Wednesday, April 30, 2008

No to the 5 year plan approach

Do you support the idea that the Town of Longmeadow should use longer range (3 - 5 year) fiscal planning even if that means reducing town/ school services today?

I would like to respond to this very sensible question. In brief, my answer is, “No!”
Our budgets are currently drawn up on a year-by-year basis. We currently are getting ready for Fiscal Year 2009. (Part of the problem at last night’s Town Meeting is that some folks were focused on 2010 and 2011, while other folks were focused on creating a sensible budget for 2009.)
We have known fiscal responsibilities for 2009 and within the range of human probability a pretty good idea of what our revenues will be and what our expenditures will be. Children will need schooling; police and fire will need training, maintenance of equipment and fuel for their vehicles. Our roads will need both repairs and snow plowing and the grass on the green will have to be mowed. Town employees will have to be paid for their services.
Within the realm of human calculation we can make estimates for what our heating and fuel bills will be. However, we have no control over the value of the dollar in the world monetary market, nor do we have any real control over the commodities market which may very well drive up the price of oil, along with gold, and corn and wheat.
We have a rough idea of what levels of state aid to expect for Chapter 90 and Chapter 70 allocations, but we have no real assurance that those levels will be adequate.
Predicting the future is much more difficult than explaining the past.
The further we try to look into the future the more dangerous our assumptions become. The more we try to make a 5-year plan, the more ideology plays a role in dictating the plan.
For example, why is it considered accepted “orthodoxy” that we cannot have an over ride in 2010?
We can try to avoid that development, but how can we count on an increase in state aid, if adequate state aid has not been available in the past? If we make a pledge, or a plan, or a promise to not have an over ride in 2010, what are we forced to look at?
Some might say the answer is easy. We just start cutting out programs and laying off people. If we refuse to raise our own taxes, and the state will not give us more aid, then we will have to cut programs and people. But, there is an alternative to budget cuts and that alternative is tax increases.
I think this idea of a long-range plan has a built in bias to it. It establishes an orthodoxy that says taxes should never be raised. It is the orthodoxy that says taxation is an evil. I disagree with both approaches.
I think it is intelligent to raise taxes when it is necessary and to lower them when it is necessary. I do not buy the dogma that all taxes are always evil.
Nor do I buy the notion that all taxes are equally unfair and undesirable. I believe that taxes should be just. They should reflect the ability of the taxpayer to pay the tax. This goes to the heart of democratic government! What is justice in government? What is the correct balance between private expenditure and public expenditure?
My basic principle is that wealthy people should pay more in taxes than poor people. The problem of course is to accurately and honestly draw the lines between the wealthy and the poor. This is the challenge of a graduated income tax.
The current property tax system is inherently unfair in that it does not reflect the ability of the property owner to pay the assessed tax.
Another problem with 5-year plans for taxes is that our political representatives do not have terms in office that corresponds to the time frames of the plans. An election may change the make up of three members of the School Committee and two members of the Select Board. Are the newly elected members to be bound by the 5-year plan of their predecessors? The voters may have removed the incumbents because they did not like their 5-year plans. In a democracy, they have every right to make new policies.
The main problem with a 5-year plan is that it places government in a “straight jacket” and makes no allowances for new ideas and new developments. Forcing a town to live by a miserly budget plan might have appeal to the misers in town, but it will not have much appeal to the general public.
I think we should focus on one-year budgets and do our best to provide our citizens with the level of services that they believe adequate. Let next year’s town meeting take care of their business, without artificial impediments to democratic procedures.
On the 5-year plan, I vote, “No!”


Jim Moran, LongmeadowBiz said...

Looking ahead at future annual operating expenses as well as new capital investments (DPW facility + high school + .... ) and developing a longer range plan (3 -5 years) (or road map) is a fiscally responsible activity for the Town of Longmeadow.

In past years we have ignored much of the town's need to maintain its buildings and other infrastructure including sewer and storm drainage systems so in the next few years we will probably be paying for it. In contrast to its maintenance philosophy I applaud the town's management of spending capital dollars through the efforts of the Capital Planning Committee where our limited tax money is spent only after needs are identified and prioritized.

Business does long range planning all the time and I have listened to the arguments by you, Mr. Duquette and others that the public sector is different from the private sector because it involves a political process. I understand and agree that it is different and maybe more difficult to manage but I don't think that it allows us to dismiss the need to look and plan ahead.

I do not agree that you cannot make reasonable forecasts for most budget items. Businesses develop long range plans and many of them end up off target because of changing circumstances and wrong assumptions so they are periodically revised and updated. A 5 year plan is usually updated 6 -12 months or as often as necessary to provide a useful management tool.

In my earlier posting I attempted to calculate the impact on taxes that building a new high school and DPW facility would have on property taxes- not a pretty picture but many town residents need to have a better understanding of our future taxes for their own financial planning purposes.

The Finance Committee took the initiative this year to continue the thinking process started last year and look at the impact of FY09 spending on the town's ability to fund the FY10 budget. With the town negotiating new collective bargaining contracts for all employees next year our budget will grow significantly and represent a major hurdle to fund many of our needed projects. Looking ahead with solid financial planning is a much better idea than ignoring the future.

Teacher said...

Another problem with 5-year plans for taxes is that our political representatives do not have terms in office that corresponds to the time frames of the plans.

This sentence should read "correspond" not "corresponds". Pardon me.

Perhaps this is the heart of the problem in Longmeadow. Our political leaders do not all stand for election at the same time.

We have an arrangement somewhat similar to the U.S. Senate, where 1/3 of the membership is up for election every two years. This was designed to prevent a large scale turnover of the Senate. All of the House is up for election every two years.

How do we develop accountability, if only a few of the members have to face the voters each year.

Perhaps the Charter needs to be changed.