Eagle Tribune: Andover needs spending control, not tax hikes

Published: August 31, 2009 01:52 am

Andover needs spending control, not tax hikes

Andover residents will be asked at a Special Town Meeting tonight to boost the local hotel tax and add a local meals tax on food served at its restaurants.

Residents should reject both measures. The increased taxes will hurt two important segments of the town's commercial base. And balancing the budget by increasing taxes does nothing to address the town's fundamental problem: an excess of spending, particularly in its labor contracts.

Andover officials say they would use the estimated $600,000 raised by the two tax proposals to help close a $2 million budget deficit. Yet town boards are split over their recommendations on the tax plan.

Both the Board of Selectmen and the Finance Committee will recommend against adding a 0.75 percent local component to the 6.25 percent state meals tax. The proposal would generate an estimated $276,000 in revenue for the town. The School Committee supports the meals tax.

The selectmen and the School Committee will recommend approval of an increase in the local tax on hotel stays from 4 percent to 6 percent. The local tax comes on top of the 5.7 percent tax on hotel rooms collected by the state. The Finance Committee split 4-4 on a recommendation.

However the vote on the new taxes turns out, residents will need to meet again Oct. 7 in a Special Town Meeting to balance the budget. The town cannot set its tax rate until the budget is balanced.

It is true that Andover, like other communities, has been hit hard by reductions in state aid. But in the efforts made already to address its budget shortfall, some town departments have been more cooperative than others.

When the call went out from Town Manager Reginald "Buzz" Stapczynski earlier this year for wage freezes and raise deferrals to help the town through its fiscal crisis, many town employees — including the school system's administrators, independent employees and custodians — responded. But notable holdouts included the teachers and firefighters unions, whose contracts call for 3.5 percent raises.

Raises of that level simply are unsustainable, particularly when, as former Gov. Mitt Romney noted long ago, communities are limited by Proposition 21/2 to 2.5 percent increases in their maximum tax levy.

Such raises are indefensible when they are far in excess of the increase in the cost of living. Right now, because of the recession, our economy is in a period of deflation, that is, falling prices. Many workers in the private sector are seeing no raises and even wage cuts. How can public employees defend raises of 3.5 percent? How can the municipal leaders who agreed to such raises defend them?

Those who own and manage Andover's restaurants and hotels worry that the increased taxes will drive their customers away. These business already are heavily taxed.

Until Andover gets its spending — particularly that spent on employee contracts — under control, residents should not support tax increases of any kind.

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Letters: Say No to Higher Taxes on August 31st

As printed by the Eagle Tribune and Andover Townsman.

Letter: Selectman: Focus should be on changing spending habits, not taxes

Selectman: Focus should be on changing spending habits, not taxes

Editor, Townsman:

I strongly recommend against adding a new meals tax and increasing the hotel/motel tax in Andover. Whenever there is a budget shortfall, the immediate reaction is to raise taxes, add to fees and spend down our cash reserves. Instead, our focus should be on restructuring our operating budget to ensure long-term viability. Andover currently faces a $2 million budget deficit that must be resolved quickly to ensure we can pay our bills. In the previous 12 months, our town and school labor costs have increased nearly $3 million (4 percent) which includes the publicized workforce reductions. These increases are no longer sustainable and require a change in philosophy for Andover to remain vibrant.

Recent tax changes that impact Andover citizens and businesses:

Aug. 1, 2009 - Massachusetts raised the Sales/Meals Tax from 5 to 6.25 percent

Aug. 1, 2009 - Massachusetts added a new Alcohol Distribution Tax of 6.25 percent

Nov. 2008 - Andover selectmen voted a 40 percent tax surcharge on businesses

July 2008 - Andover selectmen increased downtown parking fees 100 percent

Andover residents and businesses alike are struggling financially. During these difficult economic times, let's help each other by looking for ways to assist our neighbors in need and consuming the goods and services of local businesses. Now is not the time to add taxes that make a difficult situation even worse. I encourage Andover voters to vote "no" on both tax proposals at the Special Town Meeting on Monday, Aug. 31.

BRIAN P. MAJOR

Andover Selectman

11 Odyssey Way

Letter: Tax increase won't solve spending problem

To the editor:

"A fine is a tax for doing something wrong. A tax is a fine for doing something right."

Andover restaurants and hotels provide necessary services to both residents and businesses. They are innocent bystanders in a troubled economy, in a town and in a state that has for years spent itself way beyond its means. They are innocent bystanders in a state that has passed local option taxes to provide cover for their enormous local aid cuts and for their unfunded mandates.

Businesses already provide more than their share of taxes for Andover and state coffers. You may not be aware that in FY 2009, businesses in Andover were taxed at a rate 64 percent higher than residents. On Aug. 1, Massachusetts raised the sales/meals tax to 6.25 percent and added a new alcohol distribution tax of 6.25 percent which will be passed along to local restaurants, hotels and yes Andover patrons as well. The state also passed enabling legislation that would allow towns to raise the meals from 6.25 percent to 7 percent and the hotel/motel from 4 percent to 6 percent.

Anyone who has lived in Andover for any period of time would know that Selectman Brian Major and the editorial board of The Eagle-Tribune have both warned for years about the unsustainable increases in our labor contracts.

To understand why Selectman Major's continuing warnings were not heeded, you must understand that our town is governed by two boards: a School Committee that has total budget authority over all school matters which accounts for two-thirds of our total budget and a Board of Selectman who have budget authority over police, fire, maintenance and every other aspect of our town (the town side), and account for one-third of our total budget.

For 2010, five, of the six town-side unions thoughtfully agreed on a 1 percent giveback that has resulted in a 3.25 percent average salary increase. The firefighters union was the only holdout. It is also interesting to note that between FY 2002 and FY 2009, the number of full-time town-side employees, fire, police, maintenance, etc. decreased by 2.8 percent.

While we generally read about small contract increases like the teachers 8.5 percent cost of living adjustment or COLA over 3 years, this is but one components of their total salary. The other components are step increases, track increases and longevity increases. Consequently, the average teacher's salary increase for 2010 is 5.5 percent.

Another interesting note is that between FY 2002 and FY 2009, full time school employees increased by 14 percent while school enrollment went up 5 percent. By the way, the teachers union is the other union that has refused any givebacks, while residents in the private sector have either taken substantial salary cuts or lost their job altogether.

Our structural budget spending problem won't be cured or mitigated by further punishing our restaurants and hotels by raising their taxes and placing them on the brink of financial despair. We need to fix our structural spending problems. Please vote no on both tax increases.

MIKE MOSCA

Andover

Letter: Town Republicans say proposed taxes bad for business, taxpayers

Editor, Townsman:

At our recent meeting, the Andover Republican Town Committee voted unanimously to recommend against adding an additional 0.75 percent tax on meals and 2 percent on hotel rooms.

Many business owners in town have closed shop as a result of the national recession, and many more are maintaining very thin profit margins. Consumers already have the opportunity to shop in bordering towns that collect little or no meals and hotel taxes of their own, including sales tax-free New Hampshire. Lawrence, Methuen and North Andover have decided against raising their local meals taxes because, as Lawrence Mayor Michael Sullivan put it to the Eagle Tribune, "We're trying to get more restaurants to come to Lawrence, not drive them away."

Yet by adding higher taxes at town establishments, hotels and restaurants will be forced to raise prices just to break even, giving Andover an even deeper competitive disadvantage in relation to businesses in neighboring towns. Additionally, this comes on the heels of a 25-percent increase in the state sales tax which took effect Aug. 1.

Now more than ever, we need to be of service to our fellow residents and support local businesses during this time of economic need. On Aug. 31, we urge all Andover voters to attend the Special Town Meeting at the Andover High School Collins Center and vote no to higher taxes. It's bad for businesses and bad for taxpayers.

PAUL ADAMS

12 Berkeley Lane

Secretary, Andover Republican Town Committee