Bedford voters approved a higher income tax in 2017 to help a city facing shrinking reserves and budget shortfalls. City records show Bedford largely followed through on what officials said the money would support.
Why it matters: Bedford’s income-tax rate increased from 2.25% to 3% in 2018 — a rate residents and businesses are still paying today. The 2017 vote gives us a chance to look back and ask whether the city delivered what voters were told the additional money would make possible.
By the numbers
- 81% — voters who supported the tax increase.
- $1.94 million — Bedford’s financial shortfall in 2015.
- $9.5M → $5.2M — decline in General Fund cash from 2014 to 2017.
- $8.7M → $13.89M — income-tax collections from 2017 to 2024.
- 3 — additional police officers Bedford said it would hire.
- $400,000 — new street-resurfacing funding in 2018.
The Big Picture: Bedford voters approved a higher income tax during a financial crunch. Nearly a decade later, city records show the city largely followed through.
In 2017, Bedford was running out of financial breathing room. The closing of Ben Venue Laboratories had cost the city roughly $2 million a year in income-tax revenue. State funding changes had taken away more. Bedford reported financial shortfalls in 2015 and 2016, while its General Fund cash balance fell from about $9.5 million in 2014 to $5.2 million by the end of 2017. City officials asked voters to raise Bedford’s income-tax rate from 2.25% to 3%.
They said the additional revenue would help stabilize city finances while allowing Bedford to hire three police officers, begin a street-resurfacing program and restart a sidewalk program.
About 81% of voters said yes. The higher rate took effect Jan. 1, 2018. So, did Bedford do what it said it would do?
For the most part, yes.
The City of Bedford needed money
Bedford’s financial problems weren’t hypothetical. In addition to the roughly $2 million annual loss from Ben Venue, the city estimated state funding and tax changes had cost it another $1.4 million a year. Bedford reported a roughly $1.94 million shortfall in 2015 and another $684,000 shortfall in 2016. Spending cuts and a new residential refuse fee weren’t enough to close the gap. The city projected the higher income tax would generate about $1.9 million more in 2018 and $2.5 million more in 2019.
One thing is important: the tax wasn’t legally earmarked for police, streets and sidewalks. It was a general income-tax increase that could also pay for regular city operations. But those were the specific improvements Bedford officials said the new revenue would make possible.
Three more police officers? Yes.
Bedford said it would hire three additional police officers. Its 2018 audited financial report says all three were on the street for the full year. Later city reports also credited the tax increase with making those hires possible.
Promise kept.
A street-resurfacing program? Yes.
Bedford also followed through on streets. Financial records show a $400,000 transfer for street resurfacing in 2018, tied to the program established after passage of the tax increase. Substantial street spending continued in later years.
Promise kept.
A sidewalk program? Yes, but… not exactly.
Bedford’s annual reports say the city re-established its sidewalk program after the tax increase. So there is a sidewalk program. But it appears to be used for repair of sidewalks after municipal projects. Sidewalks never received the same financial commitment as streets. There was no comparable $400,000 annual sidewalk program. Most residents pictured a true sidewalk program that would maintain all sidewalks in the City rather than replacing sidewalks damaged by projects.
So the sidewalk promise wasn’t broken. But sidewalks clearly received a smaller share of the attention, money and the intention.
Did the tax bring in what Bedford expected?
Yes.
Bedford collected about $8.7 million in income tax in 2017. That increased to about $10.6 million in 2018, a gain of roughly $1.9 million. In 2019, collections reached about $11.6 million, roughly $2.9 million above the 2017 level. The first year essentially matched Bedford’s projection. The second exceeded it.
Not all of that growth can be attributed to the higher rate because wages, employment and the economy also affect collections. But the large revenue increase Bedford expected clearly arrived.
The tax also helped stabilize city finances
The less visible result was Bedford’s financial recovery.
- 2017: about $8.61 million
- 2018: about $10.61 million
- 2019: about $11.61 million
- 2024: about $13.89 million
The tax increase wasn’t solely responsible. But Bedford entered the 2017 vote with repeated shortfalls and shrinking reserves. After the additional revenue began arriving, that decline stopped.
So, did Bedford keep its end of the bargain?
Largely, yes.
Bedford hired the three police officers. It created the street-resurfacing program. It restarted the sidewalk program, although at a much smaller scale. And the city’s finances stabilized. The evidence doesn’t support the idea that Bedford raised the tax and then abandoned what residents were told it would fund. Nearly a decade later, however, Bedford’s finances look very different from the crisis that led to the 2017 vote.
That raises a new question: Does Bedford still need the entire 3% income-tax rate?
That’s a different story.
