It’s in the air these days, perhaps because of Arlington’s budget woes, perhaps because of the national discussion we enter to about these topics every 4 years. I took part in an on line discussion about whether or not the Town of Arlington can grow its way out of the current fiscal pinch through aggressive development. I think there is a bigger picture we have to keep in mind when we talk about revenue for the town government. I believe that we spend way to much time talking about taxes – that we need more or that they are too high. We need to focus not just on how to raise money but also on what services we want, what they cost and whether or not they mean enough to us to pay for them.

Here is how I see it. 68% of the town’s income is from property taxes. These cannot grow at a rate faster than 2.5 % except for new growth. New growth adds on average $400,000.00 to the tax rolls each year under current conditions. We also get local receipts from things like Motor Vehicle Excise tax, building permits, rental of town buildings etc. This amounts to slightly less than 10% of our income. Finally we get about 15 million in state aid. State aid is not in our control and fluctuates with increases and decreases in state revenues. If you look at Arlington’s receipts from the state over time, you will see that they follow a 14 year cycle of boom and bust. We are currently in the trough of that cycle.

So, of the 87 million we are spending 60 million comes from property taxes, 8 million local receipts, 15 million from the state. That’s 83 million. Where is the other 4 million coming from? Mostly from various reserve funds i.e. the town’s savings accounts.

Now let’s talk about growth in spending. The largest part of our budget is salaries and benefits. These grow at a rate faster than 2.5% every year. Health insurance costs are generally beyond our control and we have contractual obligations to provide it. We must fund pensions regardless of the growth in pension investments. And since even a 3% raise does not always cover the increases in town employee’s family budget, it is difficult to negotiate a contract with smaller raises that also includes concessions on the town’s share of health insurance or other benefits.

Let’s look at other costs that grow – state mandates for example. The Town of Arlington doesn’t get to limit the growth in the cost of special education, MCAS testing or the requirements of the federal No Child Left Behind law. We don’t get to determine the MBTA assessment. We don’t set our Minuteman High School assessment. All of these things can and do go up at a rate of more than 2.5% in some years. We don’t control the cost of energy which is known to rise more than 2.5% a year.

Our new trash collection contract is a major triumph because the growth in the cost was held to a minimum BUT it went up considerably more than 2.5% this year over last and will grow at a rate of 3% per year BY CONTRACT for the next 5 years.

If we want to keep the services we currently have, which is not necessarily a given, we must increase our revenue at a rate of more than 2.5% a year. Our costs grow faster than that. We were fortunate over the last 15 years. State aid grew, we had good new growth and we held the line on costs in part by outsourcing some functions and reducing our pension liability. But the current fiscal realities have brought us up short. And there is a limit to how much we can control costs. The biggest cost cutting capability we have is reducing staff. The vast majority of our staff are teachers, firefighters, policemen and DPW workers. We can gain some efficiency through technology but we cannot replace a significant number of these positions with computers.

The state and federal governments are unreliable partners in this enterprise. When times are tight at the state level, they are always going to pass those strictures on to cities and towns. They must. They provide services to residents of the town that we don’t want to lose either. The federal government mostly gives us grants with strings attached and does not hesitate to require us to spend money that they are NOT giving us.

What you cannot get away from is a simple formula. Things cost what they cost not what you want to pay for them. And everything that we use and that adds to the quality of life in Arlington, costs. Even some of those other sources of revenue come out of our pockets. State aid is something we pay for thru our state income taxes.

So, now I return to my initial question. What are the services that we want? What do they cost? And are we willing to pay for them? Is preservation of open space something we are willing to sacrifice current services for? Is quality public education a priority? Is state certification of our library valuable to us? Are we concerned about the level or configuration of public safety services? Are there services we currently receive from the town that we are willing to sacrifice in order to keep taxes from going up? Do we want to put pressure on the state to provide more aid? Even if it requires a rise in income taxes to do it? We have to talk about these trade-offs together instead of one constituency talking about essential services while a different one talks past them about the tax burden.

I believe that decisions about tax revenue and decisions about services cuts are both serious matters. As we weigh those decisions, we need to have honest conversations about true facts using real numbers. So it is critical that we return to talking about taxes and the services they pay for in one conversation, not separate ones.