Will New Mayor Bring Renewed Focus on Fiscal Stewardship?

Next week, Setti Warren concludes his “service” as Mayor of Newton, MA to focus on his underdog gubernatorial campaign. Succeeding him as Mayor of Newton will be Ruthanne Fuller, who won a highly contested mayoral race against the union-backed former City Council President Scott Lennon.

We at the Newton Taxpayers Association were encouraged that Ruthanne Fuller met with us in October, demonstrated knowledge of Newton fiscal issues and appointed one of our board members Al Cecchinelli to her transition team. We were happy that she was intrigued with Al’s mayoral campaign proposal to cut taxpayer costs to provide primary healthcare services to city employees by opening and operating a community health center and having the employees utilize the clinic rather than a private hospital or medical office. However, we were disappointed that she failed to articulate any specific plans to change the negative fiscal direction at our meeting, nor could give us any justification for voting to rubber stamp Mayor Warren’s agenda of increased taxes, spending and borrowing when she served as a city councilor.

While Mayor Warren may have inherited a rickety financial foundation consisting of $1 Billion in debt and other obligations from David Cohen, his eight years serving as Mayor of Newton ended up piling on more debt and unfunded pension/retiree healthcare liabilities to Newton’s balance sheet. Annual spending in Newton’s operating budget increased by $108 Million (37.5%) during Mayor Warren’s tenure. This primarily underwrote increased compensation spending for unions and bureaucrats. Warren also oversaw an increase in Newton’s bonded debt by $101 Million (46%), its net underfunded pension liability by $118 Million (57%) and its net underfunded retiree healthcare liability by $107 Million (20%), according to the Newton Comptroller’s Website.

Newton now owes more than $1.3 Billion, or ~$40,000 per household. Yes, Setti Warren piled on another $326 Million in net interest-bearing obligations onto Newton’s balance during his tenure as Newton Mayor. Yes, Setti Warren made Newton’s bad financial balance sheet worse while serving as Newton’s Mayor. We can give credit to Setti Warren for his first three years in which Newton’s spending growth rate only grew by 3%. However, we were disappointed that spending grew by 5% annually during his last five years, which approached the spending rates of former Newton Mayor David Cohen.

Now that Ruthanne Fuller began serving as Newton’s Mayor, we hope she is willing to be a more aggressive financial watchdog as mayor relative to her tenure as city councilor given her increased responsibilities to Newton’s taxpayers as she will be serving as Newton’s strong mayor and will have the responsibility of hiring department heads and preparing the budget. Newton’s revenues have benefitted from an exceptionally strong real estate market, which we believe will decelerate due to rising interest rates and diminished tax incentives for residential real estate from the new tax reform legislation. We hope that her administration will proactively address and reform Newton’s budgetary and spending practices now while Newton’s revenue trends are still strong rather than wait for a crisis to hit as David Cohen did.

The six financial reforms we would like to see Ruthanne Fuller achieve in her first year serving as Newton’s Mayor include the following:

1. Ensuring the timely publication of the 2017 Newton Comprehensive Audited Financial Report and other financial reports going forward
2. New Labor Contracts that limit spending on cash pay raises to 1% total (instead of the 2%-6% Newton currently pays) and caps employer funded health insurance contributions to 50%, which would free up $19 Million annually to reduce the net underfunded pension/OPEB liabilities
3. Use her ex-oficio membership on the Newton School Committee to push for full-reimbursement of out-of-district students, which would bring in $9.3 Million annually to offset future infrastructure project costs
4. Enhance its future Pension Plan Actuarial Valuation Reports to include how the net liability would change if the compensation growth rate used in the model changed by 1%.
5. Resurrect the 2012 Newton School Foundation/School Committee naming rights proposal, which would bring in $2.1 Million annually to offset the cost of high-tech learning materials in the school system.
6. Implementing the recommendations of the 2010-11 SPED Review Report, which would save nearly $20 Million annually through staffing level adjustments as well as creative more effective programs than the current SPED service model provides