A new budget, a new beginning? (WMassP&I)

On Wednesday, the commonwealth and its 351 municipalities began anew, as localities closed the books on fiscal year 2015 and began FY2016. The state itself has not delivered a full-year spending plan. Others squeezed it in at the last minute. Springfield did not get its budget in quite that late. Rather, Mayor Domenic Sarno proposed it in May, followed by Council approval last month without cuts and only a single dissenting vote.

The upbeat spending plan, just short of $600 million, included more money for public safety staffing and required no funds from the city’s reserve account. Moreover, the budget seemingly represents a departure from the decades of cuts, layoffs and pain. But Springfield’s fiscal health is far more complicated and no less perilous.

Progress has been made in Springfield’s finances, but has Mayor Sarno done enough? (image made via Springfield mayoral portrait & loc.gov files)

As Councilor Michael Fenton observed in explaining his vote against the budget, future obligations to retiree pension and health benefits cast a pall over the city’s long term fiscal future. One-time revenues, if not reserves, balance the budget. Mountainous and urgent investments in capital assets remain.

The situation has improved considerably since the recession. Yet now, when things are good, is the most dangerous time for the city and its future financially—and in general. The path out of the woods is not apparent, however, and is shrouded in political pitfalls, the media’s insufficient spotlighting, state neglect, and few easy options.

The heart of the trouble is revenue. City fiscal hawks have suggested there is fat still to cut and probably so, but not nearly enough to plug all the extant slow leaks in Springfield’s fiscal ship.

While there is some wisdom to Proposition 2 ½ in general and Springfield in particular, the recession hammered property values, in turn limiting and shrinking property tax revenues when the city and residents needed them most.

Guilty, too. (WMassP&I)

Boston has a role to play as well after cutting local aide during the recession as it had amid previous crises. Had those funds had been restored adjusted to inflation, Springfield and ilk cities would be in better shape. Beacon Hill’s beneficence to city schools—the per capita education aid to Springfield is among the highest in the commonwealth—complicates asks for additional funds.

Building off the Control Board’s work, Chief Administrative and Financial Officer Timothy Plante has kept city finances on a short leash. Councilors did not scrutinize this budget much, but not only Fenton is eyeing spending more carefully. To his credit, Sarno has rejected the sheer irresponsibility that defined past administrations from the past quarter century. Councilor Bud Williams—who is one of only two current councilors who served during the city’s worst period of financial accountability—has urged the city to spend down its reserves “on the people.” Sarno has rightly rejected this political pandering.

But that is not enough. Underinvestment in obligations to retirees seems Detroit-esque. Budgets may be lean, but efficiencies and savings through innovation undoubtedly go unrealized.  Using one-time funds not only maintains the specter of structural deficits, but consumes money better spent on critical improvements. Indeed, too much bond revenue—whether reimbursed by FEMA or not—is going toward, feel-good, politically expedient projects like a new senior center. Is there a need? Absolutely, but is it more pressing than, to name two, stabilizing Van Horn or Watershops Pond’s dams?

CAFO T.J. Plante (WMassP&I)

Plante’s job is not to say what the city should do, but execute the will of the political branches in a fiscally responsible way. Strictly speaking, only that which crosses legal or fiduciary lines animates his power to veto financial orders.

The upshot is that Springfield has a long way to go and the ultimate answer is either stabilizing its tax base (and with the wealth of its resident) or a wholesale shift in taxation policy coming out of Boston, which seems unlikely, to say the least.

Even the onset of gaming in Springfield will do little to alter the fiscal equation on its own. MGM is entirely excluded from the tax base under the host community agreement, paying annual lump sums in lieu of taxes. Meanwhile, the commercial real estate industry has become perhaps the greatest standing army of Pollyannas in Springfield, slow-walking projects or pricing out reliable tenants, hoping to cash in when the casino cometh.

The city needs to do more than renovate Union Station to realize its potential economically and financially. (WMassP&I)

With MGM’s impact only speculative and Union Station and the railcar factory’s requiring careful and thoughtful planning from City Hall to positively ripple outward, relying on property taxes remains risky. Those revenues and more wisely spending what funds the city has are the only choices, short of a reshuffling of state aid.

Solutions may not be obvious, but everybody, Sarno, councilors, the state Department of Administration & Finance, Plante and the voters need to keep the pressure on as the search for a clearer path continues.