State on receivership: 'You wouldn't like it'

Apr 18, 2014

The possibility of state control of Wareham, while unlikely in the next few years, has been on the minds of many in town. At Wednesday's Finance Committee meeting, Chairman Larry McDonald shared a conversation he had with the director of the state Department of Revenue.

"One thing I took out of that conversation is that the state does not want to come here," said McDonald. "They said 'we don't want to step in but if we do, you're not going to like it'."

State control, or receivership, is when a town or city is in such a dire fiscal situation that they can not properly provide services to their taxpayers. The state could then decide to appoint an overseer or financial management board to take control of all of the economic decisions in the municipality.

McDonald said receivership would kick in when the town is unable to set the tax rate. While this has not happened in Wareham, it has come close in the past and McDonald said the town is being closely watched by the Department of Revenue.

Three other municipalities in Massachusetts, Chelsea, Springfield and Lawrence, have gone under some system of state control in the last 25 years under varying methods and results.

But McDonald made it clear that what had been done in those areas might not work in Wareham, and that comparing those cities and towns to Wareham isn't as simple as it seems.

"As far as raising our tax levy, this is one possible solution, McDonald said, explaining that with a special act through the legislature they could raise the rate to whatever they see fit. "It is an option and depending on whether or not the state sees it as the solution to our financial woes, it can happen.

Aside from the differences in size and density among other things, Chelsea, Springfield and Lawrence all have lower median incomes than Wareham, yet higher tax rates (including the Wareham or Onset Fire Districts).

"It's not as though they come in here and operate with the peanuts that you have that got you in trouble in the first place," said Selectman Peter Teitelbaum at a joint meeting with the Finance Committee and School Committee last month.

"They are going to set the tax rate and say, 'you're not funding the schools enough, you need more cops, we're jacking the tax rate up.' They will hit you up for the money," he said.

"Past case studies shed some light on the possibilities, but they cannot be used to predict what could happen if the state steps in or if the state will step in," McDonald said. "They handle each municipality on a case by case basis."

"They come in and they radically alter your town government, they do it for a number of years until they think you're stable then they get out," Teitelbaum said. "You don't save any money because they just take it from you anyway, so receivership is not a great idea."

"If somebody from the state tells me we're not going to like it I believe them," McDonald said. "So, let’s solve our own problems and maintain our ability to make government work for us."