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FinCom to clarify reasons for town’s financial crisis


By Dina Samfield


SHIRLEY — The mood at the Finance Committee meeting Monday night was earnest, as its members discussed their presentation for the May 20 Annual Town Meeting. The meeting will take place in the Ayer Shirley Regional Middle School auditorium at 7:15 p.m.

At the ATM the committee intends to point out that the fiscal 2014 Shirley town budget as presented is not balanced due to the school assessment shortfall.

The school committee has requested that the voters at both town meetings reject the assessment, as it intends to return with a school budget assessment once the state budget has been resolved.

FinCom will also emphasize that it is dissatisfied with the budget as presented, that a structural deficit still exists, and that the use of one-time revenues was not desired but necessary. In addition, it will point out that unrestricted state aid and MCI mitigation funds are $685,000 less than in FY 2008, and that no onetime sources are on the horizon.

No place to cut

With a FinCom-recommended fiscal 2014 town budget of $11,499,950, “There is no place to cut,” stated FinCom Chairman Frank Kolarik.

Newest FinCom member Stewart Cady said his feeling was that people move to Shirley because of its low taxes. Then he “ran the numbers” and compared Shirley’s property tax rate to other towns, he said, and found that it was not the lowest. Shirley’s current residential and commercial tax rate is $15.65 per $1,000 of assessed value.

In Ayer, the rate is $13.63 for residential, but $27.99 for commercial real estate. Shirley has very little in the way of commercial and industrial properties.

In Concord the current property tax rate is $14.07; however, pointed out Vice Chairman Mike Swanton, the properties in Concord are worth much more. A $14.07 tax rate on a house assessed at $800,000 is double that of a comparable $400,000 house in Shirley.

In turn, said Swanton, because Shirley recovers much less in taxes, it also has fewer services than many other towns.

“What do the people of Shirley really want?” Cady asked.

Kolarik said that people go to town meeting and tell the town what services they want. “But getting it to a vote can only typically happen at a town meeting. If it doesn’t pass ultimately because people don’t want increased taxes, it doesn’t mean it is something the town doesn’t want to pass.”

At town meeting, the small number of voters in attendance can hold a lot of sway, he said.

History of a predicament

“The money has to come from somewhere,” implored member Roy Ellis of the funds needed to run the town. “It’s déjà vu all over again.”

“Life was good back in the early 2000s, relative to today,” countered Swanton. “Why? For one thing, state aid was reasonably lucrative. We now have about $685,000 less in state aid than we used to get, and in the early 2000s there was relatively strong growth year to year, meaning adding to the tax base.”

According to the assessors’ report, the town was adding $17 million to the tax levy every year, but since 2008 it “dropped out,” he said. “And in 2010, growth was about $10 million, and this year we had about $2 million in new growth.

So with the $17 million average subtracted from what actually happened, we are about $60 million behind in taxable property,” Swanton concluded.

“In the early 2000s we could have things like a full-time fire department and life was good,” he said. “We didn’t have to struggle too much. But that has been gone since 2008, and I don’t see anything on the horizon to change that. If we are going to solve it we can’t count on outside forces to come to the rescue. We have to solve the problem internally.”

Swanton agreed that there is little to cut, including from the schools. “Now with no more state aid and cutting services to the bone, there are not many more choices,” he said.

Getting the message across

Three major points the FinCom intends to highlight at the May 20 town meeting are the decline in state aid that is unlikely to return, the withholding of MCI mitigation funds and the nationwide decline in new growth.

Said Ellis, “The reason we (have this financial problem) every year is we have not raised the base.”

“The revenue base has eroded so you need to understand the causality,” answered Swanton. “It comes down to how are you going to raise revenue locally.”

FinCom member Robert Schuler’s suggestion was to begin a marketing campaign spearheaded by the town’s leaders. “There has to be a joint effort,” he said.

We’ve stood up at town meeting for at least the last five years and said what we think the town needs to do, but it has never really happened,” Kolarik lamented.

“This issue (of lack of revenue) is on the same order of magnitude as the stand-alone (school) district going to a region. It requires education so people really understand why and how this requires a solution.”

Ellis said he did not feel it was necessarily the FinCom’s job to embark on such a campaign.

“I agree,” said Schuler. “Clearly, the selectmen have to believe it and want it done and take the lead on the campaign. If the selectmen don’t support it there is nothing (the department heads) can do.”

Peeling back the onion

Swanton suggested pulling together models showing revenue and expenses, inflation, growth and wages, growth in insurance and the effect and implications of rates of growth and property valuations.

With that data we could make more accurate projections five years down the road,” he said.

Kolarik suggested returning to several of the recommendations made in the 2010 Department of Revenue report, such as the regionalization of services and making a long-range financial plan.

The town is ill prepared to deal with emergency needs,” Kolarik read from the report. “We have only $200,000 left, and if we had a real emergency, that $200,000 would be gone,” he said.

The tax base has not grown but needs have grown,” said Cady. “We have inadequate revenue due to (Proposition) 2 1/2. We have the regional school assessment. We are being assessed more because the average income in town has gone up.”

The state calculates the Required Local Contribution on basically two elements: Income and property values, explained Swanton. “The average income for Shirley residents has increased probably because people moving in had more than the average income. That has been driving the target up,” he said. “We also have increases in special education, our annual increase in the regional (agreement) amount with Ayer, and increased income. Plus state aid and MCI mitigation funds are lower. Here we are four years later and we still haven’t gotten anywhere. The economy is still down and growth has been flat-to-down for the last four to five years. So, not surprisingly, we are not better off than we were four to five years ago.

“I think part of our job is to sort of peel the onion back and get to causality,” said Swanton. “To fix the problem you have to understand the root cause.”

The new normal

“The depression in state aid and growth continues; now the question is how are you going to fix it? The things that worked in early 2000 won’t work now. There must be some other way to do it,” said Swanton.

Shirley is in a new normal state, mused Kolarik. “What is it we are going to be faced with?” he said. “People are recognizing that this is no longer a bedroom community for an army fort. We are just another bedroom community outside Boston struggling like all of the others, only we struggle a little more because we don’t have a commercial and industrial tax base.”