Left In Lowell

Tonight during the City Council’s weekly meeting, a public hearing will take (7:00 p.m.) place so that the Lowell taxpayers can have their say on the Minimum Residential Factor for Fiscal 2010.” The City Council will decide what percentage of the revenue generated from real estate taxes will come from residential and which percentage comes from commercial.

In addition to this vote, the City Council will approve some transfers in the budget to balance it out. The specifics were discussed at the City Council Financial Sub-Committee(CCs R. Elliott (Chair); B. Martin and K. Broderick) meeting which took place on Tuesday, November 24th. During that meeting, the City Manager and the CFO made a detailed presentation. Here is the link to the 2010 Budget Status powerpoint document and here is the one to the Tax Recap Adjustments. They are both great tools; a primer for the average citizen to understand what is going on with City finances.

One area of confusion to me as well as to certain City Council members is the definition of some of these terms that are bandied around: Overlay Account; Free Cash; Reserve and Chapter 17. In my attempt to educate myself, I did some research. Here are the definitions that I found.

“Overlay Account” or Provision for Abatement and Exemptions: This account is part of the annual budgeting process and provides for abatements and exemptions in the current year. Each year that account is closed, and carries a surplus or deficit, depending on activity. I have never met someone who has filed for an abatement; most of the people I know take their tax bill and pay their fair share.

Free Cash: As someone said to me, it is neither free nor cash. It is the portions of the general fund undesignated fund balance that DOR lets us spend. If we tax properly, we should not have free cash. If you overtax, then at the end you end up with money you did not need, right?

Reserve: This is a generic term and can refer to any account with cash that can be appropriated. Examples are free cash, stabilization funds, undesignated enterprise fund balances and overlay surplus.

Chapter 17: I heard this term for the first time last week during the CC meeting. It refers to the section of the law that created state oversight in Lowell in the 1990’s. One of the requirements of the oversight was to have a specified “reserve” accounts. The account has $4.2 million in it and can be used for emergencies, but must be replenished the following year.

And speaking of CC’s knowledge, a couple of weeks ago both CC J. Milinazzo and CC-elect P. Murphy were on the Warren Shaw radio show. The discussion on municipal finances was riveting. Granted you had to be a policy wonk to appreciate it; but the two of them not only know their stuff but they have strong opinions on the issue and can articulated them well. I think the FY 2011 Budget discussion next June will have a little bit more depth than the FY 2010.