Why We Need the FTPA

Why We Need a Framingham Taxpayers Association

Framingham taxpayers' interests have not always been well represented.
Framingham's revenues surged in the boom of the 1990's, and we spent virtually all of it.
The override of 2002 could have been avoided if CFO's financial projections were heeded and employee raises were limited fairly.
The 1998 Financial Task Force recommendations were ignored, leaving us without accountability for how cost-effectively our tax dollars are spent.
Local adoption of an optional state law in early 1990's has locked us in to one of the highest health insurance costs in the state.
The FTPA will focus on championing the taxpayers' interests
Support us by joining FTPA

Why We Need a Framingham Taxpayers Association
Framingham taxpayers' interests have not always been well represented. Framingham's revenues surged in the boom of the 1990's, and we spent virtually all of it. The override of 2002 could have been avoided if CFO's financial projections were heeded and employee raises were limited fairly. The 1998 Financial Task Force recommendations were ignored, leaving us without accountability for how cost-effectively our tax dollars are spent. Local adoption of an optional state law in early 1990's has locked us in to one of the highest health insurance costs in the state. The FTPA will focus on championing the taxpayers' interests Support us by joining FTPA

Framingham taxpayers interests have not always been well represented.

One might reasonably wonder, "Why do we need a Framingham Taxpayers Association?" and "Why now?". Our belief is that over the last decade, at least, a number of steps have been taken, or not taken, by the town that have worked against the best interests of the taxpayers. By creating an organization dedicated to serving the taxpayers' interests we can strengthen the voice of the taxpayers and increase the value that we all receive for our tax dollars. It is particularly troubling that shortly after the economic boom of the 1990's we needed a $7 plus million override one year, followed by significant layoffs in the next year, with prospects for at least one more difficult financial year after that.

Framingham's revenues surged in the boom of the 1990's, and we spent virtually all of it.

The decade of the 1990's saw one of the greatest economic booms in the country's history. Measured by the Dow Jones Industrial Average, the U.S. stock market had its largest increase, in percentage terms, of any decade in the last hundred years. Despite all the press about the stock market decline of the last three years, the DJIA today, while 20% or so lower than its peak in 2000, is still more than 200% higher than its level in the middle of 1990.
The town of Framingham shared greatly in the period of unprecedented economic growth that was the 1990's. From 1990 through 2002, the town's revenue from property taxes grew by an average of more than 5% per year, more than double the cap imposed by proposition 2 1/2, and also significantly outpacing the increase in the Consumer Price Index (CPI) (Note 1), which for the Boston metropolitan area increased by an average of about 3% per year over this period of time. This rapid escalation in property taxes occurred because of "new growth" in the property tax base (i.e. new properties being built or expanded and added to the tax rolls), primarily from new commercial/industrial property. Indeed, according to Census Bureau data, the residential population of the town increased by a total of only about 3.5% from 1990 through 2002, or a mere three-tenths of one percent per year. In all, the economic boom of the 1990's bestowed a surge in property tax revenue to the town that was, by FTPA estimates, some $50 to $100 million more than what was needed to keep pace with inflation and population growth - and we spent virtually all of it! (Note 2) Not only did we spend virtually all of it, we let expenses rise to such an extent that as soon as the boom came to an end, we needed a $7 plus million override.

The override of 2002 could have been avoided if CFO's financial
projections were heeded and employee raises were limited fairly.

Where did all this "surge" revenue go, and was the override unavoidable? A significant portion of this revenue was used to fund increases in employee COLAs (cost of living allowances) from 1990 through 2002 that exceeded the increase in the CPI. In 1998 the town's Chief Financial Officer prepared a five-year financial forecast that predicted the town would see large and growing budget deficits if no significant changes were made in the town's financial policies and the state's policies regarding reimbursements to the cities and towns. A citizen advisory panel, called the Financial Task Force, subsequently validated this forecast. Yet the very next year the town granted COLA's to most employees of 3% per year for the following three years (Note 3). In all, from 1990 through 2002, the aggregate amount of COLA's granted to most employees averaged in the neighborhood of 44-45%. The relevant measure of the CPI for the same period was under 40% (Note 4). There was a similar disparity, in the employees' favor, for the decade of the 1980's. If the employee contract settlements reached in 1999 had limited COLA's to 1.5% per year, our employees would have still been ahead of inflation on a cumulative basis, and the need for the $7 plus million override of 2002 would have been virtually eliminated.

The 1998 Financial Task Force recommendations were ignored, leaving us without
an effective measure of accountability for how our tax dollars are spent.

The Financial Task Force made two very specific recommendations for dealing with the impending budget deficits (Note 5). Neither recommendation has yet been implemented (Note 6). The Financial Task Force report stated: "How do we as citizens know whether our municipal tax dollars are being spent cost-effectively? We don't. By properly implementing competitive bidding and benchmarking we will give ourselves the ability to make this determination and thus to make informed decisions about how best to close the projected budget gap with the least impact on service levels and/or taxes." Who knows how much in savings might have been identified if the wisdom of the Financial Task Force had been heeded. A strong taxpayers organization will increase the chances that such forward-looking improvements are adopted. The FTPA will advocate for increased accountability through benchmarking the cost-effectiveness of key town services.

Local adoption of an optional state law in early 1990's has locked us in to
one of the highest health insurance costs in the state.

As a final example here, in 1993 the town's Board of Selectmen adopted Section 19 of Chapter 32B of the Massachusetts general laws, sometimes referred to as Coalition Health Insurance bargaining. In assessing the attractiveness of this law, consider that to this day Framingham is one of only three or four cities and towns in the state reputed to have adopted the law (Note 7). As a result of the adoption of this law and the decisions made at the time of its adoption, the employees of the town receive among the most generous health insurance benefits of any employee group in the state. The town now pays 90% of the annual health insurance premiums for most employees. No changes can be made in this coverage unless the employees agree to the change. Furthermore the law precludes the town from negotiating health insurance coverage together with salaries in order to reach a unified settlement on total compensation. Without casting any specific criticism, it doesn't help that the people trying to negotiate any changes in health care coverage are themselves benefitting from the same coverage. The FTPA is now in the process of benchmarking the town's health insurance costs to try to objectively assess how much more we are paying compared with other cities and towns.

The FTPA will focus on championing the taxpayers' interests

In the coming weeks and months we will have more to say about the above and other issues. We will sponsor warrant articles of our own, research and comment upon other warrant articles and ballot questions that we believe may have a significant impact on the taxpayers, and identify candidates for local office that support our positions. So be sure to return here periodically to see what's new.

Support us by joining FTPA

In the meantime, we invite you to support our efforts by joining the FTPA. As mentioned above, one of our goals is to strengthen the voice of the taxpayer. The larger our membership is, the stronger our voice will be. Please click here or on the Membership link on index on the left side of this page for further information concerning membership.

Framingham taxpayers interests have not always been well represented.
One might reasonably wonder, "Why do we need a Framingham Taxpayers Association?" and "Why now?". Our belief is that over the last decade, at least, a number of steps have been taken, or not taken, by the town that have worked against the best interests of the taxpayers. By creating an organization dedicated to serving the taxpayers' interests we can strengthen the voice of the taxpayers and increase the value that we all receive for our tax dollars. It is particularly troubling that shortly after the economic boom of the 1990's we needed a $7 plus million override one year, followed by significant layoffs in the next year, with prospects for at least one more difficult financial year after that.
Framingham's revenues surged in the boom of the 1990's, and we spent virtually all of it.
The decade of the 1990's saw one of the greatest economic booms in the country's history. Measured by the Dow Jones Industrial Average, the U.S. stock market had its largest increase, in percentage terms, of any decade in the last hundred years. Despite all the press about the stock market decline of the last three years, the DJIA today, while 20% or so lower than its peak in 2000, is still more than 200% higher than its level in the middle of 1990. The town of Framingham shared greatly in the period of unprecedented economic growth that was the 1990's. From 1990 through 2002, the town's revenue from property taxes grew by an average of more than 5% per year, more than double the cap imposed by proposition 2 1/2, and also significantly outpacing the increase in the Consumer Price Index (CPI) (Note 1), which for the Boston metropolitan area increased by an average of about 3% per year over this period of time. This rapid escalation in property taxes occurred because of "new growth" in the property tax base (i.e. new properties being built or expanded and added to the tax rolls), primarily from new commercial/industrial property. Indeed, according to Census Bureau data, the residential population of the town increased by a total of only about 3.5% from 1990 through 2002, or a mere three-tenths of one percent per year. In all, the economic boom of the 1990's bestowed a surge in property tax revenue to the town that was, by FTPA estimates, some $50 to $100 million more than what was needed to keep pace with inflation and population growth - and we spent virtually all of it! (Note 2) Not only did we spend virtually all of it, we let expenses rise to such an extent that as soon as the boom came to an end, we needed a $7 plus million override.
The override of 2002 could have been avoided if CFO's financial projections were heeded and employee raises were limited fairly.
Where did all this "surge" revenue go, and was the override unavoidable? A significant portion of this revenue was used to fund increases in employee COLAs (cost of living allowances) from 1990 through 2002 that exceeded the increase in the CPI. In 1998 the town's Chief Financial Officer prepared a five-year financial forecast that predicted the town would see large and growing budget deficits if no significant changes were made in the town's financial policies and the state's policies regarding reimbursements to the cities and towns. A citizen advisory panel, called the Financial Task Force, subsequently validated this forecast. Yet the very next year the town granted COLA's to most employees of 3% per year for the following three years (Note 3). In all, from 1990 through 2002, the aggregate amount of COLA's granted to most employees averaged in the neighborhood of 44-45%. The relevant measure of the CPI for the same period was under 40% (Note 4). There was a similar disparity, in the employees' favor, for the decade of the 1980's. If the employee contract settlements reached in 1999 had limited COLA's to 1.5% per year, our employees would have still been ahead of inflation on a cumulative basis, and the need for the $7 plus million override of 2002 would have been virtually eliminated.
The 1998 Financial Task Force recommendations were ignored, leaving us without an effective measure of accountability for how our tax dollars are spent.
The Financial Task Force made two very specific recommendations for dealing with the impending budget deficits (Note 5). Neither recommendation has yet been implemented (Note 6). The Financial Task Force report stated: "How do we as citizens know whether our municipal tax dollars are being spent cost-effectively? We don't. By properly implementing competitive bidding and benchmarking we will give ourselves the ability to make this determination and thus to make informed decisions about how best to close the projected budget gap with the least impact on service levels and/or taxes." Who knows how much in savings might have been identified if the wisdom of the Financial Task Force had been heeded. A strong taxpayers organization will increase the chances that such forward-looking improvements are adopted. The FTPA will advocate for increased accountability through benchmarking the cost-effectiveness of key town services.
Local adoption of an optional state law in early 1990's has locked us in to one of the highest health insurance costs in the state.
As a final example here, in 1993 the town's Board of Selectmen adopted Section 19 of Chapter 32B of the Massachusetts general laws, sometimes referred to as Coalition Health Insurance bargaining. In assessing the attractiveness of this law, consider that to this day Framingham is one of only three or four cities and towns in the state reputed to have adopted the law (Note 7). As a result of the adoption of this law and the decisions made at the time of its adoption, the employees of the town receive among the most generous health insurance benefits of any employee group in the state. The town now pays 90% of the annual health insurance premiums for most employees. No changes can be made in this coverage unless the employees agree to the change. Furthermore the law precludes the town from negotiating health insurance coverage together with salaries in order to reach a unified settlement on total compensation. Without casting any specific criticism, it doesn't help that the people trying to negotiate any changes in health care coverage are themselves benefitting from the same coverage. The FTPA is now in the process of benchmarking the town's health insurance costs to try to objectively assess how much more we are paying compared with other cities and towns.
The FTPA will focus on championing the taxpayers' interests
In the coming weeks and months we will have more to say about the above and other issues. We will sponsor warrant articles of our own, research and comment upon other warrant articles and ballot questions that we believe may have a significant impact on the taxpayers, and identify candidates for local office that support our positions. So be sure to return here periodically to see what's new.
Support us by joining FTPA
In the meantime, we invite you to support our efforts by joining the FTPA. As mentioned above, one of our goals is to strengthen the voice of the taxpayer. The larger our membership is, the stronger our voice will be. Please click here or on the Membership link on index on the left side of this page for further information concerning membership.

Note 1: The CPI is published by the U.S. Bureau of Labor Statistics (BLS) and is the most widely accepted measure of changes in the cost of living.

Note 2: The town did manage to save $2 1/2 million in its stabilization fund during the late 1990's.

Note 3: The teachers' contract actually provided for a 4% COLA in year three of the contract.

Note 4: The BLS publishes many variations of the CPI, encompassing different sections of the country and different combinations of goods and services. The variation used for our analysis here is the series for the greater Boston area for all items except health care. Since the town separately pays 90% of most employees health insurance costs, the FTPA believes that this variation of the CPI is the most relevant.

Note 5: See "Financial Task Force Final Report", November 16, 1998, Appendix D.

Note 6: After prodding from Town Meeting in 2002, the Board of Selectmen and the School Committee have agreed to implement benchmarking, but implementation has yet to begin.

Note 7: There is no official record we know of that identifies in one place all of the cities and towns that have adopted this law. The estimate of three or four is the number commonly cited by local officials.

Send comments to: webmaster@framinghamtpa.org

Every tax is a pay cut. Every tax cut is a pay raise.
Citizens for Limited Taxation

Note 1:	The CPI is published by the U.S. Bureau of Labor Statistics (BLS) and is the most widely accepted measure of changes in the cost of living.
Note 2:	The town did manage to save $2 1/2 million in its stabilization fund during the late 1990's.
Note 3:	The teachers' contract actually provided for a 4% COLA in year three of the contract.
Note 4:	The BLS publishes many variations of the CPI, encompassing different sections of the country and different combinations of goods and services. The variation used for our analysis here is the series for the greater Boston area for all items except health care. Since the town separately pays 90% of most employees health insurance costs, the FTPA believes that this variation of the CPI is the most relevant.
Note 5:	See "Financial Task Force Final Report", November 16, 1998, Appendix D.
Note 6:	After prodding from Town Meeting in 2002, the Board of Selectmen and the School Committee have agreed to implement benchmarking, but implementation has yet to begin.
Note 7:	There is no official record we know of that identifies in one place all of the cities and towns that have adopted this law. The estimate of three or four is the number commonly cited by local officials.