NEWBURYPORT — Mayor John Moak presented a preliminary of his financial plan last night that favors a temporary tax hike over the next decade to fund schools and other projects citywide.
Moak told the School Committee he is favoring a November vote on a debt exclusion, as opposed to an override, to boost the tax levy over an 11-year period, gradually decreasing that tax hike over time.
Though Moak stressed that the plan was preliminary and had yet to be presented to the City Council, he expressed optimism about what the move could mean for the city's finances.
"We are starting to be in a position where there is a light at the end of the tunnel," Moak said.
Proposition 21/2 forces cities and towns to increase the tax levy by 21/2 percent or less each year. A debt exclusion, if passed by voters, increases that tax revenue limit for a set amount of time to fund specific projects. But unlike an override, it does not permanently increase the town's levy limit, and the added revenue does not become the base for calculating future levy limits.
"The debt exclusion would add money each year, which would pay for small repairs and show tangible results," Moak said.
But faced with a $764,000 gap needed to fund Superintendent Kevin Lyons' mission budget to restore programs and staff to the depleted school system, committee members questioned whether a debt exclusion would be enough.
Member Dana Hooper voiced the possible need for the committee to look into a Proposition 2 1/2 override in addition to a long-term debt exclusion to bring the district beyond level services and into the future.
"This is a good first step, but it must be positioned as a first step, not the only step," School Committee member Nick deKanter said.
While member Bruce Menin applauded the mayor for a plan that identifies the financial plight as municipal and not just a school issue, as noted in the Revenue Task Force Report, deKanter said more is needed.
"We will be wallowing in mediocrity," deKanter said. "The plan does not help us reach out and make the district better."
If passed by the City Council, a debt exclusion question could show up on the November ballot.
Lyons and other school leaders have been steadfast in their belief that it's time to restore the schools after years of cuts, despite the gloomy forecast of state education aid being given by local legislators.
Lyons has devised a strategic budget that restores cuts incrementally to not overburden taxpayers.
Under Moak's plan, the debt exclusion would increase taxes for 11 years, with a significant drop in costs to taxpayer at the end of the sixth year and again at the end of the eighth year.
If passed in November, the funds collected in 2009 will help pay for one-time costs in the schools, such as textbooks and software. Citywide, the funds would be put toward the stabilization account, set up retirement buy-back accounts and continue infrastructure improvements.
In 2010, it is estimated money will be available for school operating costs, general government operating costs and capital improvements.
In 2010, taxes would be at their highest: A home valued at $400,000 and now being assessed $4,000 in taxes would pay an extra $138.20 in taxes for the debt exclusion, an annual adjustment of 35 cents per thousand of property value. In the years following, taxes would decline steadily.
Under Moak's plan, he said the city would no longer have to borrow for small repairs and improvements. But the mayor stressed that the tax hike is not the only answer.
"While utilizing the debt exclusion, we will be looking for additional funds such as the Group Insurance Commission health care plan, the trash contract and local tax options," he said.
Moak noted instituting trash collection fees in some way above a basic collection or instituting a meals tax will help the city down the line.
"We need to look in every nook and cranny for money," Moak said.
