Some Questions On The Mayor’s Numbers?

June 9, 2008
City of Quincy
Jay Davis

City Council President
1305 Hancock Street
Quincy, MA 02169

Dear Councilor Davis:

I would like to ask you and the other Councilors not to vote on Mayor Koch’s budget submission until this budget document has been explained in detail to the City Council. I believe that the Mayor has not been honest in his budget submission to the Council and that departmental cuts need to be reviewed further by the Council. On June 18, 2007, the City Council by Council order approved the Fiscal Year 2008 budget that was submitted by former Mayor William Phelan. The following orders for the budget were approved:

#207-100       $202,148,424      General Fund

#207-100A     $17,189,165        Sewer budget

#207-100B     $10,449,697        Water budget

TOTAL          $229,787,286

The Council did not appropriate approximately 19.6 million dollars in medical insurance at this time. It was done at a later date. This would bring the general fund total to approximately 221.7 million dollars for Fiscal Year 2008. Mayor Koch’s budget submission is for approximately 233 million dollars. This is a difference of 12 million dollars. Four (4) million dollars more then Mayor Koch stated in his public statement and budget submission to the City Council. This 221.7 million dollars is similar to the figure shown on the Fiscal Year 2008 Tax rate recap to raise and appropriate. The water and sewer budget submission for Fiscal Year 2008 voted by the Council equal approximately 27.6 million dollars. Mayor Koch’s budget for sewer and water is for 33.2 million dollars. This is a difference of 5.8 million dollars. No explanation has been given for these discrepancies yet the City Council seems inclined to go along and vote the budget document without digging deeper into the problem.

Also, much has been made of the indirect costs that appeared in the Fiscal Year 2008 budget. Mayor Koch alone is responsible for the FY 2009 budget submission. Mayor Koch is responsible for balancing and submitting to the City Council the FY 2009 budget document that the City Council will vote on. The Mayor’s Chief of staff seemed to indicate that the Mayor’s Office did not understand indirect costs and in fact this budget was a work in process. You can legally vote on a work in process with changing numbers. The Mayor has stated that the City Audit firm and the Department of Revenue are now reviewing the situation with the water/Sewer budget. The time to review this information was prior to the budget submission. It is the Mayor’s responsibility to understand the process that is in place and follow that process.

On May 7, 2008, former Mayor Phelan submitted his FY 2008 budget to the City Council. At that time, City Council Finance Chairman John Keenan requested the following documents from the Mayor in order to review the budget:

1. A revenue breakdown of local receipts, state aid, and other items with particular attention to the water and sewer enterprise funds.
2. A breakdown of positions highlighting new positions and positions that were cut.
3. Status of Quincy College
4. Breakdown of reserve appropriation relative to contracts and how they were calculated
   if previously ratified.
    

Councilor Raymondi requested the following information:

1. Personnel services numbers for 5 to 6 years.
2. Year to date expenditures personnel and expense.
3. What was returned the previous year by departments to the City. In other words money budgeted but not spent.
4. What was anticipated to be turned back in Fiscal Year 2007 by City departments? In fact according to the FY 2007 Audit $4.1 million dollars was turned back.

Also, the simple basic question that has not been answered truthfully is how can you have an 8 million dollar budget increase and a 23 million dollar tax levy increase. It is the Council’s responsibility to thoroughly review this budget. The Council requested numerous documents from previous Mayor in order to review the last budget. Why wasn’t this done for Mayor Koch’s budget submission? Also, how much does the City anticipate will be turned back by City departments? Instead of cutting budgets, the Council should review prior year turn backs as well as anticipated turn backs this year to determine budgetary cuts.

Furthermore, I feel I must address Councilor Keenan’s statements concerning a structural deficit in the budget. Councilor Keenan has taken a lot of liberty in making these statements. The contract settlements were anticipated because there were negotiations ongoing with a number of unions. It is legal and proper to use reserves to fund retroactive settlements and this has been done in the past with no statement of setting up a structural deficit. This would reduce reserves but it does not create a structural deficit. Mayor Koch has not stated that there is a structural deficit in the FY 2009 budget went he settled contract increase himself with a number of unions. Structural is permanent and ongoing. Contracts are a cost of doing business and if you don’t have enough money then you need to negotiate reduced contracts. Councilor Keenan suggests that the Honeywell payment of 1.4 million not in the budget creates a structural deficit. This is not true. There was 700 hundred thousand dollars in an interest account to pay this as well as rebates (anticipated at $485 thousand dollars) and energy savings that you need to consider along with the fact that the Council approved this contract based on savings not on producing a deficit. Again, this could reduce the reserves for this year but the Council approved this and everyone knew that this would appear as a budgetary item in future city budgets. Councilor Keenan states that using the stabilization fund causes a structural deficit. Again, this is not the case. Many cities and towns use free cash or other reserves to reduce the tax rate. This is allowed by law and the City has used free cash in the past to reduce the tax rate with no talk of a structural deficit being created. Again, these statements in my opinion are not accurate. I would be happy to discuss with you other points that Councilor Keenan raises if you are interested. Again, I urge that the Council not vote the budget submitted by the Mayor until all the facts are on the table. Our children’s education is too important to just go along to get along. Thank you for reviewing this and I am available to answer any questions that you or any City official may have.

Sincerely,

Robert C. Haley
75 Elmwood Park #20
Quincy, MA