Op-Ed: COVID-19 & Framingham City Budget Moving Forward

By Cheryl Tully Stoll

FRAMINGHAM – This is the first time in our history as a CITY that we are facing a projected, serious revenue shortage as well as a national recession.

These economic times are unprecedented I implore our municipal leaders to work together and to be as responsible as possible with spending plans.

Revenue streams that have been taken for granted in the past 10 years of an unprecedented number of consecutive quarters of economic growth are going to get very dry very fast.

There’s a good chance that we could face an unprecedented reduction in year-over-year revenue.

To understand the mechanics of how this could happen, I’ve outlined our major revenue sources and how the current economic situation could impact them.

PROPERTY TAXES:

Commercial Property: Commercial property values were already declining in most sectors in Framingham last year—now the drop over the next few years will be more significant due to what will likely be a restructuring of how entities do business and the reduction of customers many businesses will have due to the shutdown. Additionally, it is highly likely that many companies will look at doing things differently due to what they have learned from pandemic-driven operational changes.

Residential Property: Over the last few years residential property sales in Framingham have been in the driven by an increasing demand and a limited supply. In some price ranges this will continue to be the case.
Even this week things were going under agreement in the region within a day or two. Most likely that will continue for at least a while. However, there is very little land remaining for new construction and over the
past several years that has driven an additional increase in the average property value for a single-family home.

Many of the first-time homebuyers in the market these days have never really lacked gainful employment.

Many still have not realized that in many employment sectors this could change substantially in the not too distant future.

However, with an unemployment rate that is projected to increase to double digits in the next few weeks, a lot of folks who are looking for a home will be putting the brakes, on and others who already own one will
be struggling to pay their current property taxes—let alone higher ones.
Fortunately, the supply of available single family homes in Framingham is sparse, which should help stabilize prices.

Personal Property: On the personal consumer side, this primarily consists of excise taxes on vehicles and other items. In the past ten years this line item has continued to grow as people frequently upgraded their vehicles and households added additional vehicles. The revenue collected from this source is staged to drop dramatically and will probably continue to decline until the country is well out of the recession we are looking at.

Additionally, it is highly unlikely that struggling businesses will be making large equipment purchases as they try to navigate their survival. Collections from that revenue source will also drop.

LOCAL OPTIONS TAXES:

Meals Tax: Several years ago Framingham rightly adopted a local options tax on meals. That tax adds .75% to every restaurant bill whether it is sit-down service or take-out service and it is applied to any takeout prepared food at the grocery store or even gas stations.

While takeout tax revenues will grow we know that sit-down revenues have completely evaporated are gone for right now and even after thing re-open it will be a very slow road back for most establishments.

The takeout increase will not make up for the sit-down revenues that also include beverage service.

Rooms Tax: Been to a hotel in the last few weeks? Nobody else has been either. We can basically kiss meaningful revenue from that stream good bye for this fiscal year as well as most of next.

Recreational Marijuana Tax: In Framingham they were shut down before any opened; so there’s no luck pulling in any of that money at the moment.

PERMITTING FEES:
It’s very traditional that during recessionary times, that permitting revenue drops substantially. Investors often take a breather before initiating new projects and homeowners and businesses put all types of projects on hold until their financial situations stabilize. That should be expected going forward here as well.

MONEY FROM THE STATE:
Thanks to the leadership of Senator Karen Spilka, Framingham has fared brilliantly in the amount of state aid we have received for multiple purposes over the past decade. However, that was a time when state revenues were growing tremendously due to a robust economy. Senator Spilka is smart, resourceful and powerful; and I know she will continue to do the best possible job for us; however unlike the federal government who can literally print money—the Commonwealth does not have that option. What they don’t collect—they cannot distribute to us.

WHAT DOES FRAMINGHAM NEED TO DO?

My suggestion is that we hope for the best and plan for the worst. The actions I would like to see from our City Leaders ae as follows:

1 A hiring freeze on all job openings for those who are not first responders or responsible for working on the COVID-19 outbreak needs to be implemented IMMEDIATELY. This is not business as usual and should not be conducted as such.

2 The Mayor and City Council need to agree upon what should be the base level of service for each department. There needs to be an agreement regarding the school budget as well. This is not a time for separate monologues—it is a time for DIALOGUE. Not just using the word because it sounds good—but actually living up to that word and ACTUALLY HAVING ONE!

3 The budgets that have already been prepared need to be revisited with the viewpoint of potential current year cuts and probable significant future year cuts. If we deficit spend this year by drawing on free cash—we will have less cash reserves available next year. If we wait until the revenues don’t materialize, to make reductions, we will have to lay off two or three people instead of just one to make up the difference. That will mean services to our community will be reduced by much more than they should be. That pain will be felt for years to come.

4 Caution needs to be used in raising property taxes in a time of predicted unprecedented economic hardship for many of our residents and business owners. Putting people on the edge over the tipping point unnecessarily is not good public policy.

5 There are some predictions of over 15% unemployment within a year. That will also lead to many folks not being able to pay their property taxes a timely way which will further reduce the cash available to fund Framingham’s municipal budget. This needs to be planned for.

These are unprecedented times. Some communities have already made cuts in preparation for what is to come. It’s time for Framingham’s leaders to stop sticking knives in each other’s backs; and instead put stakes in the ground regarding what are the most essential services needed by our community. And share those thoughts with the community.

Leadership is not a popularity contest. When things get difficult, true leaders stand up; face those they serve; and with broad and informed input, make the tough decisions that are necessary for the COMMON GOOD.

We have a lot of strong people in this community holding important positions. This is the time when each of them has a chance to prove whether they are a True Leader or just someone warming a seat who
likes a title in front of their name.

I implore all of our local elected officials and municipal department heads to step-up; put the people you are supposed to SERVE first and MAKE US PROUD OF ALL OF YOU!

Cheryl Tully Stoll is a former City Councilor at Large and Chairman of the Board of Selectmen. She holds a B.A. in Economics from Framingham State University and an MBA from Bentley University. She works in Commercial Real Estate in the Metrowest Region.

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