Left In Lowell

I received this letter from an associate that I thought I might share and might offer some insight into the City of Lawrence and proposed House Bill 4421, which will be voted on in the next day or so:

February 3rd, 2010

Dear Members of the Massachusetts General Court,

I , the undersigned, resident of Massachusetts, write to respectfully submit our opposition to House 4421, a Governor’s Message entitled, An Act Providing for the Financial Stability of the City of Lawrence.

I have a lack of confidence in the current municipal officials to properly address the City of Lawrence’s fiscal emergency due to its enormity of scope and a concern that the fiscal crisis poses an imminent danger to the safety of the citizens of Lawrence and their property.
My opposition to House 4421 is embedded in the fact that this does not go far enough and quick enough in implementing the solutions that the problem demands. House 4421 calls for the establishment of a $35 million loan funded through a bond issue, the creation of a state designated fiscal overseer, and the possible appointment of a finance control board in the event the city fails to balance its books by January 31, 2011. I feel the current structure of House 4421 simply delays the inevitable. Frankly, giving Lawrence $35 million at this point is akin to closing the barn door after the cows have wandered out into the field.

As an affected party in the Commonwealth, we feel this process should by-pass the creation of the overseer position and go right to the appointment of a finance control board. Further, the legislation should be amended to mandate the appointment of a receiver should the finance control board fail to meet its statutory duties. Such a plan would mirror what was legislatively done for the City of Springfield with the passage of Chapter 169 of the Acts of 2004, and which enabled the city to turn its financial condition around.

The Lawrence fiscal crisis has been a long-time in the making with little responsible attention to it provided by our city officials. In February 2008, the Department of Revenue’s Division of Local Services issued what turned out to be a very prescient Financial Management Review of the City of Lawrence. It detailed at length 30 steps Lawrence should take to right its fiscal ship.
The report summarized succinctly the considerable state oversight under which Lawrence operated since 1983, including under the management of a state mandated Lawrence Fiscal Oversight Board for seven and one-half years in the 1990s. (The full report can be found here) Lawrence presently has the lowest municipal bond rating in the Commonwealth listed at Baa3.

Several passages from the 2008 Financial Management Review’s Executive Summary prove insightful and an accurate prognostication of our city’s current mess:
“Early projections point to a significant FY2009 budget shortfall. If the city’s fiscal management does not improve, if cuts in spending are resisted, and if the city council continues to reject revenue enhancements, it is difficult to envision how a balanced budget will be developed and adopted.”

“Overall, we found that many of the problems identified in this report are longstanding and continue to hinder the city’s fiscal operations. Basic financial functions at the departmental level are not being performed and the staff struggle to complete daily activities due to their lack of training and knowledge, the ineffective use of computerized systems, and leadership voids.”

“Higher level financial management capability is untested and, historically, decisions have often been misguided. To balance recent budgets, city officials have relied on financial resources that will not be available in FY2009 and beyond, but there has been no forward-looking analysis of this prospect…The apparent disregard for these types of factors have lead, in the past, to unrealistic budgeting, to failed spending controls and to an inability to collect revenues budgeted.”

“The use of the reserve fund, however, is a red flag and merely diverts attention from the deeper, and inevitable, fiscal crisis that lied ahead. It reflects a decision to take the easier route and raises serious concerns at DOR about the future ability of the city to balance its budget when all possible reserves are depleted.”

“Options will be limited and will, in all likelihood, include the establishment of a finance control board for Lawrence, based on the Springfield model which would takeover, in a substantive and authoritative way, management of the city’s finances.”

Since the issuance of that report, the city has sunk into a deeper fiscal abyss. The deficit was never addressed throughout the remainder of calendar year 2009, as the city council took no action to resolve the lingering deficit. As a result of the city council’s inaction, the city was forced to take an advance on its Local Aid monies in order to meet certain spending obligations in mid-December.

As FY2010 moves closer to its June 30 completion, we have increasing doubt that our current line-up of elected and appointed officials has the tools, experience, and knowledge necessary to address a problem that grows larger each day. Additional actions by the current mayoral administration contributing to our deep skepticism include the following:
The city has not had a budget and finance director since before the November 2009 election. However, the current mayor, since his election and subsequent inauguration on January 4, 2009, has not hired a budget and finance director for the city. In fact, as of this writing, a job posting has not even been issued for the position.

At least 11 union contracts expire before the end of FY2010. If past practice is any indication as to how the negotiations for new contracts are going to go, the city will realize very little, if any, concessions from the unions and, hence, very little cost savings. Unless the city has hired skilled labor negotiators to create costs savings on the personnel side of the ledger, the city will be ill-prepared for these negotiations and potential cost-cutting efforts.

The mayor has hired the former city councilor, who served as council president for the last six years including last year when no action was taken on the city’s deficit, to be the acting planning director for the city as well as the acting economic director. However, this hiring is in clear violation of the state’s ethics law, MGL Chapter 268A, section 20, which prohibits a former city councilor from municipal employment for up to six months after the completion of his term.

The mayor has re-hired the former water commissioner who was terminated last year for deficit spending his department budget and for leaving uncollected millions of dollars in unpaid water/sewer bills.

The mayor in tandem with the school committee has taken no action against the current superintendent of schools who has been under criminal investigation since June 2009, yet who could be fired for cause based on the terms of his contract and certain results of the investigation. The superintendent is being paid $4,000 per week under the terms of his contract.

I feel it is imperative that the appropriate committee in the Legislature has a public hearing on this bill so that citizens can testify on this petition. This bill does not affect only Lawrence but all taxpayers of the Commonwealth, as Lawrence receives 75% of their operating funds from the Commonwealth.

At this point in time, the mayor and his team have demonstrated no game plan that indicates they have a handle on the financial crisis. Lawrence is beyond a mere overseer. As a taxpayer I demands the immediate attention of a finance control board, with the heavy hand of receivership should its efforts fail. Please reject House 4421 in its current draft and structure the legislation so that a finance control board can take over our municipal operations presently.
I have too much at stake as a taxpayer and as citizens of Massachusetts during these trying times. I depend on you, the members of the General Court, to do the right thing and bring in a finance control board for our city.
Thank you for your attention to this matter that requires immediate and considerable resolution.