Friday, April 15, 2005

More On Overrides

Kathie Dunphy reminds me that there was a debt exclusion override in 1988, one year before the town's first operational override.

The very best explanation for why Milton is faced with the frequent need to consider overrides was provided by Glenn Pavlicek in his comments as Warrant Committee chair in the 2001 Warrant, a year in which the Warrant Committee lead the Town to consider an override.

"The principal goal of any budget process is to balance the organization's expenditures with its revenue. Even looking at the problem at this large a level, we quickly find the fundamental problem that the Town of Milton is facing. Over the last few years, Milton has seen its revenues increase at a rate of about 3.5% annually. Indeed, if you examine the revenue chart inside the front cover of this warrant, you will see that, excluding the proposed override, the Town's revenue is again projected to grow at just under 3.5%. The problem is that, for Towns near Boston, this amount of growth is insufficient to maintain a constant level of service. The factor that the Commonwealth uses to maintain a constant level of service for Towns near Boston (a "Municipal Cost of Living Index"--if you prefer) is 4.7%. In simplest terms, this 1.2% differential means every year Milton's revenue comes up about $600,000 short of what is necessary to do what was done the year before."

So we can see we have a systemic problem with our revenue keeping up with the cost of merely maintaining service levels. In a period of time as short as three years, you are looking at an erosion in basic service levels of 3.6%, or $1.8 million of cuts from level service. This is no doubt what caused Town Treasurer Kevin Sorgi to note a few years ago that the town would need to have overrides every few years to maintain services.

Unfortunately, in the few years since Pavlicek wrote his explanation things have gotten worse. The economic decline we have experienced has reduced revenue growth significantly below the 3.5% annual rate of the former period. Here are the rates for the three years following:

FY03 2.90%
FY04 .98%
FY05 2.70%

Even if our growth rates had stayed at the 3.5% level, in the four years since our last operating override we would be looking today at a loss of almost 5%, or $3 million to base service levels.

As it is, things are even worse.