Updated: Jan 6
As part of our Education effort, the PowerUP01945 Oversight Committee will be presenting Board/Committee Meeting recaps. We believe that once the Voters are presented context they will be better equipped to evaluate Town Operations and civic engagement will increase. By that, we mean questions will be asked. This is not PR to create Stepford wife-style homogenous community. This is Democracy. It is not a spectator sport. This is People's lives and livelihoods. #YourVoiceMatters. Welcome to the first "Your Voice Matters" Blog.
-The Finance Director, Steve Poulos, presented a Financial Overview of the town's finances. Basically, at this point, we are running at a burn rate of our "free cash" that is not within recommended level by the state Department of Local Services (DLS). We should have between 5-15% of our total town budget (around $100 million) in free cash, that allows us to have fund available in the case of an unexpected expense(s) or below level expected revenues. That would mean about $5-10 million to remain in free cash after we have funded our budget.
We have been using free cash balances each year to help balance our budget after it is initially approved at annual Town Meeting in May. At this point we are at a little above 2% of the budget in free cash- which is not a healthy situation. The graph presented shows we have been having a declining free cash reserve since FY17. This can adversely effect our AAA bond rating. That in turns increases our borrowing costs for future projects.
-There are two ways to resolve this:
1. Reduce expenses and wait for free cash levels to rise over several years.
2. Raise revenue to allow for funding of town budget without using as much free cash, which would also allow the free cash balance to rise over several years.
3. A combination of both
Steve did discuss, in very vague terms, these possible solutions. This includes raising revenues through different types of taxes or fees, including a general Prop 2 1/2 override. This is a permanent increase in the tax levy that raises the tax rate more than the legal, allowable annual limit of 2 1/2 %.
He did also show a slide that shows the rate of new growth revenue, that is taxes coming from new construction in town. Several years ago (2012-2021) we had more than $500k in new growth but that has been declining steadily to 2021. When asked why this is, Steve tried to explain that this is because Marblehead is "built out". But when pushed by Erin Noonan that we have been "built out" for decades, he said "...without having the facts, I can't speak specifically to it...." then she asked about the Mariner project and how that will effect taxes, his response "I don't know at this point... Jason" This slide is a direct result of spending. Our decisions we are making on spending translate right back to this.....as a community, a Board, a Fincom, there are other decisions that could be made in order to change the trajectory. New revenues, reduce budgets, and I'm not advocating for one or the other. But at the end of the day those are the type of decisions we have in front of us..."
When asked by Vice Chair Emily Belf-Becker*, noting that the information he was showing goes back to 2016 and what led to this drastic reduction in free cash, Steve said: "No not at this time. It is hard to speculate back then. I really don't have a good answer."
When pressed by Alexa Singer about the low free cash balance, Jason responded " We absolutely...have a revenue issue...there is no way of getting around that."
-There was also a slide about the school department, showing the rate of increase in per pupil expenditure increase in Marblehead over the last 6 years. This compared us to other towns' nearby and their percentage increase in per pupil expenditure. We have had a higher increase each year than most other towns, but our actual per pupil spending is just now slightly below the state average. Therefore, when pressed, it was made clear that we were below average in pupil spending compared to the state average and other towns with similar demographics. So what was supposed to look like a graph that we are increasing school spending at a high rate, we actually were under spending in past years.
The bottom line is: Marblehead has a structural deficit in our town budget. It runs across all departments, and we have to continue to reduce expenses to keep our free cash from falling to zero. Unless we also raise revenue.
Stay tuned. Stay Connected. Stay Engaged. #ThisIsNotNormal
Your Call To Action:
Educate yourself on the relationships amongst town Boards, Committees, Elected and Appointed Officials:
The Finance Director who is charged with the town's accounting is not educated or certified as an Accountant.
Checks & Balances. National Grand Bank holds the majority of the town's monies and has employees/Board members seated at several Enterprise Fund Boards. As a result, NGB is involved in nearly every aspect of MHD monies/finances and the Point of Escalation if an issue does arise is their employer, the NGB President - as he is also a highly respected member of the BOS. A week ago, there was a blatant Conflict of Interest in the latest round of Finance Committee appointments - a BOS member actively voted to appoint his employee to Fin Com, neither recognizing their relationship for the Record.
Nepotism. The Chair of the Board of Health, The Chair of the Board of Selectmen and Chair of Finance are all related.
Accountability. BOH has mismanaged a multi million dollar Transfer Station project. It remains incomplete but the remaining funds are insufficient to complete the project. No one has a plan. A slide show detailing the project is available, email@example.com. There's a meeting on Tuesday.
Transparency. BOS has $6M COVID Relief Monies to spend. $1M is unaccounted for, according to the School Committee. The plans for its disbursement are being made with minimal if any public input.
Choose your focus. PowerUP Oversight follows Board of Selectmen, Finance Committee/Compensation Committee, Task Force Against Discrimination, Harbors and Waters Board, Housing Authority and Water and Sewer. This selection is based on shared interests (i.e. TFAD), repeated deficient accountability and transparency standards or sustainable projects that will benefit the Greater Good.
Lift Your Voice. 2% of Voters make all decisions, set priorities and allocate resources via Town Meeting. Get engaged. Follow the Public Meetings Calendar. Attend Board meetings. Ask Questions during Public Comment. Make connections to the Big Picture. Contact the BOS Members with concerns. Share those concerns in your networks and include their response. #YourVoiceMatters.
#FollowTheMoney: large developments including Mariner & vacant schools turned affordable housing, Trusts, Grant Awards, FEMA, and any monies associated with COVID Relief.
Understand the ramifications of our continued reliance on Trusts and Grants vs. creating and adhering to Long Term Strategic Planning.