Dean Carman: Why We're Asking For An Override Now
On June 11th, Arlington residents will vote on two important questions: Question 1 to fund the rebuild of Arlington High School, and Question 2 to fund our core services through an operating override. While I believe that voting Yes on both questions is necessary, I want to explain why voting Yes on Question 2 is critically important.
Massachusetts cities and towns are constrained by the amount of tax revenue they can raise annually through Proposition 2 ½, which limits annual growth of real estate taxes to 2.5%. Because of this cap, expenses grow at a rate that is greater than revenue, requiring town leaders to periodically come to us the voters and ask for an “override”, which is an authorization to exceed the annual 2.5% revenue growth cap.
So why now? For the overrides in 2005 and 2011, town leaders waited until the absolute last moment to ask residents for additional money. The 2005 override was proposed a year after a failed override brought devastating service cuts, while the 2011 override passed amid potential further cuts. This year, town leaders have wisely decided to ask for an override before we get to the very last moment, in hopes of avoiding a high stakes “all or nothing” scenario.
Requesting an override this year will also allow us to renew our policy and spending commitments. Since June 2011, we have stayed within the spending plan outlined to the voters and stretched that three-year commitment to eight years. Though the extension of the operating override for five years has been a great success, our policy and spending commitments need to be updated to address new challenges. In addition to maintaining core services, as part of the 2019 override commitment, the town will add $250,000 per year to the budget to support the Complete Streets and Age-Friendly Community initiatives, which are designed to improve mobility for all Arlington residents. We will also add an average of $700,000 per year to the school budget above its current funding formula to allow the School Committee to: address enrollment growth; close the achievement gap for high needs students; ensure safe and supportive schools; and attract, retain, and develop staff.
But wouldn’t we spread costs out better if we waited another year to pass an operating override? Even though we will vote on a new Arlington High School in June 2019, the increase in taxes will not occur until construction begins and will be added to the tax bill over multiple years. If we wait another year to pass the operating override, the cost will increase from $372 per household to $771 per household and come close to the timing of when we are incurring costs for the AHS project. By passing an operating override now, we will be spreading out the cost of the upcoming increases to residents and minimizing the sticker shock of a large one-year increase.
Why does the cost of an operating override grow so drastically each year? One of the town’s great successes of the last eight years has been that we continually spent less than we collected in revenue from July 2011 to June 2018, allowing us to build up a rainy-day fund that we call an Override Stabilization Fund. The fund reached $23.5 million in 2018 when we then began withdrawing money from it to plug a budget deficit. Because we were able to stretch the initial three-year commitment for so long, the structural deficit that was created in the later years when expenses exceeded revenue has become greater. The longer we wait to pass an operating override, the more drastic the structural deficit, and the larger the required increase will be. By passing an override this year, we will ensure a soft landing as we transition to the next multi-year spending plan and commitment to residents.
I hope you will join me in voting Yes/Yes this coming June 11th as we work to build a positive future for our community.
Dean Carman is Co-Chair of Build Arlington’s Future and a member of the Arlington Finance Committee