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Since the beginning of February, I’ve been knocking on hundreds of doors all across Newton to give voters the opportunity to ask questions to a member of the City Council’s Finance Committee about the March 14th override referendum. Here are some of the most frequent questions I have gotten – and below I’ve written my answers to them, which might help you make or clarify your decision.
Why are we voting in March?
How much will these questions add to my property taxes each year?
Is this a permanent new tax levy each year?
Why can’t the city “live within its means”?
Why do potential budget cuts fall so heavily on schools and roads?
Can’t we just borrow more money?
What about One Time Funds? Can’t we wait a few years for an override?
How much new funding will come from the state via the 2022 Fair Share Amendment tax?
Why do two of the questions say “renovation/addition or replacement”? Those are very different levels of proposals.
How did certain schools get picked for the referendum?
Will my road get fixed now if this referendum passes?
Are the promised spending priorities permanent?
This tax increase is really hard on people with limited, fixed-incomes. What do I do?
If you have received a ballot in the mail, don’t forget to turn it in soon, by mail or at a white City Hall secure drop box. It needs to arrive before March 14th. In-person early voting at City Hall ends today at 5 PM. Otherwise you can vote at your usual polling place on Tuesday March 14th, a week from today. (All Ward 5 stations are the same as in 2022, but some other polling stations moved recently.)
Why are we voting in March?
There are three major factors driving the timing of this referendum: One is the state requiring us to seek voter approval before proceeding on our school rebuilding projects if we want their financial assistance. Another is that the Newton Teachers Association contract (the largest single contract in Newton) is up for negotiation again this spring, and we need to know how much revenue we’re working with for that. Third is that the budget goes in Fiscal Year cycles, and so the Mayor and Superintendent need to know how much funding is available before releasing a budget proposal for the Newton Public Schools and City of Newton, which must be voted on before the end of June.
In 2013, voter turnout was actually higher in the March special override election than in the November mayoral election.
How much will these questions add to my property taxes each year?
The City of Newton website has an Override Calculator where you can put in your address and it will calculate the projected dollar amount per year and per day that will be assessed additionally beyond your current tax obligations. For my house, for example, it’s about $462 if all 3 questions pass. Some very large homes would pay more than that but many smaller homes would pay much less.
Something to bear in mind is that if the override does not pass, it is likely (based on past experience in Newton) that user fees for city and school services will increase or be added to try to address the budget gaps, and these new flat fees are probably going to add up to more than this tax increase would have been for most residents.
Is this a permanent new tax levy each year?
This is a major distinction between “one time funds” the city has available this year and what is being proposed in the referendum. Question 1, the operating override, is proposing to create a permanent additional revenue stream of about $10 million, which will help the city make long-term planning decisions about programs and salaries without worrying about those funding sources expiring imminently.
The two schools projects with their own ballot questions will be bonded over 30 years. Technically that means they aren’t permanent, but of course 30 years is a pretty long time.
Why can’t the city “live within its means”?
Every municipality in Massachusetts is required to balance its budget each year. This means that it does have to live within its means, but we can either make deep cuts to ensure that, or we can increase the means we have available.
Some cities and towns have had huge booms in revenue growth by allowing very rapid redevelopment of older industrial and commercial sites. Other cities and towns routinely put override questions on the ballot every year or so. These are ways of increasing the means within which their budgets exist, but this has not been what Newton has done. We have had only four proposed overrides before this one, and two of them have failed, resulting in very significant cuts to the budget.
Without an override, Newton's total revenues – both from residential/commercial property taxes and from other sources (new growth, hotels and meals taxes, etc) – only grow by about 3.5% to 3.7% per year. Even if property values increase by a big percentage each year, the state cap means that the total revenues collected from those properties across the whole city can only increase by 2.5% per year … unless voters approve an override of the cap to set a new baseline.
There are a lot of costs that the City of Newton and Newton Public Schools are essentially locked into paying, no matter how prudently and carefully we stretch every dollar.
For example, Newton must provide school bus services, and we have very little control over the bidding process. Almost every year, only one company bids to provide this service. That is unfortunately common across the region. Our school bus contracts go up by about 9% per year, despite Newton’s 3.5% revenue growth per year. That means cuts somewhere else.
Another example is our pension funding requirements. There is only a little wiggle room each year on how much more money to put into our pension fund to meet state requirements for a fully funded pension system, and the City of Newton does not even fully control what amount will be required to put in that year. That means cuts somewhere else.
Materials costs have also been rising for our construction and roads projects, and so have cost-of-living requirements for competitive contracts. Newton is increasingly struggling to keep up with contract offerings in neighboring communities that are experiencing super development booms or which have more frequent tax overrides pass.
Why do potential budget cuts fall so heavily on schools and roads?
The schools are our biggest department by budget and the Department of Public Works is also one of the biggest. Many city departments are only a handful of staff and very small budgets that could not really be cut without being eliminated completely. When materials costs and salary costs rise by more than 3.5% and there’s no override, the cuts become almost inevitable in some of the biggest departments. In 1998 and 2008, failed overrides resulted in significant reductions in ongoing annual investments in our schools and roads, and these cuts were largely never reversed. Deferred maintenance usually leads to more expensive emergency costs later down the line anyway, putting us even deeper in the hole.
Everyone, including me, can name something in the annual budget they don’t agree with as a spending priority, but I can tell you that I’ve never heard any consensus across the city on which spending items they can live without or would prefer to see eliminated. Everyone has different priorities and nobody agrees on their ranking of importance.
Can’t we just borrow more money?
Newton has a AAA credit rating, the highest available, which lowers the cost of borrowing (although interest rates are rising for everyone, making it more expensive), and we do borrow money to bond construction projects and equipment. But the money still needs to be borrowed against either future revenues or future savings. It has to be repaid and we also don’t want our payments on our debt to become so large on an annual basis that they also begin to outstrip our annual revenue growth. We want to borrow money for things that will strengthen the city’s attractiveness, finances, and revenue growth in the future. We don’t want to borrow money to cover structural deficit holes in the budget.
What about One Time Funds? Can’t we wait a few years for an override?
You can read a very detailed and readable explanation of one-time funds here, but below is what I talk about with voters on the doorstep.
The operating override proposes a permanent new revenue stream, which we can use to make long-term decisions on salaries, programs, and services. Newton’s Fiscal Management Guidelines (sensibly) strongly discourage using one-time funds to pay for ongoing operating expenses (and also discourage putting them toward pension funding obligations) because we can’t count on those funds to be there for us in the future.
Newton did receive a significant amount of Federal emergency relief money during the pandemic, but it has mostly been allocated already (especially to catch up somewhat on deferred roads maintenance and on one-time projects or short-term pilot programs), and it must be under contract by the end of calendar year 2024. We cannot make multi-year plans on contracts and services based on the Federal money which is almost gone and is time-limited.
Newton also has an unusually high balance of unallocated “Free Cash” this particular year, but this is an exceptional circumstance that also will not be repeated in future years. We received about $8 million in a one-time tax settlement from the Eversource utility company, which they had been fighting for years, and which would have normally been small amounts of revenue over time in earlier years going toward specific relevant budget items. There was also an early payment of a Payment-in-lieu-of-tax (PILOT) contribution from a non-profit that was more than $2 million. Again, these are very specific circumstances that will not recur every year.
The operating override, by contrast, is a permanent new source of revenue available to us every year, which means we can make long-term spending choices now. Without that, we will have to assume that we can’t count on the money being there in the future. (And likewise you can bet on the credit ratings agencies arriving at the same conclusion, since their ratings partially depend on the assumption that voters will make available more revenues when necessary.)
How much new funding will come from the state via the 2022 Fair Share Amendment tax?
Newton recently received its funding allocations from the state government for the year, and there are no proposed increases in state aid to Newton beyond the normal annual increase, which actually represents a net cut because costs have increased even faster than the state aid increase. Fair Share (Millionaire’s Income Tax) funding seems to be going toward state-level transit and higher education projects as well as low-income cities and towns, which is good, but it doesn’t do anything for Newton’s annual budget crunch concerns.
Why do two of the questions say “renovation/addition or replacement”? Those are very different levels of proposals.
The state requires that the ballot questions be worded very broadly. In fact, our Public Buildings Commissioner has been very clear that both schools will be completely rebuilt and we are well into the planning stages and public input process for both projects. We can’t do this without help from the Mass School Buildings Authority and your approval on the ballot.
How did certain schools get picked for the referendum?
Many schools are in poor condition and not equal to the quality of the new schools approved by voters in 2013, but two of the schools in the worst condition are Countryside and Franklin, and they are most in need of urgent replacement. Countryside, in particular, needs to be moved to higher ground to stop regular flooding of the building, and it needs additional space capacity in the classrooms and offices for modern educational expectations. (One of the major development projects nearby will also be contributing funding toward this project.)
If these two questions do not pass – and you can vote separately on each of the three questions if you want – then these projects will not happen and your nearby school of concern will also get pushed back on its timetable for eventual renovation or reconstruction.
There is also money for bonding Horace Mann renovations in the first ballot question, the operating override. And when that project is completed, that annual money for bonding will be re-applied to other school renovation projects as needed.
Will my road get fixed now if this referendum passes?
It might. But if it doesn’t pass, then it’s definitely much less likely. The road maintenance budget is going to fall a lot further behind without an additional infusion of permanent revenue.
If you’re worried about declining roads (or perhaps slipping school quality for that matter), these things depend on having more revenue, not less. It only gets worse with less revenue available. There’s not a lot left to cut from other places, and we’re falling behind our neighboring communities.
Are the promised spending priorities permanent?
For the first budget after this referendum, these will be guaranteed expenditures as stated. Legally we can’t make any new revenue be bound to a specific line item forever because we are required to have the flexibility in the future to balance our budget by any means necessary if overall revenues were to take a sudden hit, and we also can’t be bound to fund something forever that might not always exist.
However, in practical terms, Newton is in such a tight fiscal position that we will realistically only be able to bolster the budget items mentioned in the referendum with this new revenue, and we won’t really have much maneuverability to do anything else with it other than what the referendum is promising.
This tax increase is really hard on people with limited, fixed-incomes. What do I do?
I completely understand that property taxes are regressive and hard to keep up with on a limited, fixed-income because your appreciating asset does not become new money for you until you sell it. That’s why we have increased eligibility for tax relief programs for seniors, certain people with disabilities, and veterans as well as increasing the amount of relief. You can call City Hall at any time to find out if you might qualify and how it works.
But the unfortunate reality of the situation is that Massachusetts municipalities like Newton are stuck between a rock and a hard place. This is the mechanism by which we fund our local budgets and we don’t have much flexibility from the state on how that works. When our costs for existing services rise much faster than our annual revenues, especially for critical and legally mandated services, we are not given much choice other than to ask residents to chip in a bit more for additional revenue.