The debate over town spending and property taxes is negatively affecting the thinking of some of our town leaders. While some selectmen are trying to assuage citizens with quick fixes such as returns of free cash or “underrides,” they are distracted from dealing with the long-term causes of fiscal strain. A leader’s first responsibility is to educate, so residents have the right information for good dialogue and informed voting.
Andover, like many other towns in Massachusetts, has severe fiscal constraints resulting from promises made for pensions and retiree healthcare. These constraints will become more severe, as outlined in recent testimony to the Legislature by the non-partisan think tank, Mass. Taxpayers Foundation.
Getting control of retiree health costs and making changes to the rules for future retirees are necessary, but costs that have already been “committed” are going to keep diverting revenue increases to OPEB (Other Post-Employment Benefits) costs for the next generation. The Massachusetts Municipal Association has proposed options to reduce the exposure, which can be viewed on its website, masstaxpayers.org.
The town manager recommends putting $800,000 of free cash per year toward the OPEB liability, plus another $500,000 in 2014, growing at $100,000 per year for 27 years, in order to make substantial progress against this greater than $200 million liability.
A healthy town has a sustainable balance of town services, great schools and a variety of affordable housing for people of all income levels. Andover does well, but has allowed its schools to fall behind other towns. The Boston Business Journal’s new ranking of school performance shows that Andover has moved down to a No. 21 ranking in the state.
While not perfectly correlated, Andover’s real estate prices, up only 4 percent since 2008, lag the increases in many towns with higher school performance. In many cases, real estate prices are up more than 10 percent since 2008, which implies more than a $30,000 penalty for an Andover homeowner with an average-priced home. This loss of value needs to be put into perspective relative to the annual increases in property taxes projected from taxing at the proposition 2-1/2 limit and increases for debt overrides that pay for enhancing the town’s infrastructure.