Month: October 2018

By S.D. Plissken | October 18, 2018

At last Monday’s Board of Selectmen’s (BOS) Meeting, a silent alarm was triggered. Did you see the flashing red lights behind the dais? During that meeting, the proposed budget totals departed from the actual 2.1% rate of inflation to their usual unsustainable doubling of that, at 3.8%. That is not news. But then, they proceeded from there to an insane near-quadrupling of inflation, at 7.5%. Warning! Collision Alert!

In so doing, the proposed budget increases changed upwards from an Arithmetic Progression into the beginning steps of a Geometric Progression.

Arithmetic Progression

Arithmetic Progression occurs when a number, such as taxes, increases over time at a constant rate. Milton’s tax rate has been following such an arithmetic progression for a very long time. A problem has emerged recently by which the slope of that increase line has been increased. Since that happened, the tax rate has increased by about 5% per year, which has been approximately double the rate of inflation. The function of this would be y = nx, where n = 5 and x = the sequence number of the year. It would chart to the right as a steadily increasing straight line.

A problem arises when wages, i.e., the ability to pay, do not rise either at or above the same rate. A chart of the two lines together would show a gap emerging between them. That gap increases in size as the chart extends out rightwards over time. Each year, the increase amount comes more and more out of the taxpayer’s disposable income, i.e., their “capital.” At each step, the tax burden becomes less sustainable, but in a steady way.

This is bad. This increasing gap will drive you out of your home at sometime in the future. Exactly when will depend upon the rate of increase (the slope) of your particular pay envelope. But, unless your pay rate line is running above the tax increase line, you may run your finger out along the chart from left to right and find the date when you will be driven out.

Geometric Progression

Geometric Progression occurs when a number, such as taxes, increases over time not at a steady rate, but at an increasing rate.

Milton progressed to this type of increase last Monday night. Inflation ran at 2.1% last year. That is where our increase should be, below would be even better. Milton’s Town government budget increases at the end of the prior meeting, by which time they had added up the first two tranches of proposed departmental budgets, were projected to be a 3.8% increase. That is to say, they were on their usual straight line of arithmetic progression, at an unsustainable double the rate of inflation.

But, the addition of those final departmental budgets, as well as receipt of the increases in insurance and retirement rates changed the rate of increase radically. The new rate being discussed was suddenly a 7.5% increase. This begins to be a Geometric Progression, specifically y = 2^x, or 2 raised to the power of x, and the resulting y is successively = 2, 4, 8, etc., times the rate of inflation. (Sorry, this software doesn’t do superscripts). It would chart as a curved line, rather than straight, and curving upward.

The difference between an Arithmetic Progression and a Geometric Progression has to do with the rate of increase. An Arithmetic Progression increases constantly, but at a steady rate, while a Geometric Progression also increases constantly, but at a constantly increasing rate. You are getting into trouble faster.

Will Robinson’s robot should have been shouting “Danger! Danger!” in the background. If you run your finger out along the gap on this new chart, you will find that the gap is getting wider much, much faster. Your home exodus happens much further to the left, i.e., much, much sooner.

This is very bad and getting worse. It is the difference between you driving towards a collision with another car and you driving towards another car that is also driving towards you.

Exponential Progression

Exponential Progression is where the exponent, or power, in the equation is the variable. It would be ever so much worse than Geometric Progression. We probably need not dwell on its mechanics. Essentially, this is where both you and the car driving towards you are both stomping on the gas. And have nitrous turbo boosters or something. Think Venezuela or Zimbabwe, but with snow and no zoo animals to eat. We are on track to be New Detroit, but not yet on the track to be Nueva Venezuela. Not yet.

Is the End Near?

That depends. The breaking point is certainly approaching much more quickly now. Usually, when you arrive at this point, the more rational politicians have long since been blathering about “bending the cost curve.” That is to say, bending it back down to where it should have been all along – back below the rate of inflation.

If you wish to change the course of an ocean liner, or a Town government, the best way is to begin turning very far in advance. (Trucks often have signs that warn the vehicles behind them of their Wide Turns). Town governments have very large turning radii. To turn closer to an obstacle requires a much more exaggerated, even alarming, degree of turn and the application of much greater motive power. Delayed too long, it becomes impossible to turn enough. You hit the iceberg.

To bend the cost curve, the BOS would have to reduce their costs, by a lot. There is no other way. We are far past wide, gentle turns back to reality.

Yes, the various BOS administrations of the past decade or more – all those that approved increases that were double inflation rates – have completely failed us. They should have turned back on the right course long ago – and certainly turned back hard when the recession took hold. But the taxpayers are to blame also for not overriding the Town government. Adult supervision is required.

The last administration might have endorsed the Deliberative Session motion for a 10% cut instead of fighting it. Had they done so, what we face now might be less painful. Instead, they staged a sort of dog-and-pony-show to keep the game going, just a bit longer. It is now apparent that we needed that 10% cut, desperately, in order to turn the ship more smoothly.

Even this current administration wasted the first half of their tenure voting unanimously for every shiny thing. By-Laws, CIP Plans, GIS systems with ongoing annual fees, memberships, lawyers, websites with ongoing annual fees, hiring, more hiring, even COLA.

COLA? Wake up: few in the private sector have experienced COLA for a generation, maybe two. Social Security recipients maybe, but for that they use a special “Chained” CPI that intentionally understates inflation. Their COLA increases, if any, are largely paid over for their Medicare increases, which do not use “Chained” CPI.

This late in the game, the necessary course change will be a jarring lurch. But this runs completely counter to what politicians deeply desire and believe, which is that handing out stuff is beneficial. And organizing the world around them. The French economist Frederic Bastiat famously explained that

The State is the great fiction through which everyone endeavors to live at the expense of everyone else.

Margaret Thatcher put her finger on the problem of this great fiction: eventually you run out of other people’s money.

Will the BOS grit their teeth and turn the wheel hard over? There is reason to doubt it. They might instead use the $1.4 million taken last year – the taxation without representation – to kick the can down the road just a little further. That particular trick might buy as much as two years, longer perhaps if they made changes. But then we would be right back here again when the stolen money ran out, still on the wrong course.

We shall see.

As I write this, I am informed that Ms. Lynette McDougall has called for a brainstorming session at Dunkin’ Donuts, Saturday, at 9:00 AM. She is seeking constructive suggestions, rather than generalized whining. (Not her words).

References:

Wikipedia. (2018, September 5). Arithmetic Progression. Retrieved from en.wikipedia.org/wiki/Arithmetic_progression

Wikipedia. (2018, October 14). Geometric Progression. Retrieved from en.wikipedia.org/wiki/Geometric_progression

Wikipedia. (2018, October 13). Exponential Growth. Retrieved from en.wikipedia.org/wiki/Exponential_growth

By S.D. Plissken | October 17, 2018

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

Oh, excuse me, I was just rereading something. What were we talking about? Oh, yes, last Monday’s Board of Selectmen’s (BOS) Meeting.

The BOS tidied up a bit first. They retracted a prior invalid parking ordinance, authorized crossing guards for Halloween events, added (on a trial basis) an additional concluding Public Comment time, authorized acceptance of Highway Grant money (with its attendant strings), and unsealed minutes from Non-Public Meetings held on July 10, 2018, and September 24, 2018. Well, they unsealed them for Chief Krauss alone.

Therein hangs a tale apparently, but not one about which we will know much more, at least not for now. The July 10 meeting was not posted. It must have been a secret Non-Public Meeting, sort of like a double Non-Public Meeting. The September 24 meeting began as a Public meeting, but adjourned to consider a 91A:3 II (c) matter. That would be something that concerns “Matters which, if discussed in public, would likely affect adversely the reputation of any person.” The BOS surfaced again in order to adjourn again to consider a 91A:3 II (j) matter: “91-A:3 II (j). Consideration of confidential, commercial, or financial information that is exempt from public disclosure.” Finally, they went again into a third Non-Public session under 91A:3 II (c), the one that might adversely affect reputations.

Previously, Ms. Bristol supposed that all this folderol had something to do with abatements. But now, due to this unsealing of the minutes, but for Chief Krauss alone, we know it had to do with the Police. Chairman Thibeault said that

These are being unsealed to be released to the Police Chief because of Police personnel file matters and its not for public release. This is to be compliant with State statutes.

So, something happened, back in the July time-frame, that “would likely affect adversely” reputations, and something that involves also confidential, commercial, or financial information. Did something happen that we need to know about?

From there, they proceeded to the main event, the conclusion of the second round of departmental budget presentations and moving on to the third and final round of budget presentations.

When last seen, the BOS had accepted departmental budget presentations that would move us already above the Federal inflation rate of 2.1% to a CIP plan recommendation of “no more that 3%.” That 3% would itself exact 43% above inflation. But, as they say, “hold my beer.” That was just the recommendation, the actual Cloud-Cuckoo-Land amount “as it stands” was 3.8%, which would exact 81% above inflation (where 100% would be a doubling).

According to the Federal government, your household costs went up 2.1%. Few will have had their incomes rise so much. The Town budget was projected by the Planning board to rise 3.8%. The difference between 3.8% and 2.1% is 1.7%. Assuming you actually got a 2.1% raise, which most did not, it would go entirely to the Town government. They also want an additional 1.7% from whatever you had before the 2.1% raise that you did not get.

Queue up Selectman Lucier:

Selectman Lucier: One thing, I just … can I make a comment before? – you know, we just got, as we sat down here tonight, just got handed insurance adjustments, for health insurance for next year.

Administrator Thibodeau: That’s one of the presentations that we do tonight.

Lucier: Yeah, well. In that … but that ties into everything in the budgets. We’re looking at 236 in $600,000 increase over this year, just in health insurance. You know, that changes a whole bunch of things going on in Andy’s head as far as everything else that we’ve already done. You know, how much, how much can people swallow? I mean this is – we’re already looking at almost a 7.5% increase in, you know, this year’s budget, so …

Vice-chairwoman Hutchings: And the rate of inflation is 3%. We told them that a 3.8%, I think is what was discussed. Is that correct, or am I?

Well no, Vice-chairwoman Hutchings, 2.1% was the actual inflation rate, and the 3% was the Planning Board’s ruinous recommendation to continue spending way above inflation. The 3.8% figure was the completely absurd place, the Cloud-Cuckoo-Land if you will, in which we found ourselves when actual departmental budgets proposals are totaled.

Thibodeau: 3.7. 

Hutchings: 3.7%. So … I mean, that’s …

Thibodeau: We just don’t have any control over insurance. All that insurance, and retirement. That’s something … those are the costs we don’t control.

Lucier: I know we don’t have any control over it, but it’s just ….

Hutchings: Out of control.

Lucier: I mean, … I can’t … I don’t know. I’m almost, I leaning almost to say … cap … level fund it and then …. I don’t know …

Thibeault: If you level fund it, I think your insurance is still going to … that’s not really going to solve our issue.

Lucier: Oh, I understand that. But we have some serious issues here. You know, I personally have no problem with the welfare. I mean … I … I’m kind of backtracking, I don’t think we should do any new employees. In the light of things that … I don’t know.

Thibeault: So do we want to table Item 6 discussion and move on to the departments that haven’t presented yet?

The light begins to dawn on Selectman Lucier. Perhaps Vice-chairwoman Hutchings, but she had to go home sick. [Get well soon]. They lack control over insurance rates and retirement expenses. It will come to them when they have time to think about it. Hint: Personnel expenses are your largest cost. The only thing that you do control is the number of employees and their status as either part or full-time employees. That is the only variable with which you can work.

When you are in a hole, you should stop digging. So, hiring is completely out of the question. And capping was due back during the “Great Recession.” When everyone else was seeking new employment, pulling in their belts, and having trouble making ends meet, the Town government just kept right on spending. Do you remember all the foreclosure signs? The Town government barely missed a beat. They took a bit of a check step, just one year with a slower rate of increase, but that was all. Then it was right back to business as usual.

Selectman Lucier, we are way past capping. That was so 2009. And you can forget about hiring. The BOS needs to be cutting, and not little shavings or a little final sanding, but great big whacks. You have said that we are not Wakefield with its ten lakes. Right. It follows that we cannot afford what they can. We should have a tax rate like they do, if not lower. Keep cutting until you get there.

A concerned citizen, Ms. Lynette McDougall, rose to offer some advice during the new secondary Public Comment.

Lynette McDougall. As a taxpayer, I’m kind of appalled at these numbers I’m seeing, you guys. It seems like to me we’re in a management overload or something. We need to do some cutting, somewhere – training people, cross-training people, things of that sort. [Editor’s note: so that you have some coverage after cuts, presumably]. Maybe get somebody professional to show us how to do this, because this is taxpayer’s money going out. I agree with you, if you present this to the taxpayers. I’m surprised they’re aren’t people out there screaming. I’m kind of sad they aren’t. I know you guys are doing the best you can, but we’ve got to have better than this. We’re a small town, this is small, and these expenditures are not small. And I know that’s not your fault, but you should maybe think about having somebody professional, that knows how to do these things, come in and cut some things, because we need to save the people that are here. I’m sorry, that’s all.

Good for you, Ms. McDougall. Brava!

References:

Independence Hall Association. (2018). Declaration of Independence. Retrieved from www.ushistory.org/declaration/document/

Town of Milton. (2018, October 15). BOS Meeting, October 15, 2018. Retrieved from www.youtube.com/watch?v=1C1AS4syCJU&feature=youtu.be&t=1071