Newton's Structural Spending Surge Continues Unabated

In October, Mayor Warren delivered his Five Year Financial Forecast and Capital Improvement Plan and wrote about it in the Newton TAB [Capital plan will lead city forward, October 29, B2]. When Mayor Warren’s predecessor David Cohen served as Newton’s mayor from 1998 to 2009 and was the primary reason that Newton’s budget saw a structural spending surge during his tenure. Unfortunately, despite Mayor Warren’s rosy rhetoric in his article last month, Newton’s structural spending surge continues unabated. We at the Newton Taxpayers Association were disappointed that the Newton Board of Alders’ Finance Committee was busy discussing banning plastic bags but not Mayor Warren’s CIP or Five Year Forecasts one of their recent meetings.

It is startling that Mayor Warren claimed that the Carr Elementary School renovations were under budget and that the Angier Elementary School Building project was on budget. According to The Boston Globe, Carr was originally expected to cost $8 Million but now costs $12.7 Million while Angier was originally expected to cost $30 Million but now costs $37.5 Million. Mayor Warren claimed that Newton now has a $17 Million Rainy Day Stabilization fund. The reality is that during his first term in office, Newton accumulated $9 Million in deficits in its General Fund, which it covered by issuing new debt.

Under Mayor Warren’s very own Five-Year Financial Forecast (Page 24, http://www.newtonma.gov/civicax/filebank/documents/61985), Newton will accumulate an additional $19.5 Million in deficits from FY2015 to FY2020. Furthermore, Newton increased its outstanding debt and unfunded retirement benefit liabilities by $99 Million. Over the last four years, Newton’s outstanding bonded debt increased by $13 Million, its net unfunded OPEB obligations increased by $23 Million and its net unfunded pension obligations increased by $63 Million. Warren announced that Newton would fully fund its pension plan obligations by the year 2029. The bad news for Newton taxpayers is that he will go about doing this by increasing Newton’s annual pension plan contribution by 8.5% annually.

Newton has nearly tripled its annual pension contributions during the last 13 years (from $7.3 Million in 2000 to $18.3 Million in 2013, which represents a compounded annual growth rate of 7.29%). Under Mayor Warren’s plan, Newton will more than triple its annual pension plan contribution from $18.3 Million in 2013 to $57.7 Million in 2027. During last year’s override, Mayor Warren and CFO Lemieux said that they wouldn’t plan on asking for another override for at least five years. The NTA Leadership Council interprets this to mean that Mayor Warren and his political allies will push another override package sometime around 2018 and that Newton taxpayers will be asked to pay increased property taxes to help bailout the underfunded pension plan. In our opinion, that is unacceptable when Newton spends $8.5 Million annually (net of state aid) to educate 597 out-of-district students that don’t live in Newton, but attend Newton Public Schools.

In Mayor Cohen’s last 10 years (FY2000-FY2010) Newton’s annual spending from its general fund increased from $191 Million in FY2000 to $287.5 Million in FY2010 ($96.5 Million, or 50.5). Under Mayor Warren’s plan, Newton’s annual general fund expenditures will increase from $287.5 Million in FY2010 to $417.7 Million in FY2020 ($130.2 Million, or 45%). Although the rate of growth has narrowed under Mayor Warren, the amount of increased spending in terms of dollars under Mayor Warren ($130.2 Million) exceeds that of Mayor David Cohen ($96.5 Million). Not only does Mayor Warren institutionalize and perpetuate Mayor Cohen’s structural spending surge, he’s adding to it. We only hope that the Newton Political Establishment would recognize that Mayor Warren has not saved any money for taxpayers, but rather raised taxes on Newton taxpayers in order to pay for more and more government spending, particularly on compensation to its 17 union bargaining groups.

In the last five years, Newton’s Mayor, its School Committee and its Board of Alders have gone out of their way to avoid making difficult decisions to Move Newton Forward Towards Fiscal Responsibility. This is why Newton has racked up $9 Million in operating deficits during Warren’s first term as mayor and why Newton’s outstanding debt and retirement benefit obligations have increased by $99 Million during this period. That is also why spending has increased from $287.5 Million in FY2010 to $345 Million in FY2015 and will reach $417.7 Million in FY2020 and Newton will incur another $19.5 Million in deficits from FY2015 to FY2020. Newton’s taxpayers expect much better fiscal stewardship from their public servants than what has been exhibited during the Cohen/Warren administration.