Warning signs abound

Warning signs abound

Full and original article posted on Telegram & Gazette

Two recent reports give cause for concern about Worcester’s financial well-being in the years ahead. One is the five-year forecast City Manager Michael O’Brien submitted to the City Council. The other is an analysis by The Research Bureau, titled “Teachers Compensation Package + Worcester’s Finances = Do they Add Up?” Ignoring those warnings could have dire consequences for the community.

Mr. O’Brien, known for his astute and proactive fiscal management, was looking at serious discrepancies on the balance sheet: While municipal expenditures are expected to increase by more than 3 percent ($16.8 million), revenue growth is likely to lag at less than 1 percent ($3 million). “As the revenue projections continue to decline, expenditures are expected to rise, particularly in the areas of fixed costs, such as health care benefits, retirement benefits, and debt service,” the manager warned. “The outlook for fiscal year 2012 is bleak, and the magnitude of our challenge is great.” Recognizing that the state is facing a $2 billion budget deficit, the manager based his forecast on a 5 percent reduction in state aid. Some experts, including the Massachusetts Taxpayers Foundation, say the cut could be as deep as 10 percent.

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