Another budget mess to untangle
Impasse leaves tax, water rates not set

LAWRENCE
By Russell Contreras, Globe Staff | January 6, 2008
Date: Sun, 06 Jan 2008 13:48:14 +0000
More than 40 city workers were laid off last month to close a budget deficit.
Then the outgoing City Council failed to approve new tax rates and declined to raise the water rates before leaving office.
Now the city assessor will not be able to send out property tax bills on time.
Welcome to the Lawrence city budget saga, 2008 edition.
As the new year begins at City Hall, Lawrence officials say they are not sure how and when the city will be able to pay upcoming bills or keep operating for much longer.
With no approved tax rate, the city assessor can send out only estimated bills to property owners, forcing the city to borrow money because no revenue is coming in for certain.
And, to make matters worse, the city's personnel director, Frank Bonet, said that if the new City Council does not approve new tax rates, the city can expect to see even more layoffs.
"We just have no way of paying bills," Bonet said.
It's a familiar story in Lawrence by now.
The city's budget crisis began last summer when councilors and Mayor Michael J. Sullivan failed to come to a budget compromise that would have taken Lawrence to its tax levy limit. The councilors could not agree on the mayor's proposed tax increase; some, including Councilor Grisel Silva, wanted to see a $3.2 million across-the-board budget cut.
After two emergency 30-day budgets to keep the city operating, Sullivan surprised councilors at a meeting in August by declaring his $240 million budget the law because councilors failed to act on it within 45 days, as required by state law. That angered councilors, who blasted the mayor for raising taxes to the limit without getting approval from them.
Sullivan's end run came back to haunt him as the outgoing council refused to approve the calculated tax rate last month, preventing the city from sending the rate to the state Department of Revenue and mailing out tax bills this month. The 2008 tax rate would have raised property taxes for the average single-family home by $219 and the average business by $438.
The proposed rates were $10.01 per $1,000 of assessed value for residences, and $20.55 per $1,000 of assessed value for businesses.
In 2007, the rate was $9.23 per $1,000 for residences and $19.94 per $1,000 for businesses.
City assessor Alexcy Vega said Lawrence has had to send out estimated tax bills in the past, but that can create chaos for the city's finances.
With estimated bills, Vega said, residents will also get an updated bill in April that includes any tax increase, along with the bill for the second quarter. The double-billing can be expected to trigger a flurry of calls to City Hall. In addition, if the city is forced to borrow money because of the uncertain proceeds from estimated bills, it will also have to pay interest.
"Either way, it costs us money," Vega said.
Last month, after councilors failed to approve new tax and water rates, Sullivan said the city had no choice but to lay off 42 municipal employees to close a previous deficit. "It's something we hated to do but had to," he said.
But City Council president Patrick Blanchette said Sullivan is to blame for the deficit.
"This is a result of a history of mismanagement by this administration. This could have been avoided," said Blanchette. "Sullivan is basically saying to these workers, 'Merry Christmas, you're fired.' "
Sullivan disagreed. "I don't want to get into blaming anyone, and I would hope that [the new] councilors come with new ideas on how to help the city," he said.
Sullivan said he hopes the new council, which was sworn in last week, will approve the tax rates so the city can get started on the 2009 budget. The nine-member council includes four new members.
Bonet said if that doesn't happen, the city will see more layoffs.
"We got a $6 million advance from the state to keep us going and prevented another planned 20 layoffs," Bonet said. "Hopefully, this will all end."
Russell Contreras can be reached at rcontreras@globe.com.