, Gloucester, MA

October 11, 2013

Letter: Candidates must address city's fiscal picture

Gloucester Daily Times

---- — To the editor:

The countdown for Gloucester’s mayoral and City Council election is upon us.

Gloucester finds itself in an enviable position with balanced budgets over the past six years and free cash that has accrued to over $13 million during the last 4-years including a projected $3 million for fiscal 2013. On top of that, our AA Bond rating has again placed us in a great position to leverage solid credit with terms and rates that other lesser cities and towns yearn for.

It sounds great but … is it? Like everything else when things are too good to be true, there might be a looming hangover when we have a too good to be true truism. And this is the case here where every citizen Gloucester should take notice.

Yes, it’s true we have six years of balanced budgets and we have had $13 plus million of “free cash,” but at what price? The trends are disturbing and with them come unintended consequences that must be addressed by the next mayor.

Look at our residential real estate tax rate.

In six years, our tax rate has catapulted an unsustainable 46.57 percent ($8.61 to $12.62) If you owned a home in Gloucester with an assessed value of $400,000 in 2007, your real estate tax would have been $3,444 per year.

The same home with the same assessed value of $400,000, your FY2013 real estate tax is now $5,048. Now that’s assuming your assessed value of your home hasn’t increased, but city wide, it has.

City budget records show that citywide property tax assessments for fiscal 2009 were $54,767,617. For fiscal 2012 (the last year records are available), citywide property tax assessments were $61,581,582 or an increase of 12.44 percent in three years.

For the sake of example lets add that 12.44 percent increase to our $400,000 property bringing the new assessed property value to $449,760.

Tax it at $12.62 (2013 rate) and your new tax for FY 2013 is now $5,675.97 — $2,231 more in just six years. That hurts!

But why stop there? Let’s look at the five-year water & sewer rate table below, starting from 2008 and ending in 2013. Water rates have increased 30.62 percent and the sewer rate increased an astonishing 65.22 percent in that period.

Outside of the obvious increase in cash outlay for every property owner, what do these numbers tell you. Let me give you my take.

First of all, I’ve developed real estate throughout my career. Not at the grand scale as some but the fundamentals are the same. When real estate tax rates and water/sewer rates continue to increase for both residential and commercial as they have since 2007, those trends set off alarms for any new business considering Gloucester.

A continuous escalation of tax rates creates uncertainty with long and short term financial projections. Uncertainty is an unhealthy variable that also weighs heavily on employee attraction and retention. Appealing to a specific labor force to relocate to an area with a high cost of living only increases that measure of uncertainty.

Furthermore, enormous increases in water and sewer costs signal the same reaction for marine industrial-water dependent businesses. Their water consumption is normally quite significant.

Consider Cape Pond Ice. Scott Memhard’s company does not manufacture his retail ice products in Gloucester primarily because of the cost of water. Water is a major consideration for the very businesses Gloucester covets within its DPA boundaries. With water and sewer rates off the charts, our ability to attract these businesses will be compromised.

I’m not aware of every nuance in our city budget. It’s hard to get a good handle on them over the city’s web-site. Line items are vague and there are far more questions than answers. I could not find a mention, for example, of the $293 million in unfunded liabilities last highlighted in a 2011 Gloucester Daily Times article.

That’s a sobering fact and we, as taxpayers, have a right to know the details of our unfunded liabilities and the impact they will undoubtedly have on all of us.

This piece is not a rant on the fiscal stewardship of this administration. Harsh realities of our CSO projects and other city tribulations has put us in a difficult financial position as we’re led to believe.

To a degree, I’ll accept that. But I’m sounding the alarms on the rapid escalation of the cost of running this city. Middle class citizens are being squeezed, fishermen and their families are losing their homes, while we’re looking to breathe new life into our city. You cannot achieve a vision by choking your vitality with cost of living and working hardships.

The mayoral campaign is upon us and we need leadership that can clearly demonstrate how they can do more with less because from my vantage point, it’s pretty easy do more when you extract more — a lot more.