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Politics & Government

Council Commitee Aims to Control Future Tax Increases

Councilor Ronan persuades his colleagues that they must 'get a hold' on city budgets — vote to be taken by early February.

A City Council committee voted unanimously Thursday night to change the budget process next year to require that the Council vote by early February on how much of a tax increase it will allow for the budget the mayor submits in May.

Sponsored by Ward 5 Councilor John Ronan, the measure is designed to “get a hold,” he said, of the rising tax burden on Salem property owners. Ronan said he was surprised that the measure passed the committee unanimously. He said he expects that there will be more opposition when the full council debates the measure.

Approved by the Committee on Ordinances, Licenses and Legal Affairs, the measure now goes to the full council, possibly by next Thursday. Committee Chairperson Joan Lovely will ask the city solicitor to review the proposed measure before it goes to the full council.

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Councilor-at-Large Thomas Furey cautioned that the proposed measure would “put the mayor in a strait jacket.”

Ward 6 Councilor Paul Prevey asked rhetorically, “Should we handcuff the mayor? Absolutely.”

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The mayor did not attend the committee meeting.

Ronan made a 16-page presentation to the committee, plus other council members who sat in on the meeting.

He demonstrated that the tax burden on residents has risen every year for 20 years. According to the charts Ronan presented, the average single family property tax bill in the early 1990s was $1,516. In 2011, it is $4,467, he said.

“Our working class people are getting stuck with a very high tax bill,” Ronan said.

It is too late to impact this year's budget and tax rate, but the measure could have a major impact on future tax increases.

Ronan explained through his charts and the mayor's budget that the tax increase this year, if the budget is approved without significant cuts, will have to be 3.98 percent, not 2.5 percent as most residents believe.

The city is collecting $72,532,237 in taxes this year. That is $460,892 less than the maximum amount allowed this year under state law.

So for the 2012 budget, the city can raise taxes by 2.5 percent, which adds $1,813,305. It can also include the $460,892 left over from last year. And it can include $600,000 in new growth.

That means Salem can collect for next year a total of $75,417,957 or 3.98 percent more than it is collecting this year, Ronan explained.

Mayor Kimberley Driscoll's budget, anticipating that city revenues will grow again this year, proposes to spend all of the $75,417,957 it can assess.

Mayor Driscoll disagreed in an earlier discussion with Ronan that passing her budget requires the council to raise taxes by 3.98 percent. There are other factors and other sources of revenue, she said.

The council sets the tax rates in December, after the budget is passed in June.

“We are not driving the bus,” Ronan said. He said the council never steps in during the budget-development process and tells the mayor that she only has revenue from a 1 or 2 percent tax increase.

Prevey agreed. “We have been a passive participant in this process. We should be telling the mayor what the budget limits are. I see this as a good thing.”

Councilor-at-Large Lovely proposed that the vote be in early February to give the mayor and department heads time to adapt their budget proposals to the tax increase voted by the council.

Ward 3 Councilor Jean Pelletier said much of the city's budget is not controlled by the mayor or council, such as the school budget.

Ronan disagreed. “We have absolute control.”

The council members also discussed the impact that union contracts would have on future budgets.

Ward 1 Councilor Robert McCarthy said he understands the argument for earlier involvement by the council in the budget process, but he said there have been many factors driving the increase in city taxes.

McCarthy pointed out that Salem is in “decent shape financially.” He noted that the city has increased its free cash accounts and its stabilization fund accounts.

“We have not gone on a free spending spree,” he said.

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