Gov. vetoes $177M from local aid in FY14 state budget

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Gov. Deval Patrick today signed the state’s $34 billion fiscal 2014 budget into law, but imposed a massive $177 million veto on Unrestricted General Government Aid along with $240 million in transportation-related vetoes.

The governor said he made the cuts because the budget sent to him by the Legislature on July 1 relies on approximately $450 million in new tax revenue from a transportation finance bill and those funds are not yet guaranteed.

The governor’s veto would slash unrestricted municipal aid down to 1986 levels and create fiscal distress in cities and towns across the state. The veto would reduce direct local aid from the $920 million passed by the Legislature down to $743 million, a 19 percent cut that would also result in the diversion of $110 million in local Lottery funds away from cities and towns, using those dollars to balance the state budget instead of funding local services, as originally intended in state law.

“If this veto is allowed to stand,” said MMA Executive Director Geoff Beckwith, “communities will face an unexpected and devastating fiscal crisis.”

House Speaker Robert DeLeo immediately issued a statement pledging to restore the local aid cut.

“The House of Representatives will protect the cities and towns of Massachusetts,” he said. “We passed a budget that addresses key transportation needs, provides funding to our municipalities, and makes key investments in higher education and community colleges, and we will again vote next week to maintain that commitment.”

Due to its overwhelming support in the Legislature, observers expect the transportation finance package to eventually become law, with or without the governor’s signature, and it is also expected that the Legislature will vote to override the $177 million local aid veto. Nonetheless, Beckwith said, “the governor’s veto has created significant uncertainty and budget disruption.”

Most other local aid accounts were approved by the governor as passed by the Legislature, including a $130 million increase in funding for Chapter 70 education aid, $10 million more for the special education circuit breaker, and a $6 million increase for regional school transportation.

MMA statement opposing the governor’s local aid veto and calling on the Legislature to immediately override it

The governor returned the transportation finance bill to the Legislature with an amendment two weeks ago, asserting that $135 million in Massachusetts Turnpike toll revenue included in the package might not be available in fiscal 2017 and 2018. The governor’s amendment would automatically increase the gas tax by $135 million a year if the Weston-to-Springfield tolls come down in four years. Legislative leaders, however, have made it clear that they oppose the amendment.

By returning the transportation finance bill to the Legislature, the $450 million in new revenue that its tax increases would raise for fiscal 2014 was delayed until after the governor’s deadline for signing the state budget, and the governor chose to veto more than $400 million from the budget to “bring it into balance.”

Legislative leaders are now scheduling formal sessions to override the governor’s transportation finance bill amendment and his expected veto of the final bill, as well as voting to override any related budget vetoes, including the local aid veto.

The MMA has endorsed the Legislature’s transportation finance package and is urging lawmakers to take all action necessary to make sure it becomes law.

Now two weeks into the fiscal year, the state has been operating on an interim, one-month budget enacted by the Legislature and signed by the governor last month.