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Advocacy Executive Director's Reports Budget season takes turn for the worse
Less than two months after Gov. Deval Patrick filed a state budget plan for fiscal 2011 that would have level-funded the major local aid accounts, legislative leaders have declared the budget out of balance and are planning up to a 4 percent cut in unrestricted general government aid and Chapter 70 education funding.
This is a clear setback for cities and towns that are already struggling mightily to preserve services and balance their books in the wake of last summer’s $724 million local aid hit. A further 4 percent local aid cut could translate into the loss of another $200 million in aid to communities.
Although economists say the economy is beginning to recover from the recession, local and state governments across the country are awash in red ink. Historically, public entities lag any recovery by two years, because it takes that long for the benefits of the recovery to translate into tax revenues. Leading forecasters such as the Massachusetts Taxpayers Foundation project that the Bay State is facing a structural budget gap of more than $2 billion for fiscal 2011 and $2.5 billion for fiscal 2012. With most of the federal stimulus aid and other one-time revenues disappearing after fiscal 2011, the Taxpayers Foundation is warning that the fiscal 2012 state budget could be the most painful of all.
While the state and local fiscal crisis will certainly continue, it is important to recognize that cities, towns and local taxpayers have shouldered an extraordinary share of the burden. The facts show that local aid has been cut more deeply than the overall state budget. General government municipal aid was cut by 29 percent last year, and the total reduction in municipal and education aid programs was 12 percent, or $724 million. In contrast, the state budget has decreased by 4 percent, far less than the percentage cut absorbed by cities and towns. The state is now projecting a 3.2 percent growth in state tax revenues for next year, but is contemplating another 4 percent cut in local aid.
The bottom line is that communities across the state have stepped up to the plate, and further local aid cuts would shift too much of the state deficit onto local taxpayers, increasing pressure on property taxes and forcing radical cuts in basic services in every locality.
Communities have already eliminated thousands of employees, including teachers, police officers, firefighters, and other key workers. Services have been slashed. Stabilization funds have been drained. Local taxes, including the new meals and lodging revenues, are on the rise. The property tax accounts for the largest share of municipal budgets since the passage of Proposition 2½ nearly three decades ago.
Our representatives and senators must take every step possible to protect local aid during this month’s budget debate, and they must pass critical municipal health insurance reform to give local leaders the tools to balance their budgets, protect key services, and prevent property taxes from increasing even more.
For five years, the MMA has been calling for municipal health insurance reform, and if legislators are serious about protecting their cities and towns, now is the time to pass legislation to give cities and towns the power to design health insurance plans outside of collective bargaining. This one reform is the most effective way to bring immediate fiscal relief to all cities and towns, and it is urgently overdue. Plan design reform would allow most cities and towns to lower their health insurance costs by 4 to 6 percent, or up to $100 million statewide.
The budget season has taken a turn for the worse, and state leaders need to make a dramatic course correction to protect cities and towns and invest in local economies. Otherwise, the Commonwealth’s budget will deepen the fiscal crisis in every city and town hall across the state and slash the local services that residents and businesses depend on every single day.
Advocacy Executive Director's Reports Budget season takes turn for the worse
Budget season takes turn for the worse
Less than two months after Gov. Deval Patrick filed a state budget plan for fiscal 2011 that would have level-funded the major local aid accounts, legislative leaders have declared the budget out of balance and are planning up to a 4 percent cut in unrestricted general government aid and Chapter 70 education funding.
This is a clear setback for cities and towns that are already struggling mightily to preserve services and balance their books in the wake of last summer’s $724 million local aid hit. A further 4 percent local aid cut could translate into the loss of another $200 million in aid to communities.
Although economists say the economy is beginning to recover from the recession, local and state governments across the country are awash in red ink. Historically, public entities lag any recovery by two years, because it takes that long for the benefits of the recovery to translate into tax revenues. Leading forecasters such as the Massachusetts Taxpayers Foundation project that the Bay State is facing a structural budget gap of more than $2 billion for fiscal 2011 and $2.5 billion for fiscal 2012. With most of the federal stimulus aid and other one-time revenues disappearing after fiscal 2011, the Taxpayers Foundation is warning that the fiscal 2012 state budget could be the most painful of all.
While the state and local fiscal crisis will certainly continue, it is important to recognize that cities, towns and local taxpayers have shouldered an extraordinary share of the burden. The facts show that local aid has been cut more deeply than the overall state budget. General government municipal aid was cut by 29 percent last year, and the total reduction in municipal and education aid programs was 12 percent, or $724 million. In contrast, the state budget has decreased by 4 percent, far less than the percentage cut absorbed by cities and towns. The state is now projecting a 3.2 percent growth in state tax revenues for next year, but is contemplating another 4 percent cut in local aid.
The bottom line is that communities across the state have stepped up to the plate, and further local aid cuts would shift too much of the state deficit onto local taxpayers, increasing pressure on property taxes and forcing radical cuts in basic services in every locality.
Communities have already eliminated thousands of employees, including teachers, police officers, firefighters, and other key workers. Services have been slashed. Stabilization funds have been drained. Local taxes, including the new meals and lodging revenues, are on the rise. The property tax accounts for the largest share of municipal budgets since the passage of Proposition 2½ nearly three decades ago.
Our representatives and senators must take every step possible to protect local aid during this month’s budget debate, and they must pass critical municipal health insurance reform to give local leaders the tools to balance their budgets, protect key services, and prevent property taxes from increasing even more.
For five years, the MMA has been calling for municipal health insurance reform, and if legislators are serious about protecting their cities and towns, now is the time to pass legislation to give cities and towns the power to design health insurance plans outside of collective bargaining. This one reform is the most effective way to bring immediate fiscal relief to all cities and towns, and it is urgently overdue. Plan design reform would allow most cities and towns to lower their health insurance costs by 4 to 6 percent, or up to $100 million statewide.
The budget season has taken a turn for the worse, and state leaders need to make a dramatic course correction to protect cities and towns and invest in local economies. Otherwise, the Commonwealth’s budget will deepen the fiscal crisis in every city and town hall across the state and slash the local services that residents and businesses depend on every single day.
Written by MMA Executive Director Geoff Beckwith
