Newton’s elected officials and many new city council candidates have proposed an ambitious progressive agenda to create more affordable and workforce housing, go carbon neutral by 2050 (or sooner), improve transportation, add to open space, build a world class senior center, improve services for the disabled, pay down our unfunded OPEB liabilities and keep our education system and other public services top-flight. Many, if not most, of these agenda items will require more tax revenues than we have now. How will we do that?
There are 4 main budget-positive tax sources that all come with trade-offs:
- Super-Luxury housing: The biggest residential tax revenues with the lowest need for services come from ultra-high-end construction, where there is also great demand. However, as discussed in my previous column, the city’s zoning re-design plan proposes to prohibit the construction of large high-end homes in the name of reducing tear-downs and environmental impact (with a little anti-elitism thrown in).
- Commercial/Office Development: By prioritizing housing over commercial (Northland and much of Washington St.) and NIMBYism on developments with some commercial (Riverside), Newton has essentially ceded the demand for office space to Waltham. We share in the highway traffic woes, but they get all the tax revenue. Will we ever develop a viable strategy for commercial development?
- Marijuana retail: We’ve decided to develop this revenue stream but nobody really wants a store in their neighborhood, promoting more sales in bigger mega-stores brings significant social, health and safety costs, and half the tax stream is restricted by law to mitigating the effects of marijuana stores instead of going into the general fund.
- Override: If we don’t choose to maximize any of the above revenue streams, this leaves increasing taxes on residents through an override.
Bill Humphrey and Matthew Miller are candidates who have been upfront in saying they would consider a tax override. What about the other candidates? Should we re-consider our plans for any of these revenue streams or cut back on some of our progressive ambitions? Any other ideas on where to get taxes that are budget-positive (i.e. don’t require more in services than they bring in revenue) and politically feasible?
Laurie, wait a minute. Is there the suggestion that Newton taxpayers are to pay (at least partly) for the new “affordable housing”?
This requires public input. Have the Mayor travel to the different wards and listen to the taxpayers. I might be a broken record, but have another zero based budgeting year. The past Mayor supposedly found $5 mill without effecting services, I’m sure he left plenty on the bone to cut. When I feel everything has been accomplished in finding money, consider what is short term necessary and what may be necessary long term. Just because we want it, doesn’t mean we need it now. At that point, I’d support an Override, but not until I am confident that both have been accomplished.
@Laurie–thank you for another very interesting post.
The past few years have seen very low inflation and steady increases in labor productivity. Cities can issue (and sometimes refinance) debt at historically low interest rates. From an economic standpoint, this is the LEAST reasonable time for a city to seek an override.
Newton has hiked our taxes every year by the maximum 1.5%. New construction has added further to the tax base.
If the city needs an override to make ends meet, then it simply cannot afford the mayor’s wish list or extra pay for city council.. Apparently they expect US to reduce OUR net income so that THEY have can more. And meanwhile there’s no money to raise teacher pay?
The taxpayers should not enable this kind of fiscal responsibility. They should not allow the city to make promises to employees that it cannot afford. Good people will necessarily be cheated in the end–either future residents of Newton who will have to sacrifice public services to pay on old promises, or city retirees who find those promises broken (cf. Detroit). Or maybe both.
The City of Newton does not have a Federal Reserve Bank. It cannot lose and borrow money indefinitely. No matter how progressive you are, these facts are inescapable. If there is a unique reason for a one-time override, then please present the case. Chronic fiscal irresponsibility is not a valid reason for an override.
Ideally, the rationale for an override case will not be a deeply sympathetic cause manufactured by chronic neglect, as happened with our dilapidated schools. All buildings fall apart. They money to maintain or rebuild those schools should have budgeted year after year, not on a retrospective emergency basis.
What do residents want? How much revenue does the city need to maintain the high quality of life residents expect? Can capital projects and new initiatives be planned out over time? It’s a question of establishing priorities and clear boundaries about needs and wants.
@Laurie –
With already approved state taxes like the Grand Bargain tax, the brand new family medical leave tax and the soon to be rammed down our throats without a vote TCI tax, the city would be foolish to pile on. That doesn’t mean there won’t be politicians that will try. Not having to worry about a pension or health care may embolden some of these pols.
As I said on another thread some time ago, while Matthew Miller might be game for higher taxes, the entirety of Ward 8, his neck of the city, has voted
overwhelmingly against all tax overrides and the CPA tax. An override for Ward 5 may be an easier sell for Bill Humphrey…
I think all the candidates in the Ward 5 councilor race are on record saying basically the same thing on overrides, or at least the possibility of one soon. Just noting that for the record since I’m mentioned by name in the post.
@Bill Humphrey, it would be very helpful if you and the other candidates would outline your plans for financing your proposed policies, and whether and under what circumstances you think an override would be beneficial.
I think I’m like most voters in that I am open to an override if a compelling case can be made, but I’m not in favor if it is the result of poor planning on the part of elected officials.
There is NO appetite among Newton Citizens for an Override. Newton’s elected officials must manage better with the money they have. After all, they can always make cuts in spending.
I went into a fair bit of depth on Newton’s long-range financial health, here:
https://www.facebook.com/notes/jake-auchincloss/newtons-long-range-financial-forecast-and-capital-improvement-plan/1490538944424166/
The headline –> health care costs are the prime mover in our fiscal fate.
Any conversation about the budget needs to start with health care projections. Infrastructure, programming, development – it’s all big-ticket, for sure, but it’s all secondary in importance.
I went into a fair bit of depth on Newton’s long-range financial health, here:
https://www.facebook.com/notes/jake-auchincloss/newtons-long-range-financial-forecast-and-capital-improvement-plan/1490538944424166/
The headline –> health care costs are the prime mover in our fiscal fate.
Any conversation about the budget needs to start with health care projections. Infrastructure, programming, development – it’s all big-ticket, for sure, but it’s all secondary in fiscal impact.
@Jake: Just read your FB post. So you are against an override? Do you believe that our schools are adequately funded? That are parks and playgrounds are being adequately maintained? That the pace of our school rebuilding projects is acceptable? That we should fund capital projects – like a new Senior Center (whether on steriods or not) without a debt exclusion override?
Any discussion of tax overrides needs to be crystal clear about exactly what the money will be used for and exactly what needs these funds would address.
I‘m very uncomfortable with climate change, income inequality/social justice and carbon neutrality being lumped in tax wise with the functional and structural parts of our municipal government.
Giving a large chunk of money to politicians with “an ambitious progressive agenda” and a large shopping list to play with isn’t something i would support.
We’ve seen that movie in other parts of the country and the world and there has rarely been a good ending.
I think it’s important to distinguish between capital investments and operating costs. On the former, a debt exclusion override tied to specific and highly valued projects is more likely to be acceptable to the voters. For example, we could tie a new senior center together with upgrades of the fields and parks across the city and other well justified long-term investments into a package that would have supporters in virtually every ward. On the latter, it is more difficult to create widespread support, and so new programs that are proposed are likely either to have to come out of savings in current programs or the organic growth in tax revenues.
Correct me if I’m wrong, but even if override funds are for capital investments, that would end up freeing up money to fund new “Social Justice” and “Green New Deal” projects in Newton (using the money otherwise going for the capital investments without an override). Hence, the taxpayers are still being asked to pay (indirectly through the override) the higher taxes for Newton’s Green New Deal and Social Justice Projects.
So, again correct me if I’m wrong, it would seem only fair to explain why taxes are going up (override) so that the Newton electorate can decide whether it wants an override/higher taxes because of “Social Justice” and “Green New Deal” initiatives.
@Jim Epstein – Just to be clear Green New Deal and Social Justice Projects (note capital letters) are not a thing. These are not Newton city government programs – real or prposed. The official sounding titles and the capital letters are a bit misleading. You have a valid point to make but it’s easy to make the same point without the misleading titles.
Jerry, sorry, those labels “Green New Deal and Social Justice Projects” were intended as merely shorthand for saying as Paul Green says above, and to encompass, “climate change, income inequality/social justice and carbon neutrality…[and] an ambitious progressive agenda” and projects associated with those goals. Did not intend to mislead, so again sorry.
But in any case, I’m appreciating your saying, nevertheless, that I “have a valid point to make.”
As to your point, even though money is inherently fungible, I think there’s a big difference between an override intended to just cover increases in the existing budget vs an override that is specifically targeted towards paying for a specific new public expenditure that has garnered political support – e.g. a new school or a senior center, or purchasing Webster Woods.
If an override is intended for a specific item, voters can choose whether or not they deem it’s worth paying for. I think overrides for the general ongoing operational budget are very unlikely to pass.
Jerry, agreed there’s a big difference between presenting an override to cover increase in existing budget vs specific new public expenditure. My point, as you acknowledge the fungibility of money, is that where new override money goes to a specific new expenditure or project, it can free up money to cover new or increased budgeted “climate change, income inequality/social justice and carbon neutrality” endeavors (being the money, without the override, which would have been needed for the specific new project). And that the electorate should be aware of this in voting on overrides.
@Jerry Reilly-
Let’s hope you are right. There appear to be candidates for whom the municipal stage is not quite big enough.
Global warming, climate change, income inequality, and social justice pepper the speeches, campaign mailings, and even candidate posts here on V14.
Meaningless time wasting resolutions
generated by the city council are one thing, trying to enact “an ambitious progressive agenda” – those are Laurie’s
words not mine, should cause all tax payers, not only Jim and myself great concern. These “ambitious progressive agenda(s)” always require large sums of money. The people best positioned to enact these policies and spend this money are of course the people elected to office. Lets remind these folks that their job first and foremost is to tend to the business of the city before they address carbon neutrality deadlines or cure cancer. They can start by getting potholes filled, streets and sidewalks paved, and streets plowed when it snows…
My tax bill is increasing annually at a rate I have never
experienced before. Very rich people can afford this.
Most average homeowners can not. An override would significantly add more each year. The more the government
takes in each year the more extravagant is its spending.
No more overrides. Every level of government is enacting more
laws to squeeze money out of the tax payer.
I think we need an override. Our schools are underfunded, our city employees are working without a contract, but somehow we have money to buy Webster Woods and build NewCal, but don’t have the money to pay our city employees? We need to fund Webster Woods and NewCal through override. If people truly want them – they will vote accordingly. Funding our schools adequately and paying our employees should be #1 priority. Surrounding towns passed a lot more overrides and pay more taxes. Not wanting to pay for something because you don’t feel like it, but wanting to have all those nice things doesn’t work. We get what we pay for.
@Councilor Auchincloss, thanks for pointing out that our municipal budget is being increasingly swallowed by Employee health care and pension costs. That would explain why Newton elected officials are holding firm in union contract negotiations, compared to years past when the city over-promised benefits and we now have $1.4 billion in unfounded pension and healthcare liabilities. It makes no sense to be paying down those liabilities while at the same time, adding to it. We either need to pay more taxes or hold tight on the budget.
If the proposed capital projects and new initiatives were to be paid for through a debt exclusion override, the city would have enough money to settle the 17 city union contracts. We’d also see if voters supported a new designated senior center (my bet is yes) or the expanded community center, NewCAL (my bet is no).
Needham, that town right over Rte 95 that we often claim to be in better financial condition because it has built along the highway, has had 14 overrides at last count to Newton’s 2 overrides. Whenever they have a capital project, they pay for it through a debt exclusion override. Other comparable communities have had multiple overrides over the years to fund capital projects. The notion that we can “build” our way out of a budget crunch is a fantasy.
Once again, it’s a question of priorities. What initiatives and/or capital improvements are residents willing to forego if the city doesn’t have enough revenue to pay for them?
@Jane: Your heart is in the right places, but the kind of horse trading you describe is an illusion. We don’t have the money for capital projects. We are over $1 billion in the hole. To increase teacher salaries, which we should, we will effectively have to rob Peter to pay Paul.
If next month the mayor says she wants to build a $500 million NFL stadium, that does not mean that suddenly we have $500 million more that could be apportioned to public employees. We simply don’t have that money for anyone or anything.
Webster Woods is different, I suppose, because preservation funds are earmarked.
Oh, NO! Not more taxes!
It is getting to be literally impossible for seniors on fixed/retirement incomes to continue to pay the ever-escalating real estate taxes in Newton. How about some concern for “affordable housing” costs for people who want to remain in their own homes rather than how many more people we can bring into Newton? Does the City only have a moral obligation to accommodate the people who do not live here at the expense of those who do?
Laurie is absolutely right — the developments that are planned are squandering the City’s only opportunities for residential real estate tax relief. The Riverside and Northland projects have a fig leaf of “commercial” — even those 2 site are ideal for the kinds of commercial development that would make a huge and lasting difference in the City’s tax base (as Needham and Waltham have done on the 128 belt right on Newton’s boundary. Are we just plan crazy?
And none of out City government folks seem ever to take account of the fact that the new Trump tax code has raised the real cost of our real estate taxes for most people because there is the $10K cap on deducting state and local taxes (the “SALT” cap) which means that, effectively, for far too many Newton residents we can NO LONGER DEDUCT OUR REAL ESTATE TAXES.
Bad enough we are $1.4Billion in the hole and that, as Jake points out, health care costs (a huge part of that unfunded City retiree benefits liability) are escalating much faster than the CPI.
And does anybody really believe that cost estimate for the Webster Woods eminent domain taking? I don’t — especially when BC has vowed to litigate like crazy to oppose it. They will argue that the valuation is too low, and the fees for lawyers for the ensuing years of litigation will vastly exceed what ahs been estimated.
And NewCAL– it started as (much needed) a Senior Center replacement but with typical RuthAnn Fuller mission-creep, it has morphed into a badly located/inaccessible to seniors massive community center and health facility (which, if the Mayor had her way, would back right up onto Mark Development properties so the developer would have the benefit of a community-paid spa to enhance the marketing for his apartments — which is why they gladly proposed improving the “walkability trails” to Albermarle Park….) And, if you believe the $16M cost estimate for a project that hasn’t even been sited or architectural plans draw, I have a bridge to sell you! Did we learn nothing form the endemic cost overruns for Newton North HS? That started at $43M estimated costs and mushroomed to $198M. The Big Dig would be proud.
NO MORE!
Abe Z., but, but, but we need more dense housing developed in Riverside and Northland in lieu of commercial to do Newton’s bit for global warming (at least according to some City Council members, candidates, and V14 repeat posters).
Jim and Abe – Could you explain how the Northland and Riverside Developments are going to cost the taxpayers of Newton?
@Lucia,
I believe Abe and Jim’s point it that a greater ratio of commercial to residential would yield more tax revenue and less stress on the school and transportation systems.
In regards to the latter, more commercial would lead to increased reverse commute usage vs residential which would over-burden already overcrowded inbound morning/outbound evening commuter volume on the D Line
I’d also like to see the analysis of the delta between the projected tax revenue from an owner of rental properties compared to if the units were owner occupied
Claire,
New residents will likely use more in city services (especially kids in schools) than they, or lessors, pay in real estate taxes. New commercial pays more in real estate taxes — substantially more — than they use city services.
There are a lot of assumptions here that don’t jibe with the information we have from City planning documents, studies from outside consultants, etc.
I will just address the Webster Woods issue, as that information is fresh.
if Council authorizes the purchase of the woods, it would do so as a Community Preservation bond issue—the same kind of financing the City used to purchase the Community Farm and Kessler Woods (the old NGrid property near the West Rox. Border). This method would allow the City to purchase the Woods without preventing the other uses of CPA funds—historic preservation, recreation, other open space proposals, or community housing.
Webster Woods should not come from operating funds (which the raises for teachers, aides, and others would) nor from regular City bonding or capital improvement funds.
Hope this helps
Andreae-Will CPA funds pay for the litigation with BC? I was told it would, which I find to be a concern. No matter how you look at it the litigation funding could go on for years and no matter what pot of money it comes from, it means something isn’t going to be happening in the city. Taking land by eminent domain from an institution with a $2.6b endowment may end up costing the city way more than what’s at face value in 2019.
Michael – My concern is far more practical than you give me credit for. In 2005, Newton ranked 9th in the state in teacher compensation. It’s now 85th. Teachers can drive 10 miles in any direction and do the same job for better pay and most likely in better facilities.
At issue here is not where my heart lies, but with Newton’s ability to attract and retain top candidates for our schools.
@Sarah and @Abe Zoe – you are hitting the nail on the head when raising concern about new developments squandering Newton’s ability to expand its commercial tax base. Newton’s commercial tax rate is TWICE (2x) the residential rate and commercial usage of city services is significantly lower.
Newton owes $1 billion+ in OPEB (“other post employment benefits”) to retirees that will start coming due soon (can anyone say “override”?).
Not setting the city’s tax base up NOW to maximize Newton’s financial health is ridiculous. The areas set for development (Northland/Riverside) are going to be developed. Let’s make sure they are put to use so that the city will come out healthier. We won’t have a second bite at this apple.
@Greg Reibman, I would think your involvement with the Chamber of Commerce would be critical here!
ANP – Just one “correction” to what you astutely wrote. We are $1.4 Billion in the hole on the unfunded retirees benefits tab, not “just” $1Billion.
Andreae Downs – Bond Debt adds yet more debt to the hole the City is digging for itself. And I am confident that the actual cost of the Webster Woods taming will vastly exceed the estimate — the City has rarely (if ever) estimated costs correctly.
ANP is exactly right — we have ONE CHANCE to get it right and add commercial tax base to the City revenue stream at Riverside and Northland — rather than selling out to what will be more profitable to the private interests of the developers.
Thank you for the clarification @Andreae. Just to be clear, the CPA is a program that a city or town can opt into individually that is funded by the homeowners in that community paying a 1 percent surcharge on their real estate taxes. CPA funds can be used for affordable housing, historic preservation and open space.
I would say that the CPA has mostly been a good thing for Newton.
Perhaps the most important fact about the CPA to know, especially in a discussion about taxes, is that each municipality can raise that 1 percent surcharge up to a maximum of 3 percent if a community elects to.
Who would make that decision?
That’s right, our progressive city council.
Call me a cynic, but i would be willing to bet that a purchase of Webster Woods would almost certainly trigger
a race to raise that CPA tax to 3 percent as soon as humanly possible.
I think there will eventually be an effort to raise that real estate tax surcharge to 3 percent whether we end up buying Webster Woods or not, in fact i would count on that happening.
Paul Green- thanks for clarifying the CPA situation.
And you are SO very right — our “progressive“ City Council will predictably race to the top of the allowable tax increase. They are incorrigible.
@ Abe Zoe- The City Council’s progressiveness was witnessed last week when the Council overrode the Mayor’s veto on their salary increases. Salaries were increased even beyond the recommendations of the BRC and forever adding to pension liabilities and health care costs.
@Peter Karg – I was disappointed with that vote too but I’m not sure how that vote qualifies as “progressiveness”
@ Jerry – Progressiveness only in the eyes of the City Councilors!