What Fiscal Crisis? 2005 Budget
Shows a Healthy State in Methuen
Methuen City Council President Bill Manzi

BACK

Methuen’s fiscal year 2005 budget process is com-plete.  Unlike the FY 2004 budget, we will not be able to hold the increase in the property tax levy to zero, but the budget is austere and lean.  This budget will provide necessary services without layoffs, and leave us well below the property tax levy limit set by Prop 2 .

Methuen’s success in crafting a budget that does not force layoffs and continues to meet the needs of our citizens stands in contrast to those communities whose budgets have been decimated, and where requests for Prop-osition 2 overrides are routine. The key to our success in Methuen has been our tendency to be fiscally conservative over the years, which has allowed us to build financial reserves while not taxing our citizens to the maximum legal limit allowed by Proposition 2 . Several factors have contributed to our budget stability, with the below listed being the most prominent.      

1. A multi-year commitment to austerity. When the fiscal crisis struck at the State level, Methuen was quick to act, enacting a budget freeze which limited even budgeted spending. When a mid-year aid cut was thrust upon us by the state we acted quickly to cut spending rather than draw down reserves. The option to draw down reserves rather than cutting spending was loudly advocated by some, but in the end the right decision was made. Time has proven this decision correct. Mayor Pollard showed decisive leadership under pressure.      

2. The continuing State commitment to education. I have not been in agreement with many of the local aid decisions made by the State Legislature, but in the area of education they have done a great job.  In Methuen we have had outstanding representation from Representatives Broadhurst and L’Italien, and from Senator Baddour. The City was able to leverage close to a million dollars of local property tax dollars into an additional three million state dollars (round numbers). This additional funding for the school system has enabled us to stabilize or reduce class size and deal with curriculum issues identified by the Superintendent and the School Committee. The school system’s excellence continues to be a point of pride for Methuen.      

3. A nod to the past! Mayor Dennis DiZoglio’s decision, early in his tenure, to accelerate the process by which Methuen would rebuild its educational infrastructure. That decision, and the 90 percent State re-imbursement locked in by that decision, has proved to be a remarkably good financial (as well as educational) decision. It enabled us to build three new K-8 schools, and take students from old and dilapidated buildings. If he had deferred that decision we could be faced with a financial calamity, with the State now seriously retrenching in the area of School Building Assistance.    

4. The level funding of general government in FY 2005. The General government in Methuen (non-school) was essentially level funded between FY 2004 and FY 2005. There was a major spike in pen-sion costs, which con-stituted the vast bulk of the non-school increase in spending. These increased pension costs are due to our obligation to move to full funding of the pension system.      

5. Methuen’s Labor Unions. Many of the labor units in Methuen have been asked to sacrifice over the past two fiscal years, and they have done so. The unions have been realistic, and have given consideration to Methuen as well as the short-term needs of their members. They deserve recognition and thanks for being a part of the solution.      

6. Stable Health Care costs. Methuen has managed to come in with a health care budget for employees that is level funded. The unions, banding together for coalition bargaining authorized by the City Council, and Mayor Pollard, deserve credit for this achievement. This line item always has the potential to be a budget buster. This is the second consecutive year of stability in health care costs for the City.  

The budget, while mostly good news, does contain warning signs for the road ahead. Our major unions are working without a contract; the outcome of these negotiations will have a major impact on future budgets.   

We need to continue to foster economic development in order to take additional tax burden off of the residential homeowner. Evaluating the financial needs related to our High School is of paramount importance. These and other issues will make future budgets in Methuen as challenging as this one. I have posted a copy of the budget at www.cityofmethuen.com.   Please write with any suggestions or comments to billmanzi1@comcast.net

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Prior Columns by Billy Manzi