A Balanced Approach

        Serving as City Council Chairman is a responsibility I value and an opportunity I appreciate. I enjoy working in local government: delivering services, balancing competing needs, and protecting Framingham’s long-term financial future. My professional and elected experience has prepared me to address complex municipal issues. That work benefits from constructive debate and a clear understanding of the facts.

        Criticism is an important part of public discourse, especially when it leads to workable solutions. Recently, however, some commentary on the Council and its members has presented positions in ways I believe are inaccurate. Disagreement is inevitable, but we can address it more productively by focusing on the proposals themselves and the questions they raise.

        The proposed reconstruction and expansion of Keefe Technical High School is one example. This important project raises two questions I have consistently asked: How will it be financed, and how will we protect taxpayers from the costs of such a major investment? Asking these questions is part of our responsibility to constituents.

        These questions are especially important because Keefe is a regional district overseen by a school committee whose work may be less familiar and visible to residents. Framingham supplies about 75% of the school’s students and funds roughly the same share of its budget yet has very limited final authority over that budget.

        I have raised concerns about Keefe Tech’s approach to financing its proposed expansion and proposed ways to address it collaboratively. So far, the Superintendent has continued with the current approach, and my concerns remain unresolved. Framingham’s share is still unknown, but it could reasonably approach $150 million, potentially adding more than $7 million a year for three decades to an already constrained city budget.

        Nearly every time I raise these concerns, I also emphasize my strong support for Keefe Tech and its mission. That support is personal: my wife graduated from Keefe Tech, and my mother completed its postgraduate nursing program in the 1970s. I know firsthand the school’s value to individuals and our community.

        Some commentary has suggested that I want to close the school. That is not and never has been my position. My support for Keefe Tech and my questions about financing are compatible, and I hope that distinction will remain clear as the discussion continues.

        The central issue is the financing method. Keefe has two options. The first, required by its agreement with Framingham, gives city officials and ultimately voters the final approval on financing. I believe that approach provides an important measure of local accountability. State law also allows the Keefe School Committee to choose a second funding method, under which voters in the other four member towns could potentially approve Framingham’s financial obligation regardless of our city’s position. I am only asking Keefe Tech to honor its agreement and recommit to the method that gives Framingham officials and voters guaranteed input. So far, it has declined to make that commitment despite its obligations.  They can resolve any concerns I have by making that commitment.

        Questions have also arisen lately about the recent administrative reorganization of the Callahan Senior Center. Some commenters keep suggesting the city plans to cut services, reduce the center’s budget, or divert funds. That is not the goal of the reorganization, and it will not happen.  In fact, the goal is to improve operations and strengthen support for senior services. 

        The City Council is also currently considering an ordinance to change the membership of the Council on Aging, the advocacy group for Framingham’s seniors. The proposal would create a nine-member council appointed by the Mayor, with one member from each City Council district. Currently, it has 11 members for at large; I view the proposal as a way to broaden representation on a board that currently has multiple vacancies. 

        Some critics have raised concerns about its effect on services at the Callahan Center, but the Council on Aging does not oversee the Center. That distinction matters when evaluating the proposal, because it raises an unfounded fear.

        Framingham is best served by accurate information and respectful discussion. I will continue to welcome candid feedback, difficult questions, and differing views, while clearly explaining my concerns. We do not need to agree on every proposal, but we should represent one another’s positions fairly and focus on practical solutions.

        During challenging economic times we should keep our attention on responsible government and the services residents depend on. I hope residents will examine these proposals on their merits, ask questions, and help keep the discussion constructive.

Real Estate Tax Setting Problem

There has been some growing public attention to a significant financial issue discussed at the finance subcommittee last week.   The city will release more information soon, but here is my view of what happened and why.

Each year, when the City Council votes on a tax levy increase, we have maintained a maximum of 2.5%. This is the limit set by law, but since in many past years we have not even reached that, we have what is called “excess capacity." This means we could raise it each year by more than 2.5%, using previous years’ savings, if we chose to. The administration has never proposed this, nor has it been part of any budget plan.

One thing that frustrates me is that the average tax bill always increases by more than 2.5%, despite the appropriation limit. There are legitimate reasons for this, including the shift between residential and commercial properties, variations in residential and commercial growth, the effects of new development, changes in average home values, and other factors. This year, it seemed a bit higher than usual, so I decided to investigate.

I quickly realized that the tax recap sheet submitted to the State by the city increased the levy by 3.15%, about $1.6 million more than the 2.5% we thought we had voted.   This is the same information used by the City Council for setting the tax rate.

The obvious question is: how did this happen? It is quite complicated, but to simplify, the city reports its total appropriations (over $400 million), lists all non-real estate tax revenues it receives for the year, and subtracts those amounts from the total appropriations. The remaining amount is what is allocated to real estate taxes. This is the final calculated number in the process. The state then certifies this number as being within the total levy for Proposition 2 ½.

In the spring, when we begin the budget process, one of the very first numbers we determine for revenue is the real estate tax. This is done by taking last year's total levy (excluding capital-related debt costs) and adding a 2.5% increase, along with our estimate of the taxes from new growth.   

After doing some research, I found a state report indicating that $1.6 million of our excess capacity was used in setting the levy this year, and I knew that was incorrect.  Again, this may be a nuance, but about a decade ago or more, when we had no excess capacity, the state would have rejected our recap sheet for exceeding the allowable levy increase, making the mistake obvious. However, since we had over $40 million of tax levy that we had not used, the state allowed the 3.15% increase and simply reduced our excess capacity to pay for it.  Essentially, use a portion of past years' savings.

Once this was clear, it was not too difficult to determine what happened. Over the last two years, the CFO's office has calculated the revenue figure for real estate taxes incorrectly at the start of the budget process. Both years, it was overstated by about $3 million. Last year, it didn't matter because other unanticipated revenue was available to cover the $3 million overestimate. This year, only about $1.5 million of additional revenue was available, and the $1.6 million shortfall was automatically offset by the excess levy capacity.

As soon as I realized what had happened, I notified the Mayor, as I knew he did not intend to raise the levy over 2.5%.   He began an immediate review of the process. The Mayor has convinced the State to allow us to re-certify the tax levy at the 2.5% level. Additional local revenue has been identified to replace the $1.6 million. As a result, the average tax bill will decrease by about $50.

Once I realized the mistake in the estimated revenue for real estate taxes this year, I recognized it was a recurring error from the previous year. The issue occurred because debt-exclusion taxation was double-counted. As a city councilor reviewing the budget, if I had looked more closely at the detailed year-over-year differences on the revenue estimate sheet, I could have identified the problem. So, although anyone could have theoretically seen it, everyone else, and I too, have relied on the CFO to provide the correct numbers for basic revenue. That is a reasonable expectation.  No one noticed this for two years.

We should expect our well-compensated CFO’s to avoid mistakes like this, or if they occur, to quickly notice them. When working with numbers, mistakes often stand out because they don't fit within the overall budget picture. Any experienced and capable municipal financial professional who manages the budget should see this. However, two years ago, the former CFO made a similar multi-million-dollar mistake when presenting the tax rate to the City Council. That problem was identified earlier in the process and corrected, but it remains equally unacceptable.  Although the same error as this year was made last year, it ultimately had no financial impact; once the year closed out, it was balanced despite the initial overestimate.

Politically, there is a small group of people who will enjoy blaming the Mayor for this. As I mentioned, it’s not reasonable to expect the Mayor personally to have found this error, and he was able to quickly resolve the issue. The area where the Mayor has responsibility—and I am confident he will handle it—is the need to thoroughly review the financial department processes, starting with the Chief Financial Officer.  I look forward to hearing about his approach.

The presentation to the Finance Subcommittee last week was the first notice of an issue that had only been known for a couple of days. The Mayor’s desire was to be immediately transparent with the City Council and the public, rather than wait for written reports. There will be a much more in-depth explanation of the problem and the solution at meetings over the next couple of weeks.  There will be plenty of written background material provided I am sure.

A Defense of Proposition 2 1/2

         For nearly 45 years, Proposition 2 1/2 has shaped the financial landscape of Massachusetts municipalities. Enacted in 1980, this landmark law restricts how much cities and towns can raise property taxes each year. Critics have often debated its merits, but the simple truth is this: Proposition 2 1/2 has proven highly effective. It has given residents predictable property tax bills, maintained local control, and promoted responsible budgeting. The enduring presence of this law, with no significant changes, reflects its success and the balanced approach it provides to municipal finance.

Boston Mayor Wu disagrees.  She recently suggested that it be repealed.  This law has often been seen as a political third rail, and few notable politicians have suggested tinkering with it.  Wu, however, has nothing to worry about, as she runs unopposed, and her suggestion aligns with her high-tax philosophy.  I doubt her position will gain much traction, and frankly, it should not.  But it is still worth talking about.

At the beginning, let’s recognize the obvious: the 2.5 percent cap is arbitrary. There’s nothing special about the number itself; economists or actuaries didn’t set it. But sometimes, policies succeed not because they are perfectly crafted, but because they strike a practical balance. Whether by luck or foresight, the 2.5 percent cap has kept property tax growth in check, ensuring communities can fund essential services without overburdening homeowners. The cap has introduced at least some discipline into municipal budgeting.

A common critique is that the cap doesn’t keep up with inflation. While this point deserves consideration, it overlooks several essential realities. Property taxes are not the only source of municipal revenue in Massachusetts. Cities and towns benefit from state aid, local fees, and other income streams, which help cushion the impact of rising costs. Moreover, the 2.5 percent limit applies only to the prior year’s levy. Revenue from new growth, such as new homes, businesses, and improvements, is not capped. This means communities almost always expand their tax base by well more than 2.5% annually, often by 4 to 5% in reality.

Wu and sometimes others suggest raising, eliminating, or tying the cap to inflation. While these ideas may seem reasonable at first glance, they come with serious risks. It is almost certain that any adjustment would be upward rather than downward. Sudden increases in property taxes would disproportionately affect those who can least afford it, namely seniors, working families, and residents on fixed incomes. We know this because real estate taxes are inherently regressive; they do not consider a taxpayer’s ability to pay. Removing or weakening the cap could cause unpredictable spikes in tax bills, jeopardizing the financial stability of households across the Commonwealth.

It’s easy to forget that not everyone can absorb higher taxes. For many, their home is not just a place to live, it is also their most significant financial asset. Proposition 2 1/2 protects vulnerable residents from being priced out of their communities by runaway property tax increases. By keeping growth predictable, the law helps ensure a wide variety of residents can continue to make Massachusetts home.

It is important to remember, Proposition 2 1/2 is not a straitjacket. The law allows for voter-approved overrides, giving communities the power to increase taxes when necessary and justified. This safeguard ensures that local priorities are respected and that residents have a direct say in major fiscal decisions. Overrides are not granted lightly, nor should they be.  They require clear public support and open debate, providing both flexibility and accountability in municipal finance.

After nearly 45 years, Proposition 2 1/2 remains in effect because it works. The 2.5 percent cap may be arbitrary, but its effectiveness is undeniable. It promotes prudent budgeting, safeguards vulnerable residents, and honors the voters' choice. While no policy is flawless, the alternatives carry much greater risks. Proposition 2 1/2 has, in many ways, established a stable basis for real estate taxation. It remains a practical law that should not be altered to satisfy the political desires of Mayor Wu and others. Any modifications should be carefully evaluated before they are enacted.