It looks like your typical, frugal Yankee town hall from the outside,
but inside Boxford Town Hall, there is a golden secret.
When the town's money managers closed out their books for last year,
this little town of about 6,500 found itself with almost $1.3 million in surplus taxes,
the most it has ever had in its 314-year history. A generation or so ago, that is about
how much it cost to run the whole town for a year.
Boxford is not alone in its record-breaking bounty.
Across the Merrimack Valley, and statewide, cities and towns are
sitting atop stashes of surplus taxes. It is a remarkable turnaround from the dark days of
the early 1990s, when the economy was sour and many towns were millions of dollars in
debt.
These days, the state is pouring money into local coffers at
unprecedented rates, while local business growth and housing construction -- not to
mention tax increases approved by voters -- pump in even more.
But it has raised a conundrum for some town officials: What do you do
with an embarrassment of riches?
Like their counterparts in the Massachusetts Statehouse, town
officials are struggling to find a happy meeting ground between giving their town a
comfortable financial cushion to guard against bad times, spending money on projects that
have been shelved for years and giving taxpayers a little break on their property tax
bills.
"Those economic times in the early 1990s were very damaging; the
money was flowing in nothing near what is flowing in today," said North Andover
Selectman and state Rep. David M. Torrisi. "There's revenue coming in at all
levels."
There are few places that have seen as dramatic a turnaround as his
town. In 1991, things were so bad the School Department cut the entire sports program, and
residents had to raise the $250,000 to pay for it privately.
The town stayed about $2 million in debt for a few years, while
voters defeated a handful of attempts to raise their property taxes above the 2.5 percent
yearly increase state law allows.
Things started to change in 1996, when the town found itself with
over $1 million in extra money. The surplus has hovered around that figure ever since.
The question now is what to do with it.
"We still have some major infrastructure needs," said Rep.
Torrisi, referring to plans for a new police and fire station. "Education is also a
priority. There's no question the School Department has a very ambitious plan to get up to
par."
So far, North Andover has not considered using its surplus for tax
breaks.
When it comes to surplus cash, Andover has skyrocketed from the
middle of the pack to the second richest town in Essex County.
It has a little over $5.3 million, compared to the $278,000 it had in
1991. It ranks just below Peabody, which has historically run surpluses of $5 million or
more. This year it has $6.5 million.
Andover Selectman Chairman William T. Downs attributes the change to
the economy and good management.
He said at least $2 million will be used to limit increases in
property taxes. Most of the rest will be kept in order to maintain a high bond rating,
which lowers the town's cost of borrowing money. Some will be used to pay for building
projects in the future.
"There's always pressure about how to spend the money," he
said. "The thing I worry about is having a big debt."
Some of the most dramatic turn-arounds happened in Amesbury,
Haverhill, and Lawrence. All three were millions of dollars in debt in 1991, and now they
are firmly in the black financially.
In his 26 years in city government, Haverhill City Councilor George
Dekeon cannot remember a time when the city was in the black -- until now. It has just
over a $1 million surplus, compared to a deficit of $3.3 million in 1993.
"Financially speaking, we do have a lot of debt, but at the same
time we're in the black, and that's good," he said.
That is a notable achievement for what is perhaps the only community
in the state that has a city-owned hospital and nursing home.
"They're not moneymakers," Mr. Dekeon said.
Like Andover, Haverhill is using some of its money to lessen the
growth of taxes, some to buy needed equipment like a fire pumper and the rest to stash
away for a "rainy day."
In 1992, Lawrence struggled under a $5.2 million blot of red ink.
Last year, it showed a $1.5 million surplus. City Council is considering a small tax cut,
about $12 for the average homeowner.
In Amesbury, about half of the $1.4 million will be used to cut
taxes, which translates into $44 for a home worth $150,000.
"You just have to be cognizant that things can change,"
said Mr. Dekeon. "There's always a cycle of ups and downs. I just hope it stays like
this for a while."
--- REPORT #2 ---
The Boston Herald
Thursday, February 18, 1999
Gov puts roadway repairs ahead of tax cuts
By Laura Brown
The "lion's share" of any state surplus should be used to
pay for road and bridge projects -- not as a refund to taxpayers, state officials said
yesterday.
The state is willing to spend up to $300 million of a projected $500
million year-end surplus to help bridge a funding gap created by cuts in the state's share
of federal highway money, Gov. Paul Cellucci told a mayors' gathering in Newton.
"The transportation shortfall will be given priority
status," Administration and Finance Secretary Fred Laskey said at an unusual joint
briefing after Cellucci's speech with Transportation Secretary Kevin Sullivan and state
Highway Commissioner Matthew Amorello.
Laskey did not rule out the type of year-end tax cut Cellucci
proposed last year when the state had a large surplus, but said the governor had not made
the same proposal for this year.
The "permanent" tax cuts the governor has advocated are
built into the state budget, he added.
House Transportation Committee Chairman Joseph C. Sullivan
(D-Braintree) suggested the average taxpaying family would "benefit at a greater
value from a well maintained road or bridge than from $75 back."
Just last month, the Massachusetts Taxpayers Foundation urged state
officials to use more surplus money or other revenues to pay for the state's share of the
Big Dig and state highway work to avoid plunging deeper into debt.
"This is clearly a positive step," MTF President Michael
Widmer said. "There's a recognition of the seriousness of the problem."
The state now plans to spend an average of $610 million per year for
the next five years on the statewide road and bridge program and the so-called Chapter 90
program, which provides cities and towns with money for local transportation projects.
But the administration's spending plan includes a $50 million annual
cut in the Chapter 90 program, which the legislature boosted from $90 million to $150
million in 1994.
Laskey and Sullivan argued that cities and towns could use portions
of $349 million that has been authorized for projects since 1985, but remains unspent, to
help fill the gap.
That part of the plan drew criticism yesterday from groups
representing municipal officials.
"Cities and towns across the Commonwealth are very concerned by
the governor's proposal at a time when the state is enjoying a healthy surplus," said
Patricia Mikes, a Massachusetts Municipal Association spokeswoman.
David Soule, executive director of the Metropolitan Area Planning
Council, said he was "delighted" to hear projects would be moving again, but
would need to monitor the state's plans for the Chapter 90 program "very
closely."
The construction industry - which has faced repeated shutdowns and
slowdowns as the state tried to control its highway spending - was more pleased about the
new spending plan.
"We're optimistic," said John
Pourbaix, executive director
of the Construction Industries of Massachusetts, which represents many large contractors.
"It will give our industry some stability and predictability for
the next five years, and that's what we need," he added.
The administration proposal would jump-start construction on more
than 100 road and bridge projects that were put on hold last year, Sullivan explained.
But Laskey stressed that the entire plan depends on the level of the
year-end surplus.
Cellucci plans to submit a supplemental budget request for at least
$80 million, but could boost that to $300 million if revenues are good, Laskey said.
The administration yesterday filed a $6 billion transportation bond
bill.
