grocery budget.  It does not solve your problem, it keeps you eating for a bit longer.  

 

Even with the bailout, there is likely a double-digit rate increase for the water and sewer fund in the near future.  This is potentially devastating to low and moderate income families and struggling pandemic burdened business.

 

We can’t keep solving the problem with short term solutions.  To take virtually all the money from the school department is a non-starter to me.  I would encourage the school department to participate in the solution, but to put it entirely on their back is absurd.   The proposal is not nearly creative enough for me to rush through the City Council.  We need more time for a practical solution to this unexpected problem.  I hope enough city councilors feel the same to avoid another last minute band aid to be applied to serious financial challenges.

 

Timely Thoughts on Three Topics

I try to communicate in as many ways as possible with constituents, including social media.  In local political circles the last couple of weeks have been busy, disappointing at times, frustrating at times,  and overall a bit of a whirlwind.  Outside of meetings I have been a bit more silent as I wanted to take it all in and reflect.  But, here are some random (but related) thoughts on the happenings of the last couple of weeks:

I am going to start with the George Floyd tragedy, because other issues seem trivial in comparison. 

·      The issues emerging from the incident in Minneapolis resonate everywhere, and for so many reasons.  The obvious struggle we continue to have as a nation with policing and racial profiling once again rightfully becomes front and center.  In this case the behavior was so horrific and so easily accessible through video, no one can deny the issue.  I hope the tragedy results in good and impactful discussions on the philosophy of policing and allows us to make the changes we need whether it be local or nationally. 

·      Mayor Spicer has said she intends her voice to be heard on these issues and that makes sense.  I have no direct insight, so I am wondering if she decides to join other Mayors making specific new initiatives locally.  She announced she will be holding a community hour on the topic with Somerville’s Mayor on June 9^th here in Framingham.   Mayor Curtatone of Somerville has made some far-reaching proposals towards changing policing, including establishing civilian oversight and considering asset reallocation.   To date I have seen Mayor Spicer as very supportive of police, increasing their budget significantly, so I find it hard to believe she will embrace his approach.  Nonetheless it is an interesting choice of colleagues to bring to Framingham.  Whether it is an indicator or just coincidence we will soon see.

·      The public response and activism resulting from the tragedy has been remarkable.  Although there have been some unfortunate incidents in Boston and nationally that took away from the cause at times at the outset, the demonstrations in Framingham have been well organized and thoughtful.  Not only have the local rallies allowed for our friends and neighbors to express their concerns,  for the most part they have  been organized and promoted by new and previously unknown local leadership.  That is a positive that grows out of a negative that we have to capitalize on.

For once the budget is not at the top of my list, but it is at a critical stage.

§  I remain concerned that the proposed budget is not truly balanced, nor does it make the structural changes necessary.  There is too much one-time funding with no future plan to replace it.  There are no innovations or new approaches. Continuing with the status quo is not going to work out well in the current economic environment.

§  There are lots of budget opinions out there and it makes for great discussion.  One city council colleague has written about the budget and said that some Councilors want to make service cuts.  I have to take exception to that as I have not heard any Councilor suggest this.  I personally believe we could reduce some mid-level administrative positions by restructuring our operations and save a significant amount of money.   To date the administration has laid off a few random positions but resisted any cuts to management positions.  To me the approach to date fails as a strategic approach.  The average salary of the laid off positions is about $35,000.  The administration has also defunded vacant positions, but again I question the strategy as not every position that was currently vacant is necessarily expendable.  Reduction in force is sadly necessary at times, but if we do it strategically, we will not impact services at all.

§  Budget discussions are always going to be sensitive and evoke emotions, especially when reductions are being considered.  I think overall the Finance Committee was able to keep that in check.  We agreed in many areas but were unable to agree on potential restructuring of government.  We recommended by a 3-2 vote that several departments be funded only for six months.  This approach was not to save money, because ultimately the balance will be funded, but to put a real deadline on the administration to make recommendations for efficiency and savings in those departments.  Unfortunately, I suspect these proposals will ultimately not be incorporated in the final budget and we will be sticking with the status quo.  Even one of the members who voted against this proposal stated that  he felt the administration has not done enough to make modifications to our government over the last three years.   We need to find a way to make it happen.

§  To double back to the issue of budget related service cuts, I believe we can continue to avoid service cuts with a strategic approach.  One approach I have advocated for was to consider furloughing people who were unable to do the job they were assigned during this period through no fault of their own.  My idea was to furlough people, allow them to collect the enhanced unemployment benefits, and continue to pay their health benefits.  We could have leveraged the federal unemployment money and any employee making $70,000 or less would have been receiving the same or more on furlough. It would have cost the City nothing. The money we saved we could have used to pay salaries in FY 21.  This window is closing as we begin to reopen service, but it represents the kind of strategic opportunities we need to take advantage of to get through this.

§  The way the world has changed over the last three months is stunning, for better and worse as always.  I suspect the way people run their businesses and do their jobs will change to some extent forever.  There have been efficiencies found in many areas.  Just one example, consider all the commuting time that has been saved!  I hope we can learn from it locally and take advantage of the experience to make our municipal operation more efficient and flexible by utilizing approaches we had never thought of or been forced to consider.

For those of you who have been following social media and the like closely, the “restaurant letter” has caused a lot of controversy.  

·      As I said at our meeting last week, I get it.  In a perfect world it may have been approached somewhat differently, and I think it would be next time.  As Chairman of the Council I should have foreseen some of the issues and hurt feelings and done more to avoid that outcome.

·      That having been said, I think some perspective is important too.  The letter did not break any written rules and some of the comments saying it did are a bit exaggerated.  One activist has been stating online that it was sent out on official City Council letterhead that had everyone’s name on it, but only five signatures.  That is the kind of dialogue that people start just to stir controversy.  Either that or they say things without checking the facts.  Our official stationery does not have our names on it in any instance.  The letter in question was not on official City Council stationary, though I acknowledge the casual reader probably would not realize that.  So again, I understand the objection, but let’s not let that get in the way of the facts.

·      Last thought on the “restaurant letter.”  Even if it could have been better executed, it had an impact.  The current administration is often a bit deliberate, some may even say slow, on decision making and getting processes and programs in place.  Despite the small firestorm, I believe this letter sped up this process and made it possible for our struggling restaurants to reopen easier and more efficiently than otherwise may have been the case.  Again, I know they would claim it was well under control without the letter, and maybe it was, but the track record would not support that position.  Our restaurants are in a better position today and that is what matters.

  

There is a lot going on and if you got this far, thanks for reading!  As always I welcome any feedback you may want to offer me.

A Strategic Plan to Preserve Services and Jobs

No matter when it happens, I feel bad for anyone who is laid off or loses a job they love for any reason.  This is a particularly scary time to deal with such things.

I think it is nearly impossible for the City to produce a stable and sustainable budget for FY 2021 without at least some reduction in staff at least in terms of furloughs.  I do not envy the Mayor having to make those choices.  I have been there in the past and it is very very difficult.

To date, I have no idea what the layoff or furlough plan is.  It has not been discussed with me or any city councilor that I am aware of.  I hope it is a strategic plan, that aims to protect our employees and town operations as much as possible.  I hope both the municipal and school administrations make significant attempts to manage the personnel situation quickly and strategically with the clear goal of long-term stability fofr the organization.

I believe several points should be considered as to personnel management decisions that could help our fiscal stability immensely.

1. We are at the point where it makes good sense to leverage the federal and state funding where it is available to stabilize our municipal government.  Many of our employees, through no fault of their own, cannot do their regular job right now.  If we furloughed these people, anyone who was making up to almost $70,000 a year would either make more money or the same money on unemployment due to the CARES act.  The City has a long list of people in this position and could save substantial money.  Money that could be used to preserve these jobs long term.  If we strategically did this we could save an awful lot of money that we could use to keep these people employed long term and not harm them financially in the interim.  I would advocate the City continue to pay the benefits of furloughed employees during the interim period, further stabilizing their experience.
2. The City should not lay off or impact people in any manner that provide direct core services to constituents.  Police, fire, educators, trash collector, highway workers and more are the reason people pay their taxes.  We should use strategic furloughs to fill the gap, and not targeted layoffs of particular people.
3. One area that we can gain efficiency is looking at our middle management structure.  This is an area that has greatly expanded with job creations and upgrades in the last decade.  This is hard for managers to hear and I know that.   Restructuring of this area, which would have to be permanent in this narrow area, can save significant amounts of money, and not impact services.
4. There has been a lot of discussion about pay raises and that is always a challenge because when you lay people off you are asking others to do more.  However, I also think it is symbolic to others who have lost their jobs.  I do believe consideration should be given to reductions in pay, temporarily at least, at least for people who make above $100,000

No question these are awful decisions to make and my heart goes out to anyone impacted.  However, if we do this right, we can minimize, even eliminate, the harmful impacts to people, and actually enhance the long-term employment prospects of most of our employees.  If we do not do it right, it will have a broad-based detrimental impact.  My fingers and toes are crossed we make the right choices.  I am a little mystified by the couple layoffs that have been reported so far, as they do not seem strategic, but I suspect in time we will have a better explanation.

If we do not deal with our significant budget issues now, one thing I know for sure, is next year will be a nightmare and our very core services will be threatened.   We can adopt a well thought out plan or we can flounder through this pandemic, the choice is most assuredly ours