Lawrence financial crisis in perspective

I’ve been reading the comments coming in on my first post on this subject and I appreciate them. I think there are some additional facts that further argue in favor of giving the new Mayor some time to put things in order before taking over control of the City.

Although it is true that Lawrence is a relatively poor city, Lawrence’s financial crisis largely reflects relatively recent municipal management decisions, very fairly attributable to the recently ousted Mayor. And that is grounds for believing that the crisis may be easier to resolve than some fear.

Here are some additional facts about the City of Lawrence politics and finances that are relevant to the vote today:

• In every year of the last decade, Lawrence taxed below its levy limit. Without seeking an override vote, the city government could have raised a total of $22 million more than it did over that 10 year period (Fiscal 2000 through fiscal 2009) — an amount that slightly exceeds the present gap that it faces. During the previous decade (1990-1999), Lawrence ran close to its levy limit.
• From 1998 through 2005, Lawrence ended every year with a positive free cash balance — as high as $14 million in Fiscal 2002. The City’s cash position declined from its 2002 peak of 7.02% of its budget (above the statewide average of 6.22% in that year) to a negative position in 2006 and has remained negative for the past few years.
• General fund expenditure grew 40% from 2000 to 2008 (the last year reported) — this is consistent with the statewide average growth, but suggests that through 2008 Lawrence had not taken extraordinary measures to control spending, even though it was running in the red.
• Lawrence’s net state aid has not grown much since 2002 (the year in which aid peaked for some other communities like Arlington), but Lawrence is not among the communities who saw an absolute drop in state aid through the decade — Lawrence’s 2009 net state aid was up 8 percent from 2002.
• Lawrence had problems and was subject to state oversight in the nineties, but the fiscal oversight board was disbanded in 1997 and the city managed well for five years, building its substantial surplus, but returned to poor management practices in 2003. See the Department of Revenue’s 2008 report.
• The recently ousted Mayor, Michael Sullivan, was first elected in November 2001 — in other words, he took office with a strong surplus and the ability to raise additional revenue and managed the City into its present troubles.

Against this background, it makes some sense to believe that the present problems may be solvable. Additionally, it is worth noting that the limited additional flexibility that we are offering Lawrence (to borrow even though it is already running a deficit, otherwise prohibited by state law), has been extended over the past decade without much fanfare to at least three other communities — Swansea, Southbridge and Medway.