Budget Priorities

Amherst faces a $1.9 million shortfall with its FY09 budget, and projections for the next couple of years are just as bleak.  There is no magical fix out there for what to do about it – it’s going to require reducing spending through cuts and efficiencies, and it’s going to require bringing in more money through taxes and new revenues.  (See Economic Development Now.) 

The alternative is to slash services, which would mean dismantling Amherst as we know it, and that is neither realistic nor desirable.

The budget process involves input from many people at many levels, and the Select Board’s collective priorities and recommendations are part of that. 

I think that understanding the budget priorities and philosophies of those who serve the Town, or who seek to serve, is vital, and so I offer mine:

Top Priorities:  For me, the most basic budget priorities are public safety, the schools and public works.  These are our bones, and we must keep them strong.

Capital Investment:  Building maintenance.  Equipment replacement.  Protection of Town assets.  This is not exactly discretionary spending.  The Finance Committee and the Joint Capital Planning Committee have a goal of dedicating 10% of the tax levy to capital each year.  We never meet that goal.  Deferring capital spending into the future may feel like short-term savings, but in fact, it increases expenses in the long-term.  It is imperative that we make capital investment a priority. 

Building Up Reserves:  Not so long ago, the Town’s reserve funds – its emergency savings – were plentiful.  It is a very different story today.  If we don’t take steps to actively increase our reserves, the next economic downturn will be devastating to Amherst, and that downturn will come – it is just a matter of “when.”  In addition to being unable to offset a drastic reduction in State aid, insufficient reserve levels would compromise our bond rating, which would increase the cost of borrowing to pay for capital improvements.   This might seem dry and esoteric as compared to issues like how many swimming pools the Town funds in the summer, but its significance cannot be overstated. 

The Salary Question:  Salaries and benefits is by far the biggest chunk of our annual budget – employees are how we do what we do. It is important that the Town Manager and others involved in contract negotiations with the employees’ unions protect Amherst’s interests, but it is also necessary to have realistic expectations about what collective bargaining can accomplish.  The salary model of step increases with longevity and cost of living adjustments (COLAs) means that employees don’t get the benefit of years when there’s plenty of revenue, and it means they don’t suffer when there is not enough.  It sacrifices big gains while protecting against big losses: it is all about stability.  It is simply unrealistic and unfair to expect to alter that model by radically reducing or eliminating the COLAs, or freezing the steps.

Salaries, Part II:  Talk about compensation levels being too high in Amherst Town government fails to recognize the obvious:  the Town pays what it must to hire and retain the staff that it wants, no more and no less.  If it could get and keep people for lower pay, it would.  But those with the highest skills have the most options – they have no incentive to accept lower pay here than they could get somewhere else.  Reducing wages and benefits comes at a real cost, and it is folly to think otherwise.

First of all, it makes the most sense to me that such funding is a desirable thing to do after Amherst has met all its core town needs first, and that is not the situation we’re in this year.

The work being done by these agencies – and so many other agencies not included in the Town’s human service funding – is crucial to society, locally and on a much larger scale. What they accomplish with the resources they have available warms your heart and blows your mind. To me, that is a given. And entirely beside the point.

Funding Human Service Agencies:  This is always a hot topic, one that gets attention out of all proportion to its dollar amount.  In FY08, the Town gave about $66,000 to human service agencies, and gave about $116,000 the year before that.  In the context of a budget that is about $60 million, that is a small amount indeed.  To fund or not fund makes almost no practical difference to the Town’s budget, so what to do?  First of all, I can’t prioritize this funding; I consider it too hard to justify.  Among the reasons: we can’t afford all of our standard municipal programs, services and costs – so how can we be funding anything beyond that?  Another:  we fund only a few agencies.  Should the Town be deciding which among its local agencies are “worthy” of funding?  Yet another:  private fundraising is the norm for such agencies – that is not the case with the Police Department or the Finance Department.  I think it is a big slippery slope.  But it is also a passionate issue among many, and I admit that the argument that such funding is “among the things that make Amherst Amherst” is vaguely compelling to me.  I think we need some kind of compromise that lets us move beyond this time-consuming topic.  What if we could agree to set the funding amount to a fixed percentage of the budget for the next five years, such as at the FY08 level of 1/10th of 1%?  Those who favor the funding would not be satisfied by the percentage, but might appreciate the stability.  Those who oppose the funding would not be satisfied with the commitment, but might appreciate that the overall amount is small.  That is one option that might take this distracting issue off the table.

Meals Tax:  I think a meals tax would likely be effective and would likely have no significant negative impacts.  (I don’t consider this to be a simple “manna from heaven” option.  I encourage you to read what I have written previously on this topic.)  But the most important point about the meals tax is that it is a giant maybe.  It may never even come up for a vote on Beacon Hill, never mind on our local ballot.  This is not an overnight solution, and there is precious little the Select Board can do beyond what it is doing currently – encouraging the Massachusetts Municipal Association's lobbying on this front, and emphasizing Amherst’s support to Senator Stan Rosenberg and Representative Ellen Story, both of whom are already in favor of it – to speed this up or affect the outcome.  It is a future possibility, but it is not an actionable priority.

The O word: Override.  Here’s my thinking about overrides:  I think that Proposition 2 ½ prevents us from being able to raise the tax money we need to run the Town.  It artificially constrains tax collection to a rate that fails to even keep pace with inflation, never mind the exorbitant increases in an area like health insurance.  Limiting tax increases to 2 ½ percent has the effect of making our tax dollars worth LESS each year than they were worth the year before.  That is an untenable situation.   Overrides are our opportunity to fix that problem.  It seems to me that those who oppose Proposition 2 ½ should be open to overrides, because overrides essentially give us the power to “repeal” that law.  Of course, no one wants to pay higher taxes, and that expense has some serious implications for the town.  But inadequate revenue has serious implications as well, which is why trying to achieve a proper balance is so vital.  Also vital is for residents to have confidence that the Town is spending its money wisely, carefully and in ways that reflect the community’s priorities.  No one wants to fund waste and inefficiency, and it is the responsibility of Town officials to ensure that that not happen.

You will not always agree with me.  You will always know where I stand, and my reasoning for it.  If that is the kind of transparency and accountability you want on the Select Board, I hope you will vote for me on April 1st.