BLOG: Mayor Warren’s Fiscal Baby Steps Are Not Enough to Justify Three Property Tax Overrides

Newton’s Mayor Setti Warren (D-Newton) has been hailed as a fiscal wunderkind and a breath of fresh air relative to the fiscal profligacy of the David Cohen administration.  Setti Warren was elected Mayor in November 2009 and as part of his campaign, he proposed a “Zero-based budgeting program” in order to address Newton’s financial situation.  Warren hired a new Chief Financial Officer for the city (Maureen Lemieux) in April 2010 and by the end of 2010, Lemieux was providing education to Newton’s department heads about zero-based budgeting. During his first two years as Newton’s Mayor, he has received a significant level of favorable press from the Newton Tab and community leaders with regards to his ability to preserve city services despite eliminating 18 city worker jobs.  Newton’s financial performance under the Warren administration even convinced former override opponents Daniel Fahey and Jeff Seideman to support the three overrides totaling $11,400,000 that are scheduled to be voted on March 12th, even though the Warren Administration has generated three straight years of deficit spending from 2010-2012 according to Newton’s CAFR reports.

The override consists of two parts, a general operating override that results in a permanent increase in the city’s tax base and a debt exclusion override that increases the city’s tax base temporarily by a specific time period.  Newton voters will be going to the polls on March 12th to vote on an $8,400,000 permanent increase in the city’s annual tax base as part of a general operating override and a $3,000,000 temporary increase in the city’s annual tax base as part of two debt exclusion overrides.  Here is what the override proceeds will be ostensibly used for if the three overrides are passed by the voters:

• $4,500,000 in the general operating override will go toward funding teachers and other costs associated with the growth in enrollment in the schools.
• $1,000,000 in the general operating override will be allocated on an annual basis for paving the city’s streets and sidewalks.
• $500,000 in the general operating override will be allocated to fund the salaries and benefits associated with hiring four new police officers and other costs required to control the increase in traffic in the city.
• $1,700,000 in the general operating override will be set aside on an annual basis to pay for the debt service for adding new classrooms onto the Zervas Elementary School,
• $700,000 in the general operating override will be used for relocating the Fire Department Wires Division and replacing the Fire Department headquarters and Fire Station 3 in Newton Centre.
• $3,000,000 will be set aside as part of two 30 year debt exclusion overrides in order to build new Angier and Cabot elementary schools

Although we at Moving Newton Forward agree with Messrs. Fahey and Seideman that Setti Warren and his administration have been better fiscal stewards of Newton’s financials than the David Cohen administration, we disagree with them with regards to changing our minds and supporting the override.  Just because the two leading opponents of David Cohen’s 2008 override have decided to support this override doesn’t mean that we will support this override any more than we would jump off a bridge because well-known investors like Warren Buffett and Whitney Tilson have decided to do so.  Messrs. Fahey and Seideman do not speak for us because they are giving credit when credit isn’t due to Setti Warren’s record.  Even with Warren’s fiscal reforms, Newton’s annual general fund expenditures have increased from $287,527,155 in FY 2010 (when Warren first began serving as Mayor) to $298,001,862 in FY 2012, which is an increase of almost $10.5M during this period.  The Mayor’s Budget for FY 2013 is expected to boost general fund spending to $312,029,964.

We concede that Setti Warren’s $10.5M increase in annual general fund spending over the last two years is less than the $83.3M increase that the Cohen administration incurred from 2002 to 2010.  We have noted that Warren’s average annual general fund spending increases has been nearly $5.25M, which is almost half of the $10.4M increase in spending from 2002 to 2010 under David Cohen.  And we can see that Warren’s compounded annual spending increase of 1.8% from 2010 to 2012 is dramatically lower than the 4.4% annual increase from 2002-2010 under the Cohen administration.  However, we are going to vote against the override because Setti Warren and his administration have increased annual spending by $10.4M on top of the $83.3M in annual spending increases that were pushed through under Mayor David Cohen.

While the mayor’s fiscal reforms have been an acceptable first step in comparison to David Cohen’s record of fiscal folly, we believe that there is more to be done to whip Newton into fiscal fitness.  At the January City Hall Meeting between Mayor Warren and the Newton Republicans, it was mentioned that 80% of Newton’s budget is utilized for wages, salaries and other government employee benefits.  When we consider that Newton’s general fund budget for 2013 is $312M, if we were to reduce the amount of Newton’s budget devoted to employee compensation by 4%, this would provide a sufficient level of freed up funding to underwrite the initiatives touted by the pro-override group without having to raise taxes on Mr. and Mrs. John Q. Taxpayer. 

We believe that if Mayor Warren and his team have wrung out all the fiscal waste, shrinkage and other spending on non-value-added activities, the city would not need to put an override on the ballot and areas we believe the city can cut back will be the subject of future reports.  Although we expect the city government to discharge its duties in managing the city in the most efficient manner and we have no intention of micromanaging city affairs, we believe that there are areas that the city can cut back on and we will offer such ideas in order to answer the question “So where would you cut?!”

Override supporters have tried to suggest that Newton’s fiscal problems happened with a different mayor.  We respond by pointing out that 70% of Newton’s current aldermen had served under the previous mayor.  Override supporters have tried to interject that Newton’s fiscal profligacy happened in the past.  Unfortunately, we are paying for it in the present and the override supporters want us taxpayers to pay more in the future as well.  But we think Ward Three’s At-Large Alderman Greer Tan Swiston (R-Newton) said it best when she said that Newton taxpayers have been reeling from all the financial waste of the past, despite it being “water under the bridge”. It’s their “water” that was washed under the bridge, very much against their wishes and despite their efforts to fight it and it still stings. 

In conclusion, we have reinforced our decision to vote no on the override.  We understand that a portion of the increased debt and spending expenses that have impacted Newton’s finances were due to the Taj Ma-High School known as the new Newton North High School building.  We respect that Setti Warren and his administration have made a number of changes at the margin in order to reduce Newton’s spending rate growth.  However, we are concerned that these changes were only made in order to drum up support for a tax override.  We think Alderman Lisle Baker said it best when he said “My hope is that if this turns out to be successful, we will look at this as a building block and go back to the voters again...for the resources we need”. 

Lastly, we believe that the Warren Administration’s vaunted “fiscal reforms” are style over substance considering Warren’s increases in spending have resulted in deficit spending during this period even though the town has seen an increase in revenues during this time period and the increased taxes are being used for more spending. The override supporters are making the case for the override based on “needed spending for education, police, the fire department and public works” and our group will be following up this report with at least four additional reports that show that the city of money has spent plenty of money already and doesn’t need to raise more money to pay for gold-plated wages, salaries, pensions and health insurance benefits for government workers.  Furthermore, our group’s case against the override is based on more than reflexive opposition to the Newton North cost overruns.  We at Moving Newton Forward urge Newton residents to vote no on the three Proposition 2½ override questions that will be on the ballot on March 12th, 2013.