Proposed Council Committee Changes

A few words about a set of proposed Rule changes being considered by the Council that provoked an unfavorable editorial from the Daily News on 1/28. The proposed set of changes would expand the size but sharpen the focus of the Finance Committee and would bring, I believe, an improved capacity of the Council to handle the full scope of its fiscal responsibilities. Overseeing the financial policies and spending of the Town is THE foremost responsibility of the elected Councilors and the proposed changes support the Council's ability to fulfill that responsibility.

One of the first tasks for an incoming Council is to review and approve the rules that it will operate under during its Session. One of the key parts of the Council's Rules and Procedures are the purpose, scope and composition of Standing Council Committees, including the Finance Committee. Under last Session rules, 3 residents were added to the 3 Councilors that had been on the Committee previously. This Committee carried the burden of a very large set of responsibilities, including: "all matters of finance," all appropriations (including annual budget), review of fees, hiring an auditor (as well as reviewing audit findings), and the review of the Capital Improvement Plan. The Committee is charged to report recommendations on all of the above to the Council.

The heart of the proposed change to the Council is to expand the membership to include all 9 of the elected Municipal Councilors only (no resident members). The 2nd part of the proposed changes is to narrow the scope of the Finance Committee to focus only on "measures that would involve any expenditure of Town funds i.e. appropriations, bonds, insurance, transfers, salaries and wages." This means that every Councilor will be responsible for and fully informed about all budgetary and appropriations matters that come before it, rather than just receiving recommendations from a sub-committee that has spent time focused asking questions. A new Council Committee (3 Councilors) would be formed to focus solely on the audit of Town Finances. Finally, an Advisory Committee (3 residents) would be formed to advise the Council on questions of financial policy: debt management, CIP, bond issues, etc. This dovetails with the proposal to eliminate Standing Policy Committees on Education and Public Safety.

So, rather than weakening the 'watchdog' responsibility of the Council (as the Daily News suggested), these changes would ADD to the time that every Councilor spends focused on financial measures and the health of the Town's financial management--it's what we were elected to do. (Basically, it's saying that we will meet as a whole 2x a month, with one entire meeting devoted to finances.) The Council will again take up long neglected duties to oversee and review the annual audit of the Town's finances. And a Committee of residents with financial expertise will advise the Council regarding key financial planning and management policies.

I'm confident that the proposed changes will significantly improve the Council's capacity to process budgetary and policy questions. As the elected watchdogs of the Town's finances, this is our primary responsibility.

Proposed changes can be found HERE on the Town's website.

Rep. Costello Expresses Dissatisfaction with Gov's Budget Plan on Local Aid

We already know that the lottery revenues that drive local aid in MA were down last year and are expected to be down for fiscal year 2009. As the Commonwealth puts together a budget, many will be watching how the budget handles this. As reported in the previous post, Governor Patrick is proposing to make up for the shortfall in lottery revenue with proceeds from casino development. Given Speaker Dimasi's strong opposition (for now) to the casino plan, this revenue is speculative, to say the least.

Representative Costello weighed in on this issue. This is from the 1/26 Daily News:

Costello rips into Patrick plan; Rep. says budget does little for cities like Newburyport

By Katie Curley , Staff Writer
Daily News of Newburyport

NEWBURYPORT - Rep. Michael Costello blasted the governor's proposed budget this week, saying the plan is based on casino money that isn't there and ignores "real issues" like special education costs and charter school reimbursements.

Gov. Deval Patrick touted his proposed $28.2 billion budget this week as boosting state spending on aid to cities and towns, but local cities and towns won't see much of that increased spending, if any, Costello said.

Governor's Budget Connects Local Aid to Casino Deal

As reported by the MA Municipal Association today, the FY09 budget for the Commonwealth just released today by Gov. Patrick links about almost 14% of next year's lottery proceeds to communities to the passage of his proposed 3 casino plan.

Under the budget submitted today, $124 million of existing Lottery local aid would be contingent on passage of this new revenue source.

What this means is that the Gov. has in fact proposed to level fund local aid, but as currently structured, 14% of that would come from speculative casino revenues. I'm undecided about whether or not casinos are a good thing (my starting answer is 'no' but I've heard some persuasive arguments) but it seems a bit egregious to hold local aid hostage to passing the casino plan. To a degree, the Governor's budget balances on planned revenues next year from selling the 3 casino licenses (let alone future tax revenue).

Of course, the Governor's budget is just the first step. It will be important to see how the House and Senate handle this in their versions. Given the leadership's resistance to the casino plan, I'd be surprised if this allocation stands. If it did, Amesbury would stand to lose quite alot in local aid (if casinos are not authorized next year).

Update: the Boston Globe had this to say today (1/25) about the unlikely prospects of casino revenue anytime in FY09:

But budget observers say that even if Patrick's controversial casino legislation is approved by the Legislature, the state would probably not be able to collect the licensing money in time to help finance the fiscal 2009 budget, which begins July 1.

The casino legislation still has not had formal hearings, which are expected to last for months. And if the bill is passed, the state would have to establish a seven-member gaming authority, allow communities to hold referendums, solicit proposals from casino developers, and auction the licenses. Patrick's budget assumes all that could take place within the next 17 months.

Water Treatment Loan for Amesbury

From the 1/09/08 Daily News:

State Rep. Michael Costello's office said yesterday that Amesbury will receive $17,056,000 for two different projects. A total of $12 million will go toward upgrading the water treatment plant - the current facility is nearing the end of its 20-year life span - and $5,056,000 will be used to install new water mains, pump stations and water tanks at various locations around Amesbury.

I could recall discussions and a vote during the previous Council session about upgrades to our waste water treatment facility but wasn't sure if that included approval of a loan. A quick search on the Town's website got me to minutes from a 10/5/06 FinCom/MC meeting and a 10/10/06 MC meeting where a $500,000 bond issue for a waste water treatment updgrade study was discussed and approved (unanimously). Basically, the Town needs to upgrade its treatment plant to comply with current federal EPA standards. The $.5 million bond was to study how to retrofit our current plant to bring it into compliance with EPA standards. At the workshop and public hearing, the next step after doing the study would be to apply for a loan from the Commonwealth's Drinking Water State Revolving Fund to finance the upgrade. The study was done and the $17M award from the SRF program the other day is next step.

To accept the loan from the Commonwealth, however, the Municipal Council will have to first approve it. Checking out the regulations for this program--Drinking Water State Revolving Fund regulations--local approval is not required before a community can apply for the loan but is required to complete the application. Reading the regulations, it looks like approval needs to be made before June 30, 2008, so I assume that the Mayor will be presenting this as a measure to the Council between now and then.

I'll have a few questions, when this comes up. Judging from the story in the Daily News, it looks like the scope of this loan has expanded since the discussions in October 2006. Those discussions focused on an upgrade to comply with EPA regulations and the SRF loan request was expected to be $10-12M, as opposed to $17M. The current loan includes water main work around the Elm St./Rt. 110 intersection + additional pumping station and tank work. We should be assured that these additional items are part of our Capital Improvement Plan. I'll also want to know what the impact will be on the water rate and our overall debt-to-revenue ratio. On the plus side, the interest rate on this loan is very good (2%) and retrofitting an existing facility is good.

At the MA Municipal Association - Overview

I had the great pleasure of joining Councilors Lavioe, Benson, Neale, Chatigny and Gilday at the MA Municipal Association annual meeting on Friday and Saturday (1/11-12). Mayor Kezer, Kendra Amaral and Michael Basque were also there. Amesbury has a good tradition of participation and for good reason. It was a fantastic opportunity to attend workshops, meet other legislators and executives, learn from our peers and meet vendors and staff from the Commonwealth. It was also a pleasure to see Mayor Kezer and Ms. Amaral receive an Innovations in Government award for the Amestat program.

I focused on financial workshops, attending "Debt Management for the Generalist," "Division of Local Services' Best Practices," and "Reading Financial Statements and Budgets." Most of new Councilors also attended these sessions. I'll try to highlight points of interest from those workshops soon.

I also had the chance to meet and chat with: our bond rater (S&P), our legal counsel (Koppelman and Page), representatives from the MA Board of Library Commissioners (about state of capital project funding), from the Dept. of Environmental Protection (about recycling and waste disposal), from the engineering firm that is looking at the potential new site for the DPW and many other legislators around the area and the Commonwealth.

Vehicle Excise Revenue to go down

According to the December 2007 'City and Town' publication from the MA Department of Revenue, localities are going to take another hit this year in reduced revenue. With cars lasting longer and with folks holding on to them longer in a weaker economy, the taxable value base for local vehicle excise tax is decreasing, after a peak in 2006. In 2007, the statewide value base decreased by 4.89%. In 2006, Amesbury collected $1,736,714 in excise tax. A 4.89% reduction in this would be: $1,651,789, which is a loss of about $85,000 in revenue. This will be an added pressure as we look at our next budget.

New Trash Contract

Adapted from a post I made today on Allaboutamesbury.net:

Our 2008 Refuse Removal expense is $700K and our Recycling expense is $140K, for a total of $840K. This is based on the advantageous terms of a 20 year old expiring contract. From what I have heard in various conversations about this, we can expect to pay up to 100% more for this under a new contract, providing service at the current level ($1.6M). That's a huge increase, needless to say.

A few thoughts. I'll start by saying that I only have limited knowledge about our options on this, regarding how the service might be re-configured. The most obvious alternative is going to fee-for-service, where households and businesses would pay per bag or bin directly, e.g. by buying trash stickers at local markets. On the one hand, this directly ties production of waste with the cost of removing it, which would have the virtue of directly discouraging waste production and encouraging recycling. On the other hand, moving to direct pay would add a new fee to our costs of living, merely shifting the cost from our property tax burden to our household budgets. It is an open but important question whether or not our net cost (all households) for waste removal would be cheaper if we buy the service collectively (via City contract) or pay for it one bag at a time (fee-for-service). That would be my primary question here, which would be cheaper in the end for the residents.

Regarding the question about fairly distributing the cost of waste removal (e.g. why should condo owners pay for a benefit they do not receive from the municipality?)--this is akin to the question of why households that don't have children in school should pay for schools, that don't have seniors at home should pay for the senior center or, better, why residents on private roads should pay for plowing that they don't receive. There are complications to this but there are compelling policy reasons why such costs are borne collectively and not based on use only. The cost of waste removal seems to me to fall in with these other costs. So, that reasoning alone isn't compelling to me for switching to a fee-for-service structure.

So, I'll be interested to hear about our City's alternatives in this regard. As I understand it, this issue would only come to the Municipal Council as part of the FY2009 budget, so our ability to influence the structure of this contract may be limited.