Setti Warren's State of the Union Snowjob

I read Setti Warren’s State of the City speech.  You should read it too.  It reinforces the Newton Taxpayers Association’s position that Setti Warren’s administration has continued the structural spending problem that he inherited from David Cohen.  Furthermore, it is obvious to the casual observer that Setti Warren and his supporters emphasizes smoke and mirrors style over substance as well as rhetoric over results.  It is no surprise that it was snowing in Newton when Setti Warren spoke on February 4 and it is no surprise that it was snowing when he was originally supposed to deliver his speech on January 21 because Setti Warren’s record as Newton’s mayor is one giant snow job on Newton taxpayers. 

Mayor Warren claims that he solved Newton’s $41 Million budget deficit based on estimates by the Cohen administration.  The reality is that in David Cohen’s last year as mayor (Fiscal Year 2010), Newton’s deficit was only $3.25 Million.  In his first three years as mayor, Warren has accumulated $12 Million in deficits and is projecting another $10.4 Million in 2014 and $12 Million in cumulative deficits from 2015 to 2019.  While Mayor Warren claims to have set aside $13 Million in a rainy-day fund, the reality is that the City of Newton had $160.26 Million in cash and other liquid investments as of FY 2010 but only $145.8 Million as of FY 2013.  Furthermore, Mayor Warren increased Newton’s total interest-bearing debt and retirement benefit liabilities by nearly $113 Million ($70.6 Million in retiree health benefits, $36.2 Million in unfunded pensions and $6 Million in new bonded debt).   Newton’s total pile of debt and other liabilities now stands at $1.16 BILLION, representing a $38,103 de facto tax lien on each taxpaying household living in the city.

Mayor Warren also claims that he negotiated 2.5% total increases in compensation and health care with the unions.  This is not true for two reasons:

1.       When touting the 2.5% total increase figure, Mayor Warren and his administration excluded the impact of the 8% annual increases in pension plan contribution spending and the 7% annual increases in retiree health care benefit plan contribution spending.  This results in total projected compensation and health care spending growth of 3.3% over the next five years.

2.       When Mayor Warren and his team were touting the new contracts, they did not discuss the impact of the last day raises that will take effect on June 30, 2014.

The good news was that Mayor Warren was telling the truth when he said that Newton seeks to fully fund its pension liability by 2038.  The bad news is that he plans to do this by increasing pension plan contribution spending from $18 Million in 2014 to $42 Million by 2037.   The worse news is that Newton will still owe over $600 Million for its retiree health benefit liabilities.  Mayor Warren acknowledged additional steps need to be taken in the coming years.  We hope that Warren will follow the advice of Former Mayoral Candidate Bill Heck, Newton Taxpayers Association President Joshua Norman and Aldermen Ted Hess-Mahan and Richard Blazar and institute 50/50 health insurance and use the contribution savings to fund the OPEB benefit trust instead of pushing OPEB overrides like Wellesley.

We were surprised he said that Newton remains one of the best education systems in Massachusetts.  50 years ago, Newton was one of the world’s most widely admired school systems.  Today, 24 K-12 school districts in Massachusetts generate comparable or better academic results than Newton even though they spend less per student than Newton.  Then again, those other districts spend less on lavish compensation packages for administrators and unions than Newton.

While Mayor Warren gave lip-service to Chestnut Hill Square and potential redevelopment of the Austin Street parking lot, he refused to acknowledge that TripAdvisor and Eagle Investment Systems recently moved one town over to Needham and Wellesley respectively and when construction contractor Richard White & Sons closed up shop after 107 years.   In addition, specialty chemical manufacturer MicroChem recently moved from Newton to Westborough.  Furthermore, we found it ironic that the President of the Newton-Needham Chamber of Commerce (who is a close friend and supporter of Mayor Warren) Greg Reibman was instrumental in pushing for the 2008 and 2013 overrides only to call for special targeted tax breaks for businesses 10 months after endorsing the 2013 override package.

In conclusion, Setti Warren needs to be more honest about his record of results as Mayor of Newton.  We at the Newton Taxpayers Association thought Newton’s financial position could not get any worse under David Cohen.  Unfortunately, Setti Warren is worse that David Cohen because he has continued David Cohen’s structural spending problem and adding to Newton’s huge pile of debt and unfunded liabilities but is pretending to be a fiscal/governing reformer.