Prop 2 1/2 Override Vote Possible for 2011

Voters in Malden may be asked to raise their own property taxes in early 2011. Mayor Richard Howard said a Proposition 2 ½ override could be in the city's future during a tense Finance Committee meeting Tuesday night.

"Next year doesn't look like it's going to be much different than this year," said City Councilor Paul Condon.

Discussion of an override crept into both the Finance Committee and full City Council meetings Tuesday night.

"There's no free pot of money," said Howard. "We don't have it, and this community will have to decide if they want to fund it."

City Can't Replace One-Time Funds in Next Budget

The problem, according to Howard, is that Malden used one-time funds to cover an $8 million budget shortfall for fiscal 2011 (this fiscal year). Those sources won't be available next year.

"If it was $2 million, $4 million, $5 million we're not out of the woods. The woods are $8 million thick," said Howard.

Without the one-time finds, and without any further help from the state or federal governments, the town would have to make up that difference itself.

"The state of Massachusetts is not coming to our rescue in fiscal year 2012," said Howard.

Cuts, Concessions, and Override All on Table

There are three options available to Malden to meet its budget needs: Ask for union concessions, cut budgets across the city, or ask for an override.

"We have got to find $8 million to $9 million to make next year's budget work," said Howard.

In the meantime, Howard said a $1.65 million transfer from holdover and stabilization funds to the School Department must be held for next year's budget. A large portion of the committee meeting focused on where to hold that money: In the School Department or city budget coffers. After a lengthy debate, the committee agreed to send the money back to the schools with the understanding it be held for the next fiscal year.

"Every extra cent, everything that we have left over has to go toward building the fiscal year 2012 budget.," said Howard.

Debt Exclusion instead?

City Councilor Neil Kinnon asked whether the city could instead ask for a debt exclusion to pay off current debt with new loans at a lower interest rate. While overrides effectively raise property tax rates permanently, debt exclusions are used for short-term projects, like building construction, and eventually fall off the tax rolls.

"That would free up a whole lot of cash but wouldn't lock citizens into paying forever," said Kinnon.

Howard and City Controller Domenic Fermano said they were not sure whether state law allowed such a use for debt exclusions, but would research the idea and report back to the Finance Committee.

"We don't have the answer to that yet," said Howard.

City Wants to Extend Union Concessions Another Year

Later, during the full City Council meeting, Howard again said an override request may be inevitable. Even with an override, he said, the city had large funding gaps to cover, which meant the administration would return again to the employee unions asking to extend the one-year concessions most agreed to for the current fiscal year.

"A 2 ½ override on [the current property tax levy of] $63 million comes to $1.5 million in increased tax funding," said Howard. "The health insurance line item grows by $2.6 million. It outstrips the growth of anything we can raise locally by more than $1 million."

All but three unions agreed to the city's plan to save jobs this year by increasing health insurance co-pays and employee contributions, and by adding a deductible to the health plan. Three unions—both police unions and the firefighters union—have not agreed to the plan.

Those departments did see layoffs—10 in the fire departments and four in the police department, along with six vacant police positions that were voided.

Wellness Plans Could Help Reduce Healthcare Costs

Howard stressed that offering a wellness program to the city's employees could save money in the long run. A program that offered incentives and help for employees to take preventive measures would keep health costs down by reducing the number of large-ticket health problems, he said.

A wellness program would include features like health savings accounts, incentives for preventative treatment, and bonuses for meeting targets.