(EDITOR'S NOTE: A Special Town Meeting has been called for October 2 at 7 PM at the High School's Upper Gymnasium Field House, 36 Charter Rd., to discuss a citizen petition to reduce this year's property tax bill. The Acton Forum wanted to present both sides of this issue to our readers. Allen Nitschelm is involved with the Acton Voters Group and has contributed the article below. The Acton Forum asked for an article with an opposing viewpoint from the group "Together for the Future of Acton," but our request was turned down. This group did approve of our mentioning their website, which is www.PreserveTheReserve.com.)

Overview

The Acton Voters Group, a non-partisan group of local Acton residents (www.ActonVotersGroup.com), has turned in over 1,500 certified signatures to call for a Special Town Meeting on Thursday, October 2, 7:00 PM, at the High School's Upper Gymnasium Field House, 36 Charter Rd.

The Acton Voters Group proposes using $2.4 million from the NESWC Enterprise Fund to lower property taxes this year, which would result in no tax increase for the average property owner. This one-time reduction would help struggling families cope with rising costs and economic uncertainty.

Using non-recurring revenues like Free Cash and NESWC for tax relief is one of the recommended purposes of reserves, according to the Massachusetts Department of Revenue (DOR). Other valid purposes include one-time capital expenses and emergency use. Some communities save these monies in a Stabilization Fund for capital projects.

The DOR also recommends that towns like Acton adopt a reserve use policy, which will guide the spending boards on recommended levels of reserve use and for what purposes.

Acton's town officials have declined to adopt such a policy and now claim that Acton's reserves need to be "preserved" and that taxpayers should not get a break.

Acton town officials are inconsistent.

First, Acton town officials plan to spend the reserves to very low levels in just three years. They need to explain how spending them down is prudent. Many of these same officials spent down the reserves to zero just three years ago. They did so in order to fund large increases in the operating budgets. When the reserves ran out, overrides were proposed to the voters. Is that good fiscal planning and management? Or maybe you see a pattern emerging like I do?

Second, town officials repeatedly warn of a looming economic crisis. But Acton's financial picture is strong. The town is guaranteed a 2.5% increase each year in property taxes under Prop 2 1/2 (no matter whether housing values increase or decline.) With new growth, that increase is likely to be 3% - 3.5%. The town also anticipates two more years of large increases in Chapter 70 (education) aid. Even if the state cuts back, Acton could still see a significant overall increase.

But let's say the worst case happens and Acton's state aid revenues do not increase at all. If that happens, then Acton would need to trim proposed increases in spending, not use reserves to fund the deficit. That would be the wrong thing to do.

Using reserves for emergencies is what you do when a tree falls on a building, or a boiler breaks; not what you do when you are told state aid is being cut. The only responses to a permanent decrease in recurring revenue is an increase in recurring revenue elsewhere (like a general override) or reductions in the growth of spending.

Third, other town officials say that capital projects will grind to a halt if one-third of the reserves are used for a property tax reduction. Really?

Under the Acton Voters Group's approach, reserves would actually increase from FY10-12. We calculate a reserve level of over $6.3 million in FY12. Town officials plan to spend them down to less than $1.5 million. This is well below minimum DOR recommended levels.

Besides, large capital projects are always funded with long-term borrowing, typically 20 year bonds. If voters approve such projects, reserves will not be used. Don't let misinformation and "scare tactics" influence your opinion.

Under the Acton Voters Group plan, budgets would be truly balanced, and not by using one-time reserves to mask deficit spending.

Under the Acton Voters Group alternative, there is no need for a general override in three years. Town officials are predicting a $2.4 million override--at least. We believe that number is conservative if their plan is allowed to unfold.

Both the Town Official's plan (ALG 3-year Plan) and the changes suggested by the Acton Voters Group are available on our website, www.ActonVotersGroup.com. You can compare them and decide which is more fiscally prudent. We also have several articles of interest:

• We unearth the Acton Leadership Group minutes from last Spring. Read what town officials have said about using reserves, capital overrides, and projected deficits.
• We debunk several false and misleading claims by "spending advocates" who will evidently resort to any charge no matter how ridiculous to try to retain these funds and not give taxpayers a break.
• We have copies of our warrant message and flyers.
• We have charts illustrating much of the above.
• We have DOR regulations explaining how reserves should not be used for recurring operations.

Most interesting is the slogan of the group that has been handing out literature to parent groups recently. They say their plan will "preserve the reserve" when it clearly won't. In fact, under the plan they support, almost all available reserves will be gone in just three years. This fact can be reviewed at our website as well as at their's.

What happens if the Acton Leadership Group plan is implemented? It is hard to predict the future, but we can use the past's blueprint because history will likely repeat itself.

They claim their budgets are safe and the Acton Voters Group's vision is risky. But under their plan, budgets will continue to grow at 5-6% levels over the next several years. These budgets would not be balanced by normal accounting rules, as they use one-time reserves like NESWC and Free Cash to finance a deficit. And the deficit will get larger and larger until the reserves are no longer available.

When the reserves run out, we will be stuck with a very large deficit which will be at least $2.4 million and could top $4.4 million or more. At that size, there is no way to "reduce the rate of budget growth" to reduce costs. It will be too late to do anything like that. At that point, the only option is cutting back services or layoffs. And that is how officials will coerce voters into approving another general override.

I think it is safe to say that if the town of Acton follows the Acton Leadership Group plan, we will guarantee having a general override vote in the next three years.

The prudent alternative. Rather than leaving the town vulnerable to an emergency and not having money available for capital projects, let's control spending growth instead, and have balanced budgets each year.

In this economy, budget growth of 3% to 4% is reasonable. With our economic recession, inflation is not expected to grow as much as some had feared. Taxpayers cannot be expected to continue approving every override request. So we need to structure our budget growth to be affordable, which means it must be within the expected recurring revenue growth and not be using one-time revenues like reserves.

At 4% growth levels, a remarkable thing happens. We get balanced budgets. We have growing reserves. We have no general override in sight. And we can look at upcoming capital projects and decide to use reserves on a one-time basis for worthy projects, or ask for a capital override.

I would urge all Acton voters to attend the Special Town Meeting and decide, first, if taxpayers deserve a break from rising property taxes this year. This can be done while maintaining reserves at a level above DOR recommendations. Your vote will also do another thing: it will send a signal to our leaders that taxpayers want to be considered and be part of the process. And it will alert those officials and staff who are right now negotiating union contracts with our town employees. Next year, all the school contracts will be renewed. So now is the time to let our officials know how we feel about controlling the growth of spending.

Start thinking about why Acton's high-risk strategy of using reserves to fund recurring operations should be stopped. This is not a decision for this Special Town Meeting, but you can be sure it will be front and center next April. As a town, we are poised to adopt this imprudent strategy that I would compare to a game of Russian Roulette. If we spend down all of our reserves on recurring operations, and then face a massive deficit in a single year, our only choice will be large layoffs or passing a large tax increase.

Think about that for a moment. The reasonable alternative of lower spending and modest budget growth will no longer be available in a couple of years. That is why we must take action now to control spending.

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