Lewiston officials must commit to financial security

Some might say I was harsh in providing the Finance Committee recommendation to the Lewiston City Council regarding the fiscal year 2018 Capital Improvements Proposal. Having been appointed by three different mayors at various times to serve, and having served on the Lewiston City Council, I have the unique perspective that others may not. I spoke in hopes of a wake-up call to city leaders but, once again, they hit the snooze button.

While in office in 2008, the Council made a bold choice to limit debt. Our solution was to have new borrowing be limited to 97 percent of what was paid off the prior year. The concept was sound and made an allowance for a super-majority override should it ever become necessary.

The debt level at that time was less than $100 million and today, despite that rule, it now stands ready to hit $200 million — double in 10 years.

Given Lewiston’s contracts that require parking garages be built and the need for three new fire department substations and a new main fire station, the city is looking at roughly $25 million in new debt through the next few years for those projects alone. In addition, Lewiston’s roads are being replaced on average every 30 years; yet roads are only meant to last about 12.

Capital improvements are defined as “the addition of a permanent structural change or the restoration of some aspect of a property that will either enhance the property’s overall value, increases its useful life or adapts it to a new use.” (Source: investopedia.com). But in Lewiston (and a few other communities) city officials have used capital equipment funds to purchase supplies that have a useful life of less than a year; to pay salaries of some city employees; and to pay for surveys and planning.

None of those choices meets an accounting standard of capital improvements, and the only reason things are done that way seems to be to keep the current year budget lower by spreading out the cost over multiple years. Doing so every year only negates what city officials try to accomplish. Spreading out the payroll over a long-term loan (bond) is not a smart business practice, and I don’t know why anyone would even consider it.

Lewiston has also seen more property removed from the property tax rolls than it can afford. Since 2012, taxable property has increased by 3.9 percent, but exempt property has climbed by 10.9 percent (source, Ed Barrett, city administrator). Given that any tax exempt properties still require city services and effort, that is not sustainable moving forward.

Lewiston officials must find ways to encourage new taxable development, whether it be commercial or residential property. If Lewiston does nothing, the businesses and homeowners currently footing the bill will, at some point, look elsewhere and relocate. Each year of these patterns provides more and more of a death spiral effect, making it financially tougher for those people who stay.

At several council meetings I have heard the mayor pleading for someone to explain why businesses will choose Topsham or Augusta instead of the larger area of Lewiston (and Auburn). The truth is, many in city government know at least one major reason, but are afraid to discuss it.

Lewiston has become one of the largest social service centers in the state. While those services are needed, they brought with it even more people needing the services.

Lewiston’s schools are falling behind in providing for special needs student as that population explodes. And with state funding mechanisms using a two-year lag comparing services provided to actual need, we will continue to see this portion of the budget jump without state reimbursement.

There is also the unfunded federal mandate to take in refugees from other countries and not only is the federal government not paying for the mandate but, worse, its slowness in approving work visas and other documents required means new residents need even more assistance for a longer period of time.

The cost of all this means higher property taxes and more people having less money to spend in restaurants and shopping malls Lewiston officials hope to build.

So where does Lewiston go from here?

First, Lewiston officials must seek reimbursement from the state and federal government and work with legislators at both levels to ensure we are able to do so. The alternative is to simply close our doors and say we’re sorry but we can no longer assist everyone.

Second, we must redefine how and what we budget and spend for. To put the long-term debt in context — it is like a family earning $60,000 a year but having a credit card with a $150,000 outstanding balance. Now imagine an employer cutting your pay by 10 percent; that is what may happen in the current year state budget when it comes to municipal sharing.

Lastly, Lewiston officials must find a way to make the city more attractive to investors, big and small. The city must help them through permitting and financing and then help find employees who can make such investors successful. That may mean new vocational education programs at the schools, more adult programs where job skills are developed, or help with getting into post-secondary programs.

A year from now, I may again be asked to make a recommendation to the City Council on the LCIP and the municipal budget. I just hope the snooze button has been disabled.

Robert Reed currently serves as chairperson of the Lewiston Finance Committee and a former city councilor. He is the executive director of the Maine Chiropractic Association and volunteers as an advisory board member of the Looking Ahead Clubhouse in Lewiston and with local Scouting programs. He lives in Lewiston.

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