Episode Transcript
[00:00:00] Speaker A: We are checking in with the Quincy City Council President, Ann Mahoney, to get an update on what was a Finance Committee meeting last night. And how are you today?
[00:00:08] Speaker B: Doing great today, Joe, thank you very much.
It was a good conversation. And we wanted to start with a conversation last night. And this was about the financial safeguards and financial transparency ordinance that we were talking about. And it's timely because we're going into the budget. And now here's my dog joining me.
It's okay. So he's very curious. As soon as I start talking, he wants to be part of the show. So, yeah, so we had that last night. And because Counselor Yuen basically had put an ordinance in saying she doesn't want things to pass in the first night, we decided that we wouldn't force the issue to pass it in the first night. And then afterwards she of course said, I would have been okay with that. And I said, you know, I think it's good because people could hear what the options were, see if they like the way the language is written. And I asked them if they wanted to get back in touch with me and we'll move forward from there. But really the goal of this was that we all ran for office. Each one of us, each one of us has an individual need to respond to the constituents that we represent.
And the debt is definitely something people are concerned with. And we can talk about the debt for a million days over, but we have a debt. Whether you want to say we have debt because of the pension obligation bond which does add to the debt, or it's because of projects or however you want to look at it. But when you're using one time revenues to lower the taxes, you are going to get into trouble in the long run. So those are the financial safeguards I think we have to put in place and other things such as when you're using money like grants and paying people salaries, we on the council should know that it shouldn't be something that we have to dig around and ask for. So there's just certain things that puts this into perspective. It doesn't tie the administration's hands, but it gives a little bit more perspective to what the budget is. And that was what the goal is. So I was really looking back at the last couple of years and I think last year they lowered the taxes with one time money, $35 million. And I think it was in 20.
I might not have the right years. The year before it was like $8 million. The year before that it would have been two years ago. When I was in the council, it was $19 million. I just looked at the years I was in the council. That's a lot of one time reserves. And to rebuild them, it takes a long time to rebuild those reserves. And more importantly, when we look, when the S and P looks at us, they will lower our bond rating. So I was a little confused last night because director Della Barber said that the consultants tell us that we shouldn't have too much money. 10% of reserves is just too much money for the city of Quincy. They would look at us and frown because we have so much work to do. They would never look at you and frown. If you had 10% in reserves, that's like saying you shouldn't have any money in savings. Right?
And in the other side of it, what they're looking at is they're disappointed that we don't have the reserves that we're using one time monies and we're lowering our taxes and we're not planning for the future. And that's what these, that's what this is about. This is about putting those guardrails in and really starting to think about the next five or ten years down the road. What our financial look like, what our financials look like. Not just the money that we could be getting in from the state, federal or wherever else from our taxes, but also what's going out with the money that we've, we've borrowed.
[00:03:04] Speaker A: So what is the current state of the city's reserves, Ann?
[00:03:08] Speaker B: So currently they have a stabilization account with. They had $2.3 million in that account up until just recently. And because they did a, they basically said they were going out to have the, the pension, the parrot, parrot piece, they were going to go out and have an actuarious look at it and, and basically prove that those numbers were incorrect. But instead what they did is they changed the discount rate at the pension fund, which just loosened up the requirements of how much money had to go into the pension this year and opened up, you know, it's like, it's like refinancing something and it loosened up everything. I think it was able to put about $7 million. We haven't got that full report back, but it put $7 million back into the reserve accounts. Now we have about $9.8 million in a reserve account and we only had $2.4 million in free cash last year, which is extremely low for a city our size.
So $3.2.4 million. We only have $55,000 left in free cash. And those are our reserves. We used all the pension reserves for lowering the taxes. We used, we used sales of proceeds of bonds to lower the taxes. Now in the 20 years I've been in municipality work, I've never seen that done, ever. And I asked that question last night and the chief financial officer didn't have an answer for me. And the auditor came back and said it's never been done. As far as she knows, we've never used the proceeds of bonds to lower the taxes. That's a very scary thing to do when you think about it, because if you're refinancing something and you have a lot of debt, you might want to pay off your debt that they were trying to lower the taxes. And I understand that. And it is a one time thing, but we have a lot of debt too. So we have to be careful about how we're handling those things and really understand what the long term effects are going to be.
[00:04:50] Speaker A: So how would this ordinance address that issue?
[00:04:54] Speaker B: So it would put some parameters around things and goals. We do have some financial goals that they have in the city, but really like looking at free cash. A good plan for free cash would be 40% would go into maybe a capitalization capitalization. 40% of your free cash would go into potentially stabilization and maybe 20% could go into a one time use rather than 100% of your free cash going into a one time use. It would put parameters around your stabilization accounts and what you're trying to do. And then it would also give you a few. You need to start forecasting as to how we're spending so that we can actually plan these things out. When we actually do the budget in June, the city should be able to anticipate what the taxes are going to be. Because you know as well as I do, Joe, you've been doing this for a long time. We set the budget, we all vote on it, whether we vote an approval or denial of the budget and then we move on and we wait until October, November, December for the administration to come back and tell us how much it's going to be for our taxes. There's no reason why we have to wait that long. They know what the tax is. They know what the outlook is going to look like. And, and we should probably know that when they come in in June, what the anticipated taxes are going to be.
[00:06:07] Speaker A: So this. I'm sorry, go ahead. Approximately, we should know that the ordinance also has a provision providing for a quarterly financial transparency report. So would, would that provide you with the information you're looking for, do you think?
[00:06:21] Speaker B: Well, I think whenever you have this amount of debt and the kind of turnover we've had on the council is telling people that, you know, people, the taxpayers of the city of Quincy are asking for more information.
They're getting a lot of, you know, we know what we're doing. This is what's best for you.
You hired me and I'm doing what you told me to do. This is, this is how elected officials talk now. Like I wasn't, I wasn't elected to make savings accounts. But everybody at home knows that when you're, when your budgets are tight, you pull in it. You know, you pull in your, you pull up your bootstraps and you pull in your belt and you, and you figure out what you can do without. Right? And we are at a time where, you know, social, socially and economically, we don't know what's going to happen. Right. We have, our gas prices are going up. It happens all the time. I'm not saying that we should be afraid, but it's definitely something you should consider.
We had ARPA money that we used for a lot of things that we potentially shouldn't have used for and we could have used for other things, but that money, all of those free things are gone now. And now we're in a situation where money is getting very tight and people are feeling it and just everyday people are feeling it, but they're not sensing that our community is recognizing it because we still talk about extraordinary large projects that might be coming down and we're not talking about the debt and we've kind of flopped over it and said we've lowered the taxes by $35 million and there's no discussion about that. And that's something that's concerning to me. So I think this is the right time to come back and talk about those things.
And the quarterly reports only help the administration and the general public to understand what's happening. So looking at the debt levels, the reserve balances and one time funds and how we're going to use them and then our pension long term obligation, we were caught off guard last year. As much as people want to say this was a genius thing to do, the pension obligation bond, we were caught off guard when Parrick told us that we had to pay $15 million because that's something that we should have known about. They thought when they did the pension obligation bond, they should pay us back. That's not how that works. That was for the future, Deb. And the end of the difference between those is the differences of what you've made over that time and what you need to produce for the people that you are you providing those pensions for. And I'm sorry, Joe, because my voice is gone.
[00:08:30] Speaker A: Yeah, I know. It's. You're struggling. You were coughing at the meeting, too, I noticed. It's spring. Springtime. Cold, unfortunately.
[00:08:37] Speaker B: Yeah.
[00:08:38] Speaker A: You're taking the time to talk to me about this.
[00:08:41] Speaker B: Yeah. So, you know, smart, smart bar, just like anybody.
[00:08:44] Speaker A: Smart.
[00:08:44] Speaker B: Barring at home. When we are doing this, when you're. When you're talking to your kids about saving for a car, for buying a house requires long term, like, long term forecasting for yourself. Like, do you plan on being employed? How much do you plan on making? What would make it comfortable? What. What can you afford comfortably? And if you overstretch yourself, like if you went out and bought a car and you were paying $800 for an apartment, but you're paying $1,500 for a car, maybe that car is the wrong. Like the wrong car for you because it might be fancy and it looks good, but you may never get to your goals of owning anything. That's a simple way of looking at it. Or if somebody uses a lot of credit card debt and you know, you're living by your means, you have your mortgage, you have your, you know, your car, your gas, everything that you have to do, and you use a lot of credit card and you're using your savings to pay it on your credit cards. And at the end of the day, you still have credit card debt, you have no savings, and now you've lost your job. These are the things that happen in real people's lives, and it happens in municipalities, too, if you're not paying attention to it. So eventually these little things where you're using one time cash over and over and over again, it shows a systemic problem in the way you're financing and budgeting. And this is really about the financing of the city debt. So about. It's not about cutting services, it's about making sure we're putting in those guardrails so that we all see what's happening. So that when we are saying yes or we're saying no, we're saying it in a way that actually protects the taxpayers and levels out their taxes. One of the things that we don't do in Quincy every year, it's a. It's a. It's kind of a.
It's kind of like a. We don't know what the taxes are going to be. Right. It's kind of like the unknown thing. And we talk a lot about how people are house rich and cash poor, but we should be able to be forecasting these things and stabilize at this point, with all the growth we have in Quincy, we should be able to stabilize those taxes so people can really start budgeting themselves. But if we're not budgeting and we're not forecasting, then we can't do that for them. And I asked that last night too, and the chief financial officer said that they have not started forecasting.
Now we want to talk about how we're the envy of everybody. I know for a fact that a lot of other communities and cities forecast because that's how you are able to manage your debt and your future and you have to do that.
[00:10:57] Speaker A: So, I mean, is this a fundamental monetary policy difference between the administration and the elected body as to how money is spent?
[00:11:07] Speaker B: I think what happens is, you know, there's a lot of trust that's put into each other. And for the last, you know, for the last 18 years, there's been a lot of trust in the administration. And the cracks are there where we're questioning some things. And it's not necessarily this administration, it's any administration. So I like to really make sure that people know that this isn't really about one person. It's about, it's about anybody who's, who's in the seat that we have to balance these things and realize we like to talk about how the mayor is the chief financial officer. Well, in a business, if you were spending more than you were bringing in our savings or creating, or your S and P number went down, that would be a reason probably for you not to have your job anymore. But as we know, we get elected into these jobs in Quincy, but we do have to put some safeguards in so that we're protecting not only what we're doing today, but what's going to happen in the future. Because if we continue down this path, it may look like we're doing really great. But in a couple of years down the road, it's going to catch up with us and it's going to be a mess. And if you're not being, and you know that anybody would know that if I told you, you've heard all the, all the things of somebody, that somebody wins a million dollars and they broke the next day because they didn't plan on what they were going to use it for. They just spent all their money and they were broke the next day. But if they planned it they could have lived on it for a while. We need to plan. And that's what financial planning is about, is making sure that we're not over extending ourselves and that we're really looking at what we're accomplishing and how we're going to pay for that before we get into the next big project. And that's the other reason why I asked that this is timely to have this discussion tonight so that we can have, you know, we can have the.
We can have the debt. The Hillside can come in and talk to us about our debt. One of the things about the consultants coming in to see us, I think they're coming on the 27th of April that the Chief financial officer told us was that they help guide us in the decisions we make and that they don't want us to build reserves because reserves are a bad thing. And I think he was confused. And I never like to call people out in that situation. But that in fact is the opposite of what they would say. They would say, build your reserves, but what they don't want to see. You have $25 million of excess levy. Now, I by no means am suggesting that the city of Quincy should go tax to the max. But that excess levy is what we kind of.
You hear it all the time, like, we have 20. This is the envy of every town. All that really means is that if the City of Quincy gets into a really bad trouble, they can come back without asking your permission and tax you. Think about it, it's $25 per million. 25 million of excise levy of what? You could go back and tax people. That's all it's saying. It's not a reserve fund. It's just, it's. It's basically saying that if we need it, we can come knock on your door and tell you that you owe us even more money to keep our city going. That is not a good plan. And if that's the way we're looking at it, saying that we're doing good because we have it. It's just a very dangerous thing to say because you wouldn't want to turn around if you're lowering the people's taxes every year by $35 million to make it feel better than turning around and saying, now I need the $25 million and you have to help me out. It will happen eventually when they have to tip into that. And the problem is, is we're running out of one time reserves.
[00:14:14] Speaker A: So does the state. Do you know, Ann, does the state require communities to have a minimum Amount of reserve funds, they recommend it.
[00:14:22] Speaker B: I mean, the state doesn't really. So. So just even when we paid off the debt last year with that, when we lowered the taxes by the 35 million, I know this DLS will look at it and they won't agree with what you're doing, but so long as you're paying your bills, they don't care how you get there. That's up to the management of the city, the management of the towns. It's the approval of the elected officials, it's the people you put into office. But they will frown on it. And they are looking at us, and I can tell you like we're obviously saying all the time that we're the envy of every community around us.
Yes, because you're getting told yes to everything that you want to do and stretching everything very, very thin. But on the other side of it, the financial people that are looking at her are saying, you know, you. You're. It's going to catch up with you. Like, it will catch up with you. And what are you going to do when it catches up with you? You know, and that's the concern that everybody has. And, you know, this is like the turnaround time of somebody when somebody says, well, what do you do? And it's not that you have to change the services that we're doing. We just have to put these guardrails in and start really looking at things and digging into it and being honest about what we can and can't do. And, you know, an example of this is, you know, we just, we just talked about the reserves, the $9.8 million in reserves, and that's used for emergencies, for capital, for different things. If we hadn't used $35 million to lower the taxes last year, we might have not had to bond the $2.4 million for the firefighter gear. Now, in no way in any shape or form am I saying that we shouldn't be giving the firefighters their gear. I'm just saying if we were in a better position, we could have got that much earlier, maybe last fall.
And at the end of the day, all that matters is they're getting what they need. But we as a city have to look at the finances together, all of us, the council, the mayor, the taxpayers, and understand what is it we're trying to get out of it. At the end of the day, what I can tell you is seniors are struggling in the city of Quincy. We live on a fixed income and our taxes are double digits. When they go up, new families can barely afford to move into Quincy. That is not just Quincy though. That's the whole state of Massachusetts and that's the housing market.
The housing that we're building is out of reach for the average person to live in Quincy. So we have to start realizing like what are, what, what's our goals for Quincy? Where are we going and how are we going to be able to be sustainable with the budget that we have? Because as we're growing, we know we're putting stress on our streets, in our schools and our infrastructure. So those things always have to be looked at. So we need to balance all of those things as well as balance the growth that's happening within the city and balance our debt. It has ballooned over the last 18 years.
And I'm not knocking any of the projects that we have. I'm just saying that these are the guardrails that you would normally talk. If we were talking about retirement. Nobody in the city of Quincy, if we had this portfolio, could retire with $1.6 billion worth of debt.
[00:17:05] Speaker A: So how was the ordinance left at the committee last night, Ann?
[00:17:09] Speaker B: So I think it was received very well by everybody. But again, you know, we put it in, we put it in in January and it's April now that we're talking about it. And I do think it takes, you know, if you take some time to step back and take a look at it. I think most of the things that we're asking for, they're really not, they're not, they're not meant to be like a gotcha kind of thing. This is more of a, an example that provides, it provides the opportunity for us to have like a sight into what's happening when we ask those questions, when we have the auto to look at those things and it stabilizes our funds to offset the levy. So we have to stabilize what we're doing so that we're not relying on those one time funds. And I think, you know, those safeguards, when they're built in, it will actually increase our S and P and our loan and our interest rates will go down. So it's, it's really just taking that step back and taking a look at it. It's not about the budget itself. It's really about the way we're approaching everything.
[00:18:01] Speaker A: Okay, so it was left in committee.
[00:18:03] Speaker B: It was left in committee. It was my recommendation to leave in committee. I did ask if anybody had any changes or, sorry, any, any questions that could reach out to me directly and then we'll get those changes made. There was no There was no.
No use. Nobody asked for any amendments to anything last night, but there was no motion made either. So the plan is that this will be coming out of committee probably at the next finance meeting, or could potentially even come out of committee if the finance chair wanted to at the next council meeting if there's no changes.
[00:18:29] Speaker A: Okay. Is it just in finance or is it an ordinance also?
[00:18:32] Speaker B: I don't. I can't remember, Joe. I don't know, but I know it was in finance. And this is timely. I put this in, obviously, at the beginning of the year with the idea that we're going into budget season. We should be talking about these finance pieces before we go into budget. And again, it's not about cutting the budget of the services. It's about really understanding how our. But how our budget is created. And our budget isn't just created by the monies that come in from the state federal government, or your taxes. It's also balanced by the borrowing that we've had as well. And it's like all of our homes. It's the same thing. Like, can we afford to go on that fancy vacation this year, or should we maybe not going that one because we want to go on the big one next year? I mean, it's. It's. It's all this. We all live the same way. It's just our priorities have to be set, and savings are a big part of your priority. So when somebody says that that's not their job to create savings or create, you know, you know, create opportunities for us to feel stable, then it's a little. That's. It's a little misdirected, I think.
Okay. I do criticize that because I. Anybody in. Anybody in finance would tell you that that would be. That's not. You should always be trying to build that. That stabilization back up.
All right.
[00:19:39] Speaker A: Anything else?
[00:19:41] Speaker B: Not today, Joe. I think I might vote. My voice is leaving me, but my dog left me. Everybody left me. So I'm gonna. You know, I think. I think I wish it's just a beautiful day so I hope everybody can get out and enjoy it. I don't think I will be, but it's. It's a beautiful day. So thank you very much, Joe, as always, and I'll talk to you soon.
[00:19:57] Speaker A: Oh, of course. I appreciate the time and hope you feel better.
[00:19:59] Speaker B: Thanks so much.
[00:20:00] Speaker A: Okay, bye. Bye.
[00:20:01] Speaker B: Bye.
