By: Joe D’Amore – December 2012
With headlines announcing Grand Jury indictments of two city officials and the already completed take- over of Lawrence public schools many are suggesting comprehensive receivership of the City of Lawrence is warranted. For an assessment of this possibility the major precedent for state control of a municipality is the City of Chelsea.
Chelsea was placed in receivership in the autumn of 1991.
Laws proposed by then Governor Weld were implemented to suspend local government, removing the mayor from office and relegating local officials to advisory status to support state appointed receiver James Carlin. The receiver was given powers for two -five years initially and had wide discretion to materially modify and even undo city contracts, increase revenues through fees and property taxes, revamp zoning regulations and operate the school system. Initial success was seen in stabilizing the city’s finances which had deteriorated from years of mismanagement and corruption. The receiver retained unilateral powers ushering in a wholesale restructuring of the municipal employee contract, drastic reduction in overtime permitted by the fire department and a wide crackdown on businesses and their owners who were delinquent on property taxes, water and sewage bills. The focus was predicated on primarily closing the structural deficit that existed but also to reverse the institutionalization of abuse of power, political influence and corruption that had gripped the city and lead it to a financial ruin and rampant crime.
Upon close inspection of Lawrence, the fiscal situation is different irrespective of the reported, multi- jurisdictional investigations of Mayor William Lantigua in several areas including bid rigging, corruption and campaign finance indiscretions.
The Mayor and the City Council have produced balanced budgets two years in a row and are guided by the de-facto state fiscal overseer Robert Nunes who is primarily managing the city’s state deficit borrowing facility The FY 11 $229,000 million budget effectively eliminated a deficit and incorporated already implemented layoffs , pay freezes and service cuts. With increases in Chapter 70 state aid for the schools, property tax increase at the legal prop 2 ½ limit, a first round of deficit borrowing well below maximum levels allowed all led to a budget with deliverable, though not widely acceptable merits. The current budget though dependent heavily on state and federal grants is also balanced.
The city and special funds are $94 million and the schools will need $152 million. Recently two rating services Moodys and S&P cautiously improved the city’s credit ratings on $90 million of general obligation debt but not on $24 million borrowed to pay off past operating debts. Though there are lingering concerns on dependency on temporary state and federal grants the current situation contrasts sharply with what Lawrence faced two years before with a $15 million shortfall and looming uncertainties regarding borrowing needs. Additionally, with schools now in receivership and a fiscal overseer already appointed the possibility of a fiscally -driven reason for receivership is greatly diminished.
If receivership does occur in Lawrence it would have to be for reasons based on leadership failings not exclusively dependent on fiscal management.
Clearly the indictments and potential future ones must produce clear evidence of structural corruption and mismanagement patterns and then the political will that was championed by Governor Weld to intervene would have to be embraced by Governor Patrick too. Other than a vote of no confidence by the City Council or a third but successful foray into recall that might usher in an exit, the current Mayor will remain in place at least until the next election in 2013 and the undercurrents of uncertainty will be preserved.
If a court order jettisons the Mayor from public office Lawrence will have two choices to face; pursue a Special Election for an interim mayoral position or succumb to outside political pressures to deliver the city into receivership. Both of these actions will require a great deal of political will ; for receivership a willing governor and for a continuance of self-control a will of the people and some and courageous individuals who will seek office.
Either of these will have to be successful to lift this deeply conflicted and broken city from its current state of affairs.