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!”

Monday, April 28, 2008

The Politics of Planning

Calls for "living within our means" and "long term financial planning" are popular because they are so clearly desirable. No individual or organization can ignore these sage prescriptions and hope to endure. And, no organization, be it a family, a corporation, or a community, can ignore the fact that such goals cannot be accomplished in a political vacuum.

While the politics of families and private organizations usually have the benefit of a clear bottom line as well as a solid consensus on goals, the politics of communities rarely do. In our homes and board rooms, the policy makers cannot escape the "bottom line," which provides them with irresistible and economically rational incentives regarding policy decisions - especially budgeting decisions. In short, families and companies are NOT democracies! Neither parents nor CEOs face regular elections with the kids or the workers as voters. Thank God! This narrow politics allows for significantly more efficient decision making, which facilitates more precise and productive strategic (long term) planning.

Unless we repeal democracy, American states and localities will continue to operate in a political environment that bears little resemblance to those discussed above. The people who make budget decisions in our town do not share a common vision of our mission, or our "bottom line." The members of our community (understandably) separate their personal financial picture from the town's. This individualistic tendency exists in all organizations, including the family, but in families and private organizations it is disciplined by a shared (or at least enforceable) understanding of "the bottom line."

In the public sector, the bottom line is always in dispute and the enforceability of any bottom line is very difficult. In communities there are a number of narrow interests that compete for resources in the short term. The interests of particular taxpayers and those of schools, and other public services are often at odds (or at least apparently so). For example, a childless couple might see a clear need to invest in town infrastructure and be satisfied with the condition of our schools because they continue to achieve high test scores, graduation rates, college bound seniors, etc... Sounds perfectly reasonable to me. On the other hand, a family of six may be upset that their kids have outdated textbooks, no enrichment programs, and enough fees to make you think it’s a private school, while not being too upset about a DPW building that is crumbling simply because from their perspective a DPW building is not an urgent need. Sounds equally reasonable to me.

Can we satisfy both perspectives? Sure, but it will be expensive, so instead we pit each perspective against each other in a competition for resources. Well, this can't be good, right? We are always told that pitting groups against each other is destructive and bad. But how can we avoid this competition without failing to properly manage our resources? Isn't the fact of government waste at all levels a by-product of conflict avoidance? That is, trying to be all things to all people. Elected officials simply do not want to make decisions that will alienate valued constituencies, which is perfectly understandable from their perspective.

Seems like we've got a bunch of reasonable perspectives that don't add up. The thing is, we have a way to choose – it’s called politics, and it’s not something voters should try to avoid. Indeed, voter avoidance of politics lies at the heart of our budgetary problems. Understanding the perspectives of others is useful, but it shouldn't short circuit our competition for resources. We simply must require elected officials at ALL levels to defend a distinct perspective against other candidates doing the same. Instead of obscuring their preferences in an effort to maximize political support, politicians must be made to take harder positions, and take them VERY publicly. The result would be much more competitive elections and much more accountable government, two things that cannot exist in isolation.

Longmeadow's present financial troubles should spur residents to get political, not just to get mad. We have an opportunity this spring and fall to elect local officials and a new state representative. If we force candidates to speak directly to our conflicting visions, and to actually take sides, we can make serious progress toward public policies that will move us forward. The winners may not see it your way, or my way, but they will have a clear mandate to pursue the vision that got them elected, and we the voters will get an opportunity to hold them accountable for promised results.

As for the upcoming town meeting, I strongly suggest that you come and vote your interests, and that you hold your local elected officials accountable. By this I mean, only support those officials (at the next election for them) who share your interests and the vision produced by those interests. By doing so you are helping to clarify the incentives of elected decision makers and forcing them to link their political interests to the REAL interests of their core constituencies.

At Longmeadow’s town meeting this Tuesday, we will be passing the annual budget. Unfortunately, the unelected committee on whom we rely for long term financial recommendations has failed to meet its obligation to inform the voters of their recommendations in a timely fashion. Instead of publishing their recommendations with the warrant, or otherwise even agreeing to such recommendations prior to the day of town meeting, the Finance Committee has damaged its own credibility. Such blatant disregard for the voter’s right to know, and know in time to absorb and evaluate, these recommendations should not be taken lightly. While the as yet unknown recommendations may be quite sound, the failure to arrive at them earlier should be publicly condemned. The town should think seriously about structural reforms that would disallow such practices in the future.

UPDATE (April 29th)

Last night the Finance Committee met to formalize its budget recommendations, which had been left unclear in their published report. I applaud the Finance Committee's effort to correct its earlier mistake, and agree with them that the time line which put them in this bind in the first place needs to be changed.

At last night's meeting, the Finance Committee voted to support an amended budget, not the one passed by the Select Board. The Finance Committee's amended budget recommendation calls for $90,000 to be cut from the non-school budget for FY09. Otherwise , the Finance Committee supports the Select Board budget, including it's $150,000 cut of the School budget.

Sunday, April 27, 2008


As I highlighted in my last Buzz posting… in order to live within the town’s financial means there is a need to look at longer term fiscal planning.
Last week the LONGMEADOW FINANCE COMMITTEE issued their report to the Annual Town Meeting and recommended that the General Fund operating budget be reduced by $89,000 rather than using $89,000 from the Operating Stabilization Fund.

The committee recommended against supporting the General Operating Budget as proposed. “….we feel we need to reduce this proposed budget by $89,000 and save all we can for 2010.”

Their reasoning was based upon looking forward at next year’s (FY2010) difficult budget process wherein all town employees salary contracts (including teachers) will be renegotiated.

Last year’s BUDGET STRATEGIES COMMITTEE proposed a path forward through 2010 after recommending a Prop 2½ $2.15 million override. It was clear at that time that balancing the FY2010 budget without a Prop 2½ override was going to be a challenge.

Some excerpts from the latest LFC report…

The first responsibility of the Finance Committee is to present to Town Meeting and all the citizens of Longmeadow a budget that balances the interests of all citizens, regardless of what level they use our myriad of premium town services, and a budget that is sustainable over the long term. …. Integrated in our challenge to balance resources and uses for the next fiscal year we are charged to advise the town on the impact the proposed budget will have on long term fiscal planning. As a town our challenge is to live within the means of the allowed annual 2 ½% increase in the tax levy without frequent Proposition 2 ½ overrides to finance our shortfalls.

The FC report also recommends a series of “facilitated forums” starting in September 2008 to get resident input on how to meet the upcoming FY2010 budget challenges. This is certainly a step in the right direction but how about extending the path forward to FY2012 rather than reverting back to the one year at a time planning process. And while this planning process is underway the town should also consider integration of possible future major capital expenditures (new/ renovated high school, DPW facility, et al) into the budget process in a more comprehensive approach to town finances.

I would strongly recommend that town residents read both the ATM warrant and the Longmeadow Finance Committee report and attend Tuesday night’s Annual Town Meeting. (starts at 7 PM at Longmeadow HS).