Next Recession Could Make State Budget Deficit Explode – So Too Would Quincy’s

Governor Charlie Baker
A Keith Bedford/Boston Globe photograph

– News from elsewhere covered by Quincy Quarry with commentary

 

The next recession could make the state budget deficit explode – and so too likely would Quincy’s budget.

 

The State of Massachusetts annual budgets are suffering from what’s called a “structural deficit” and which does not go away even in good times. 

 

Follow the money
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The City of Quincy would appear to also have the same problem with its annual budgets.

 

The Boston Globe recently published a compelling piece that addresses how even in the current good times, the Commonwealth’s tax revenue cashflow is failing to cover the nut absent trimming state spending. 

 

The Globe article also notes that things will likely only become worse when only to be expected economic downturns come a calling.

 

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And as for implications for Quincy, it can only reasonably expect to face steady trims in the amount of state funding provided to the city as the state’s cashflow continues to come up short even during good times.

 

That and even bigger cuts in state funding coming to Quincy whenever the economy goes south.

 

Even more troubling, as well as again, is how the City of Quincy faces many of the very same cashflow problems that the state is facing.

 

Even bulls run out of steam
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For example, Quincy has almost exactly the same percentage of its reserve funds as compared to its annual budget  – a bit over 3%. 

 

5% to !0% is considered a decent reserve fund percentage as compared to annual spending, with 10% – or more – preferred. 

 

By contrast, best rainy day fund reserves in the Commonwealth Cambridge has cash reserves roughly twenty times greater than Quincy to protect its annual budget spending which is roughly only twice as large as Quincy’s.

 

Contrary to local belief, money does not fall from the sky. Image via danielvartanian.com

Granted, given quirks in the way that Prop 2 1/2 property tax limits play out over time, the City of Quincy has the ability to significantly increase local property taxes even more than their already higher than the state average before hitting Quincy’s local property tax Prop 2 1/2 limit.

 

In turn, such so provides City Hall with the means to impose a $20 million additional property tax whack upon primarily already highly taxed homeowners before hitting the local Prop 2 1/2 property tax limit. 

 

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As such Quincy’s City Hall is able so to bolster its meager reserves when times are tough and as Quincy Mayor Thomas P. Koch did in 2009 when he hit local homeowners with a 13.8% average increase on their property tax bills at the same time that the national economy was cratering into one of the worst recessions since the Great Depression.

 

However, as well as obviously, raising local property taxes when times are tough is tough on property owners when many of them are already struggling to cover their obligations.

 

Drink the Kool Aid, drink the Kool Aid
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Wicked tough.

 

Plus, as it is, Quincy residential property taxes have already gone from running roughly 5% lower than the state average on an identical assessed value basis to at least 5% higher than the statewide average tax bill during the Mayor Thomas P. Koch era.

 

Even more troubling are the implications: at a time when Governor Baker is doing everything that he can do to trim expenses or other wise control costs for the state, Quincy Mayor Thomas P. Koch is proposing all manner of ultimately massive spending increases after already greatly increasing annual city spending at roughly twice the rate of inflation during his tenure in office. 

 

Quincy’s key problem?
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How massive?  Upwards of hundreds of million of dollars in mostly local municipal debt funded spending on mostly infrastructure on top of annual budget spending increases by Mayor Koch and which have – again – run roughly twice the rate of inflation during his time in office.

 

Crashes happen
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In turn, such outsized proposed debt funded spending increases as well as long ongoing annual spending increases only further increase both the nut that needs to be covered as well as the financial pain for local taxpayers and residents when times are tough.

 

How painful? 

 

Potentially far more wicked painful than the pain that has already inflicted to date upon local residential property taxpayers by the Koch Maladministration.

 

Read Globe Story: The next recession could make the state budget deficit explode – The Boston Globe

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