Bankruptcy is Westborough's Best Financial Solution Now
By Len Mead 6-11-10 Bonus Letter Below . . Union Fireman Misses The Point -- Taxes Too High Relative to Other TOWNS
This year Westborough property owners will be paying a tax bill averaging $7,400. That's about $3,200 higher than the state average tax of $4,200. Now, most of us living here believe our community is much above average and I agree. My sense is that Westborough is 40% above the average state community -- so a tax bill of about $5,900 would seem right.. However, we're paying a tax premium of $1,500 MORE than 40% over the state average.
So just what are we buying with this $1,500 tax premium? Mostly over-generous wages, pensions and benefits for Westborough public union employees -- far exceeding similar pay and benefits in the private sector. This tax premium has built up steadily over the last 12 years --union contract by union contract. But worse, if this trend continues, we'll be paying twice the state average tax bill to stay living in Westborough 9 years from now.
Now before you liberal readers get your panties up in a bunch, can we agree that, yes, reasonable taxes are justified to educate our children and provide public safety and other social services. But in my view, we are simply paying too much of a premium at this time of recession and 9% plus unemployment.
While free market solutions bring higher and higher productivity in the private sector, it seems particularly ironic to be paying a $1,500 "union premium" to our public employees because union rules simply prohibit productivity increases to provide needed public services at less cost per student or citizen.
The only reason our town will be able to pay current obligations in fiscal 2011 is because $1 million was reduced by negotiating changes in existing union health costs and step raises. But this one-time result only nibbles around the edges of contractual obligations that just keep compounding upwards regardless of the state of our economy or taxpayer's ability to pay.
Friends, it bears repeating that government HAS NO MONEY. Nationally, we have a debt of $13 trillion vs. $4.6 trillion in revenue, a 1.4 trillion deficit in the current year and $109 trillion in unfunded liabilities or $352,000 per citizen! (See usdebtclock.org/)
Recently the Worcester Telegram reported that 6,731 public employees in the dying city of Worcester earn over $100,000 and the Empire Center for NY State Policy identified that 8,074 NY Transit Workers also earn more than $100,000. The Boston Herald's State Payroll website shows 5,803 MA state employees making over $100,000 in 2009 -- one third at the University of Massachusetts! Just meeting such payrolls is daunting -- but then consider the future burden on taxpayers where public workers routinely retire much earlier than those in the private sector with 80% of their salary.
Our Westborough Town Report of YE 2009 shows 24 Employees making $100,000 or more led by the School Superintendent at $179,000, Town Manager at $130,000 (annualized), and Police and Fire Chiefs at $127,000.
The last Post Employment and Benefit Valuation Report in September of 2008 for Current and Retired Westborough Town Employees showed the minimal annual cost of fully funding the obligations at $6 million per year for the next 30 years and an unfunded Accrued Liability of at least $50 million -- more than half our total town budget of about $89 million. Yes, that was before the recent $1 million payroll reductions, but also before unemployment doubled and the worst recession since the depression kicked in.
Folks, our country, our state, and yes, our town, is already broke. What I mean is that there is just no way productive taxpayers will earn enough to fully pay promised future obligations. They just cannot be met.
Now, before suggesting why bankruptcy is Westborough's best financial solution now to fairly solve this financial nightmare (also faced by every community across the country) let me predict what will happen soon to the largest unfunded future obligation in the world -- our Social Security.
There just isn't enough money or debt capacity to continue paying social security "obligations." So in the next 10 years recipients will first lose "inflation adjusted" increases. Then social security checks will be reduced -- over time down to probably to 75% of what has been promised. And, of course, the retirement age will and must be increased to an age starting in the 70s, but rising after that as life expectancy increases. Why? Again --- the money just does not exist. There isn't enough money to fully fund the obligations made.
Massachusetts is not a "right to work" state, so the only possible way for Westborough to correct the unfair premium public workers receive on our payroll is to declare bankruptcy. Then the overgenerous, unsustainable contract obligations can be torn up and the schools and town can start fresh -- hiring back the best teachers and other public workers based on a payroll of roughly 75% of the current $50 million or so. Communities in California are already taking this step out of necessity.
In many cases the highest paid here will be re-hired (if they apply) for less, others will not be hired back, but in many other cases, above-pay-grade performers can be hired back with more responsibility for higher pay. But automatic step increases, automatic pay increases just for taking courses without added job responsibilities and early retirement at 80% of compensation are the type of things that just cannot fairly continue. They are non-existent in the private sector.
So my earnest suggestion now, Dear Readers, is for our Town Leaders to get out front and LEAD. Declare bankruptcy and protect taxpayers living here who want to stay living here. You may think this is a crazy suggestion. Fine. Then let's hear YOUR solution. I challenge you to propose a more equitable move to save our community from a slow, painful fate where we'll be paying double the state home tax average in 9 more years if we just continue on our present path.
Len Mead can be reached anytime at mead1720@gmail.com
