Methuen has plenty of company when it comes to financial trouble. Just about every community in the state, along with state government itself, is struggling to balance the books.
But it could distinguish itself from other communities by confronting those problems directly. And it is doubtful that putting off paying its bills will do it.
The current trouble is over property taxes. The City Council first adopted a so-called "classification" rate that would have raised taxes on the average residential property by $88, and on the average commercial property by $609.
But that was based on taxing business at 170 percent of assessed value, and the state Department of Revenue rejected it, saying it placed too much of the burden on business. So, Mayor William Manzi proposed lowering the business rate to 164 percent of value, which would have lowered the average commercial bill to $287, but increased the average residential bill to $128.
That set off a frenzy of outrage, with homeowners accusing the mayor of raising their taxes. Manzi said, correctly, that the city wasn't trying to collect more in taxes, but was simply being forced by the state to shift some of the burden from business to homeowners. But homeowners were having none of it. All they knew was that their tax bills were going up. They didn't care why and demanded that the city cut its spending.
So the council cooled much of the outrage last Monday night, with a 6-3 vote to reduce the overall tax levy by $746,000 for the current fiscal year. That brought the average residential increase back to $87 — a dollar less than the original figure.
But that does not solve the problem. It only postpones it. That is because only $250,000 of the reduction is through reduced spending or new money — a $200,000 cut in school busing fees and a $50,000 federal grant to cover expenses from last year's ice storm. The other $496,000 comes from delaying a pension payment to the Methuen Contributory Retirement Board until June 30, a move proposed by outgoing Councilor Joseph Leone.
And shortly after the vote, Michael Hennessey, the employee representative on the retirement board, said the board would sue the city to force it to pay "its obligation," a suit that City Solicitor Peter McQuillan said the city would likely lose.
Leone counters that a delay will not affect retiree benefits this year at all, but simply delays the payment of the city's long-term unfunded liability. He admits this is only "buying time" to find other areas to cut, but said he believes other cuts are possible. And he says once the new fiscal year arrives, it will be possible to squeeze more savings out of union contracts.
That is dubious. The city's unions gave up concessions worth about 10 percent for the current year. They are unlikely to do so again.
Meanwhile, the city faces another cut in state aid and a $900,000 increase in its pension bill as soon as the new fiscal year starts on July 1.
In short, it is not going to have more money six months from now.
The problem remains: The city has to find more money or cut spending. Taxpayers simply cannot afford more taxes. The only option left is not to delay spending, but to cut it.
