WATERTOWN — State and town officials representing Watertown and Belmont presented a cautiously optimistic picture of both the town and the state’s economic outlook at the annual Watertown-Belmont Chamber of Commerce “State of the Towns” address Tuesday.
State Senator Will Brownsberger emphasized the burden of rising health care costs at the state level, which he said was consuming as much as 30-50 percent of the state budget. Coupled with modest economic growth, Brownsberger said the state was reaching a “new normal” based on a reduced level of services.
“We had a growth path of revenue, we took a deep hit and we’re going to go back on a growth path but we’re never going to get back to where we were. We’re never going to get back that original growth path,” Brownsberger said. “The emerging numbers basically say if we have a continuing healthy economic recovery and if we get our health care costs under control, then we can probably maintain the current collection of services and local aid that we have now – at that reduced level.”
Speaking from the other legislative chamber, House Representative Jon Hecht said it was “another challenging year” for the state with a projected five percent increase in tax revenues, which he expects to be “eaten up” by health care, energy and pension costs.
“The bottom line is that again, this year at the state level, we’re looking at the need to find places where we can save some money,” Hecht said.
Hecht said he was pushing to “at least hold steady” on state aid to local municipalities. Judging from the governor’s proposed budget, which he presented in January, Hecht said it was likely that cities and towns would see level funding from the state.
“I’ve been talking with the Ways and Means Committee and with my colleagues to see if there are way to make some small increases in local aid, but we’ll just have to wait and see,” Hecht said. “It’s not an easy thing in the current environment.”
Both Brownsberger and Hecht touched upon the need for reforming pensions and post-employment benefits as cities and towns statewide face millions of dollars in unfunded commitments to employees.
“We need to make a continued effort to deeply reform our pension system and post employment benefits, meaning retiree healthcare,” Brownsberger said. Brownsberger is the co-chair of the Public Service Committee in the Senate. “Rep. Hecht is the only person willing to co-sponsor with me the bold pension reform approach that I think we need to take in the coming year, so I’m hoping to make progress there.”
Watertown Town Manager Michael Driscoll said Watertown faces $58 million in pension liabilities and $120 million in unfunded post-employment benefits. He said he would be working with the Town Council to develop a system in order to fund those benefits in the coming year.
Looking back over the last several years, Driscoll said reductions in state aid and economy driven revenue sources continued to be a challenge but were somewhat mitigated by savings in health care costs and increases in new growth.
State aid was down by $2.9 million since FY09, motor vehicle excise tax is down 10 percent, and investment deposits were down from $750,000 in FY08 compared to $74,000 in FY11, Driscoll said.
Unlike other cities and towns around the Commonwealth that have seen as much as a 25 percent increase in health care costs over the past three fiscal years, Driscoll said Watertown will actually pay less for health care in FY13 than it did in FY09, helping significantly to balance the budget.
“We were one of 11 Massachusetts communities to join the Group Insurance Commission (GIC). To me, it was a critical, critical decision,” Driscoll said. “It’s allowed the town to continue providing quality health insurance to its employees and its retirees.”
Compared to Newton and Belmont, real estate taxes are low, Driscoll said, with an average annual bill of $4,500 in Watertown as opposed to $8,600 in Newton and $9,700 in Belmont.
New growth has also helped Watertown weather the economic storm, said Community Development and Planning Director Steve Magoon. Magoon outlined half a dozen large-scale projects that have seen movement over the year and emphasized that the town is currently looking to create a comprehensive plan that would incorporate development, zoning, and transportation issues.
“One way to increase our revenues and resources that we have as a municipality without it being through a Proposition 2.5 override, or without it being on the backs of existing property owners is through new growth and development,” Magoon said. “And, we’ve had new growth.”
The Arsenal Residences project in Watertown Square is looking to market and occupy individual residential and retail units, Magoon said. Construction in the Haartz-Mason, a 170 residential unit development with 11,061 square feet of retail space is underway, as is the 44 unit residential development at 140 Pleasant Street. Magoon said developers were very close to completing a model unit and expected to have occupants move in by the end of the summer.
New tenants are expected to move into the old Aetna Mills building, which is now being dubbed River Works, Magoon said, though renovations will continue.
“That’s a really good opportunity for the community to continue the diversified nature of our real estate portfolio,” Magoon said.
Central Rock Gym, the 90-unit assisted living facility at 20 Summer Street and the 155-unit apartment complex at Waltham Street have also either been approved or are proposed for development, Magoon said.
All told, Magoon said new growth will bring in some $150-200,000 in annual tax revenue.
Belmont is at somewhat of a crossroads as it continues its search for their next Town Administrator, said outgoing Board of Selectmen chair Ralph Jones. In the meantime, Jones said Belmont continues to maintain it’s AAA bong rating and is controlling health care costs with mechanisms similar to the GIC.
“We had 70 applicants apply to the Collins Center, who is running our search. Of that, we looked at 40 and we reduced the number to 10. We have some highly qualified people and will have a recommendation of three to five people to bring to the Board of Selectmen by May,” Jones said, referring to the administrator search. “It’s a very strong field of candidates and we’re very pleased.”
Jones highlighted the Belmont Treasurer’s refinancing of the town building debt as a way to reduce the taxpayer burden by approximately $1 million and drew attention to the town’s efforts to reroute the traffic circulation in Belmont center.
“We’re trying to make sure both town employees and commercial employees park further away from stores,” Jones said. Recalling his family’s history in retail stores, Jones added, “My father used to have a rule that all employees had to part at least four blocks away from the store so customers could park closer. We’re going to try to do that.”
Planning Board chair Sami Baghdady said Belmont continues to be a stronghold for residential development but struggles to get developers to buy into commercial development in the area, noting 95 percent of the tax revenue comes from residential real estate taxes.
“Belmont does not have a problem with development, as long as it’s residential,” Baghdady said.
Baghdady highlighted the 245,000 square foot research and development project the town had hoped to see near Fresh Pond in 2006. The project eventually ended up as a 299-unit 40B development. He noted the 150,000 square foot office park on McLean Hill that is currently vacant, and the 399-unit assisted living area also on McLean Hill, which is also vacant.
There is hope in an “exciting” new project currently in front of the Planning Board for a 179,000 square foot development of 80 percent residential and 20 percent commercial to get some alternative sources of revenue growth in town, Baghdady said.