"Unfortunately, neither of them works"

MLB catcher and hitting coach Charley Lau on the two theories on hitting the knuckleball. 

...nor do the theories on minor league stadiums bringing in tax revenue.

For example:

A large body of academic research has found that despite optimistic projections of the economic impact of stadium subsidies, subsequent analysis indicates that they have little to no effect on the local economy and the economic well-being of nearby residents. 

"A Case Study on Stadium Benefits"

And:

...any economic benefit a city sees in shelling out for a minor league stadium is largely imagined. Examining 283 minor league cities from 1985 to 2006, she noted that even Triple-A towns that saw modest increases in per-capita income didn’t see enough of a bump to cover stadium expenses. Also, while those towns sometimes see small increases in rent as a result, the combination of all the added residual income still isn’t enough to warrant the public outlay.

"How Minor League Baseball Struck Out with Taxpayers"

And:

 Cities keep trying, but the economic stimulus provided by pro sports teams—the parking lots full of out-of-state license plates, the overflowing restaurants—is more anecdotal than real. 

"The Braves Play the Taxpayers Better Than They Play Baseball"

And:

Professional sports can have some impact on the economy. Looking at all the sports variables, including presence of franchises, arrival and departure of clubs in a metropolitan area, and stadium and arena construction, the study finds that the presence of a franchise is a statistically significant factor in explaining personal income per capita, wage and salary disbursements, and wages per job. But this impact tends to be negative. Individual coefficients, such as stadium or arena construction, sometimes have no impact, but frequently indicate harmful effects of sports on per capita income, wage and salary disbursements, and wages per job.  

  "Stadium Boondoggles Spread to the Minor Leagues" 

And (UPDATE, as this looks specifically at the Worcester deal):

After the announcement by the city and the team Friday of their signing a letter of intent to build a stadium in the Canal District, WBJ sent copies of the financing details to 10 economists and stadium experts around the nation to gauge whether Worcester's claims over the stadium development paying for itself – without the need for current tax dollars – would come true.
Of those experts, the only one who spoke positively about the deal was the Smith College professor who was hired by the city to judge the economic viability of the offer to the PawSox. The rest doubted the stadium-pays-for-itself claims would come to fruition.
"There's just mountains now of economic evidence that the payoff that's promised and what actually happens is far different," said Joel Maxcy, an economist at Drexel University in Philadelphia.

"Sports economists: $101M WooSox Stadium Deal Unlikely to Beat the Odds"

All of the above have extensive links to further research to the same ends; I haven't cherrypicked these. 

Note in the above, by the way, that parallel to the claims being made in Worcester, the tax revenue increase coming from offshoots of the stadium does not pan out. Let's agree, therefore, that, claims aside:

Worcester officials promise no existing city tax revenue will be used to fund the ballpark project. Instead, the city will create a District Improvement Financing District around the park and ancillary development. According to a fact sheet on the new park, new taxes and other revenue from within the district will pay for financing.

In 2022, the first full fiscal year of operation, Worcester official project they will owe $2.9 million on an overall $100.8 million loan. But they’re anticipating $3.7 in revenue from the development, operating at a surplus of $741,000.

On the revenue side, state tax gains are projected at about $2 million annually from income tax, and food, beverage and hotel taxes.

...Worcester, and its taxpayers, are on the hook for this stadium. The $100M in bonds have to be paid regardless if the projected funds come in.

However, the $100M loan for this stadium is not all that the city has planned.

This is on top of the $194.6M that the City Council authorized for the new South High back at the end of March. Remember, in contrast to earlier projects in Worcester, the state through MSBA is only reimbursing 55% of the costs of the new South, due to increases in the per foot cost of building. Thus over $100M of the cost of the new South will be covered by the city.

This is in addition to a Doherty High project that has yet to find a site and has yet to receive state approval as to its plan, but will be at least as expensive as South (more, if the City has to fund land for the project). It will similarly be a lower reimbursement rate--it isn't as though costs to build have any prospects of coming down over the next several years--and thus a similar amount=--$100M--covered by the city.

The acquisition of this debt in concert with the federal administration's decisions around imports led to a discussion at Worcester City Council the first week of March.

Mr. Petty said maintaining the city’s infrastructure is equally important, but there is a limit to the amount of money the city can borrow.

“Hard choices will have to be made,” he said. “Where do we put the money? Do we put it into the school or do we put it in somewhere else? Infrastructure is important, too. The finances of this city are the most important thing we do; everything goes from there. A balanced approached will be needed when it comes to paying for these big items. Some tough decisions are going to have to be made.”  

And Worcester has a third high school not mentioned above that has yet to even be accepted into the MSBA pipeline: Burncoat, which is (as the state has acknowledged) in worse shape that Doherty and would need to be a middle/high project, given both the proximity and condition of the middle school. While Burncoat could follow the North and South building staging (building a new building on the athletic fields while the old building remains in use; taking down the old building and reconstructing the athletic fields), it is the arts magnet and a 7-12 building has different requirements.
Figure at least another $100M.

Finally--and most disturbingly to me--no one is making any plans at all regarding the $70M in "urgent" (having to do with life or safety needs) repairs the spring Facilities Master plan reported out. While the report was made at a joint subcommittee meeting with City Council, it's not clear that the report has been taken up either by the city administration or by the school administration in discussions with the city. Those are basic systems repairs at schools that, come a week from today, we'll once again be sending 27,000 kids to.

I realize that it is much more fun to smile at press conferences where everyone is clapping than to ask how we're going to meet basic functions of municipal government like providing schools in decent repair. It is the job of an informed polis, however, to ask how we continue to run our municipality for the benefit of our actual residents.
It is for the latter that we elect City Councilors.
And School Committee members, for that matter.

"Chapter 70 and Local Education Funding"

at the Worcester Registry of Deeds for the WEC/Research Bureau presentation on the Chapter 70 formula and local education funding. With Luc Schuster from Mass Budget and Policy, Ben Forman from MassINC, Tom Zidelis from the City of Worcester, and Brian Allen from the Worcester Public Schools.

City Capital Budget

(that's the budget that buys "stuff": trucks, buildings, sewer systems...)
Among the things being considered at this Friday's joint Education/Finance and Operations meeting (9:30 am Friday at DAB) is the city's capital budget.
As far as I can tell, it's still not posted on the city's website; that's a link to the agenda backup on the WPS website.
The City Manager's cover letter puts the total as $40.6 million, with the "net tax levy" at $24.8 million. A big chunk of the difference between the two numbers is the $10.4 million projected for MSBA reimbursement for school buildings off of the $13 million being allocated
What's a little weird about that number is that the projects that have been approved by MSBA are:

• Columbus Park: windows and boiler
• Tatnuck Magnet: windows
• Worcester Arts Magnet: windows
• Worcester East Middle: roof, windows, boiler

...which our best guess is putting at a $15 million total. Thus the $13 million already isn't enough. If you go into the description of the borrowing, though, the plan on page 51 lists not only the above, but Burncoat, Doherty, and South as well. None of those has been approved--South is the one that MSBA is considering, and we'll hear about that this fall--and the numbers on that one is yet to be calculated.

The City Manager's letter also (page 4) says that it "includes $400,000 to begin to address the design requirements of the second round of accelerated repairs submitted for approval to the MSBA." While it's a breakdown for $7.5 million in "public school building rehabilitation and equipment" (not sure where that number is coming from), I have heard elsewhere that this is money for a--much needed!--facilities master plan. If that's the case, that would be great, as we really need a plan of which buildings need what and in what (logical) order. I know the state would like us to have one as well. I just wish that I could find that in the budget somewhere.

Beyond the school buildings, the capital budget also includes the usual $500,000 for capital needs. You can find the expenditures recommended by administration on page 89 of the WPS budget; it is:

• $150,000 for classroom computers and technology
• $240,000 for school buses (that's 4 buses)
• $110,00 for Facilities department vehicles

It's useful in this context to then have the rest of the city capital to compare that to. Recall that we are running 50 buildings spread across the city, serving nearly 25,000 students, with 4000 employees. We do our own snow plowing. We run our own technology. We have acres of land to mow.

Thus the page 33 list of assigned equipment purchases in the five year capital plan is oddly lopsided.

And you might compare the above with the list of new vehicle purchases being requested by some of the city departments.

Plenty here to consider! Please take a look at the budget and let me know if you have questions!

Comments regarding the proposed slots parlor

I was asked by several members of the community to post my testimony before the City Council on Tuesday. It here follows.

My name is Tracy O'Connell Novick and I serve on the Worcester School Committee. It is in that capacity that I am before you tonight.
The petition I have placed before you tonight mirrors an item placed on the School Committee agenda for Thursday. It is my grave concern over an apparent rush to negotiate that I placed the item here as well.
I would further call your attention to the fact that I represent a constituency unable to vote.
Mr. Chair, you and this Council know me--I do not appear before you without doing research. When I learned that Rush Street Gaming was proposing a slots parlor for Worcester, I naturally looked at slots parlors and at Rush Street Gaming.
Regarding slots parlors--
Teenagers have an addiction to gambling at 2 to 4 times the rate of adults. Due to their still developing pre-frontal cortex, teenagers are uniquely in danger of developing an addiction to gambling, as they are to other addictive behaviors. It is ironic, Mr. Chair, that at a time this city is considering the creation of a high school for those in recovery from addiction to drugs and alcohol, we would be considering a facility that will allow for the creation of new addicts--gamblers. As addiction to gambling correlates with other addictive behaviors...let's just say, Mr. Chair, that if we open a slots parlor, we're going to need that high school.
Of course, teenagers are not allowed in a slots parlor. Rush Street Gaming has a history, however, of allowing underaged gamblers into their facilities. In multiple facilities in mulitple states, they have been fined, repeatedly, for underaged gamblers.
They don't, Mr. Chair, respect the law
I've been asked--wouldn't you like to see the tax base increase? I would--and this won't do it. Every slot machine removes the equivalent of a job from the local economy, with the discretionary (and non-discretionary) money it vacuums up and sends out of state. For this proposed facility, that's 1250 jobs per year that Worcester will be losing.
Moreover, an increase in the tax base assumes that Rush Street Gaming pays their taxes as assessed. But, Mr. Chair, they don't do that anywhere else--why do we think Worcester would be any different?In every single city in which they operate, Rush Street Gaming has appealed their tax assessment. In Pittsburgh, the casino had barely opened their doors when Rush Street filed for an appeal. They have done so in every subsequent year as well.
These cities have to go to court, time and again, against Rush Street's well-funded lawyers to collect their taxes.
This has a particular danger in Massachusetts. Should a slots parlor open here, its assessment will be added to the aggregate wealth of the community.
That means our Chapter 70 aid will be cut.
...which would be fine, except that our aggregate wealth won't be higher.
The city will be on the hook for the difference, but won't have the money to pay the school budget because we have made a deal with someone who does not pay his assessed taxes.
The same is true, Mr. Chair, unrestricted lottery aid. It has already fallen for FY14; it will, we know, fall further with a slots parlor. To tie our local tax base to a bad dealer is folly.
This is just a glimpse, Mr. Chair, of the economic instability and detrimental impacts of a slots parlor. It has been said by those who study them that there is nothing so destabilizing to the local economy as a slots parlor. Mitigation is not possible--it is too destructive.
I ask, Mr. Chair, for myself and for my constituents--who cannot vote--do not enter into these negotiations.

Nursing

still feeling the loss of the school health grant
lost substitute nurses (for sick days, etc)
funded for 42 full time nurses; we have 41 right now
maintain pool of candidates, interviewing soon
Used to have more nurses than were budgeted by this committee

"it appears the city is going to have to fund its nurses through tax levys"

We have never had a fully staffed program of nurses, not when covered by the city, not now that it's covered by the school committee

request for a report on how much it would cost to staff full nurses

Parent-Guardian Roundtable

Hearty congratulations due to all who pulled together the WPS Parent-Guardian Roundtable this morning!
About 200 people packed the room and eagerly conversed about hopes and dreams for our children's education, currently challenges, and possible solutions. A few notes from me:

1. I'm always impressed how, if you pull together a group of parents of Worcester Public School students, you'll get tales of great education happening: the teacher who stays after, the principal pulling together a day that gets everyone excited about math, the IEP that gets a kid the help he needed...there's good stuff happening out there! The conversations I heard included a lot about the solid education their kids are getting.
2. The conversation about challenges in my group began with a grandmother saying, "Well, it all comes back to money!"
3. Several of the challenges I heard expressed today had as much to do with blanket policy enforcement as anything. Making room for the individual might sum it up nicely.
4. The relative welcome parents feel in buildings varies widely.
5. The first parent to share with the entire group stood up, expressed some concern about the potential popularity about what he was going to say, then firmly said, "Until we parents say that we will pay more taxes for education, we won't have the resources we need. I am willing to pay more taxes." He was warmly applauded.

Well done, Dawn, Eric, Deb, and all!

Pension Reform: Rosen

Gary Rosen has just spoken at some length about the state's rejection of Worcester's local option, saying (I paraphrase) that the $12 million under tax levy is not relevant, that we weren't asking for more money, that it's a terrible year to raise taxes.

Tax Levy limit

In light of some of the editorials coming out recently (last week's Worcester Magazine and this Sunday's Nick Kotsopolos column), a few facts on Worcester's tax levy may be in order:

Worcester is 3^rd in “excess capacity” which is the dollars under the levy limit.

Cambridge is first at $96 million under.

Marlborough and Worcester are both $12+ million under.

Waltham is 4^th at $8 million under.

In % under the limit, we are ranked 26^th.

"Is it ethical?"

Deb Steigman asks "Is it ethical?"
We were willing to pay more taxes when the economy was okay.
The only way we're going to survive is our future, and our future is our children.
If the president thinks the money thinks we need to have the money.
"Who are we to take it away?"
We don't have nurses.
26 or more children in classes.
"I have neighbors who have moved out of the city because of the schools"
"taking care of the most vulnerable"
"This is not where we should go after and get that extra money!"
calls for reforms in every union in the city
"This is the one clear place where there should not be a cut."

Cellucci, Swift secretary says we need higher taxes

Really interesting editorial in today's Boston Globe on the need for the Commonwealth to raise taxes, particularly if you look at who wrote it: Steve Crosby, who was a secretary for former Republican governors Paul Cellucci and Jane Swift.

Typically, governments spend at least all that they collect. The enormous revenue growth of the mid-'80s led to no savings, a huge unfunded pension liability, and vastly increased spending. If the tax cuts had not occurred, the Commonwealth's spending would likely have matched all the tax revenue the state collected. Nearly two decades of tight fiscal policy has been an essential brake on state spending, and an appropriate response to the legitimate concerns of personal and business taxpayers about profligacy in state government.

But times have changed. Service delivery is genuinely compromised in vital areas of government. There is also a structural deficit that probably cannot be made up with spending cuts that the public will support.

We have reached the end of the inexorable pendulum-like cycle of government change, from the social investment of Governors Sargent and Dukakis, to the fiscal conservatism of Weld/Cellucci/Swift/Romney, and now back to the demand for social investment under Patrick. New revenues are needed, and that means taxes need to be increased. It should not occur until pension and health costs for state employees are brought to standards that are sustainable and fair in today's environment. It should be done with shrewd phasing, and with full utilization of the stimulus and rainy day funds.

Bad news from the state

Perhaps that should read "MORE bad news from the state"

The House Ways and Means budget released yesterday uses a (mind-boggling) $489 million dollars less of the stimulus money than the Governor recommended. As it also does not include the increase in the meals tax to 6% or the sales tax for soda, candy, and alcohol, so it has $300 million less there.

It thus proposes a local aid cut of 32%, plus cuts in education (no word on what yet), human services, health care, and much of the rest of government.

You can find the Mass Budget and Policy Center's analysis here.

More on taxes

From the Massachusetts Budget and Policy Center:
The Income Tax
The Sales Tax
The Gas Tax
Local Options Taxes
Examining Tax Fairness

Liveblogging City Council: tax rate

Councilor Toomey is asking (under suspension) that we have an investigation (done by colleges, perhaps?) into moving to a single residential tax rate.
Councilor Clancy says "the last group" he wants looking at a single tax rate "is a college." Yes, that would be this evening's implicit mention of PILOT.
Councilor Toomey (to much muttering on the other side of the room) points out that WPI does, as a matter of course, studies (for the city among other groups)...that it's an intellectual exercise.
Councilor Petty asks that the information go to the working group put together by the Manager.
Councilor Palmieri also objects to the colleges having anything to do with it...and yet, they are the ones who DON'T have a dog in this fight, as we aren't asking about PILOT!
Clancy objects again...loudly this time.
Referring to committee voted down (that would be the committee that has yet to be appointed)
Sending it to a college is voted down

Taxes pay for services

Somehow the above statement is something that sometimes seems to escape us in talking about budgets:

Taxes pay for services.

The money that plows our streets, pays our police officers, buys our firetrucks, heats our schools, inspects our restaurants, and keeps our libraries open are tax dollars.
Some are city tax dollars, some are state tax dollars, some are federal tax dollars, but they're all tax dollars. It isn't magic money that falls out of the sky; it comes from taxpayers.

This past Sunday's column by Nick Kotsopoulos (despite its misleading title) does a great job of laying out what this means.

So what happened there?

A few thoughts about the tax level discussion after some reflection:

This was not the first, but was the most recently egregious, example of a huge dissonnance between what happened at a City Council meeting that I attended and the meeting I read about in the next day's Telegram and Gazette. It's pretty clear to me that, after so many meetings and so many years of covering it, getting to the point is really all that we're going to get from the daily. Unfortunately, this leaves out a huge amount of very significant information. Last night, it was the number and the identities of those who were testifying in favor of a single tax rate. They were not, by any means, all weathy business owners. There were homeowners, small business owners, a remarkable mix of people, nearly unanimously in favor of the tax rate. You'd never get that from the paper.

By the same token, you wouldn't have gotten that from listening to the city councilors, either. It's sad that public comment can be so unacknowledged. Thanking people for coming isn't enough.

It's clear that there's still a gap between taxation and services even in the conversation (not to say the minds) of the city councilors. I'd expect any conversation about taxation to talk about where that money goes. While it happened last night, it didn't happen nearly as much as I'd expect.

Brace yourself, folks: last night, Councilor Rosen threw in the first call for city layoffs for next year's budget.

Vote on the tax rate

Vote is 9-2 for lowest residential tax rate, Petty and Rushton opposed

Residential rate will thus be $13.50 per $1000
Commercial rate will be highest possible, $28.72 per $1000

That will be an average homeowner increase of $50 for homeowners (Rushton's motion would have raised it an additional $21 dollars, totaling $71 dollars) and $1600 for business owners

Mayor Lukes on the tax rate

The Mayor gives the chair to Councilor Rushton to address the council

agrees with Councilor Germaine: "last minute, an afterthought"

Will "appoint a task force after the Thanksgiving holiday"
"a real issue about how we deal with businesses...colleges as a cushion"
The Commonwealth "isn't bailing out anyone"
"Since 1984, we've been doomed"

The union reps (in evidence tonight) "aren't here out of love for us...this is where the money is"
Health insurance has been a budget buster
"accommodation is needed"
Vote for LRTR
Setting up task force

Councilor Germaine on the tax rate

Thanks people for coming out tonight
will support LRTR

"disappointed in the process" two weeks for "such an important vote"
urges Council to "start the process months in advance, not one month and take a vote on it"

Councilor Smith on the tax rate

We always get "drawn into the same argument...want to stay away from that"
Expand the tax base...arguments tonight

"I don't think we can compare the city to towns around it...added benefits"

Speaks of foreclosures..."businesses and homeowners are hurting"

He's "open to having a conversation about having a single tax rate over an extended time period..over time, shift the burden"

Vote for LRTR
"doesn't preclude discussion"

Councilor Rosen on the tax rate

"I hope our colleges and universities are watching tonight and that this will motivate them to do their part...but I'm not going to beat them up tonight"

"I wish we had many more businesses...I want businesses to stay here, and I want businesses to come here...do we need more? We certainly do. We as homeowners need more businesses...increase the commercial tax base."

Businesses made a "pretty good point"

Hopes they'll be "more vocal tomorrow...trying to educate the city of Worcester"

This "is not a low rate"

(Here's where it gets interesting, folks!)

Need to ask.."do we have too many people on the payroll?"...need to cut expenses...take at the look at budget next spring...he's sure it will be painful, but it's "the only way out of it"..take a look at the people we have working in the city..."maybe we have too many"

Agrees that this will mean a cut in services, but "I don't know that we can afford this"

vote for LRTR

"Please...(homeowners) do pay plenty...they cannot pay any more. That's not a deal they can afford now.'
Vote for LRTR