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Local Aid and Finance Governor’s FY10 budget plan calls for $375M local aid cut
Facing a budget gap of more than $3 billion for next year due to the severe national recession, Gov. Patrick today filed a fiscal 2010 state spending plan that includes a $375 million cut in municipal aid (Lottery and Additional Assistance) below the original fiscal 2009 funding levels.
The budget bill, known as House 1, would combine Lottery and Additional Assistance into a new category called Unrestricted General Government Aid, and each community would receive 28.5 percent less than their original fiscal 2009 amount for these accounts.
In an effort to offset these cuts, the governor is proposing to raise additional revenue through meals and lodging taxes and the closure of a telecommunications property tax loophole.
The governor’s budget proposal would level-fund Chapter 70 aid for each city and town ($3.95 billion statewide), maintain funding for the payment-in-lieu-of-taxes (PILOT) program at $30.3 million, and fully fund the veteran’s benefits and school lunch programs.
Aside from the primary local aid accounts, House 1 would cut the police career incentive account by $8 million (16 percent, underfunding the account by $14 million), reduce funding for regional school transportation by $8 million (13 percent), and reduce library aid accounts by $4 million (14 percent).
• Link to governor’s budget Web site
• Link to Division of Local Services Web site for fiscal 2010 Cherry Sheet numbers, by community
• Download administration’s estimates, by community, of revenue that could be derived from 1 percent local-option meals and lodging taxes as well as partial closure of the telecommunications property tax loophole (96K Excel file)
• See also: Governor releases details of mid-year local aid cuts
Charter school funding
The governor’s budget recommendation includes several changes to charter school law that would allow more charter schools in districts that are at or near the current school aid withholding cap of 9 percent of required “net school spending,” so long as the charter school would serve “at risk” students. The new cap would be 12 percent.
The governor also proposed to create a new state budget account to fund facilities payments to charter schools and incremental tuition costs due to new students and normal growth in the per-student tuition charge. For fiscal 2010, this would reduce the charter school tuition assessment paid by public school districts but would also reduce the reimbursement amount. Local officials are advised to carefully check both of these Cherry Sheet items to calculate the “net” amount, as many communities may see an increase in their net loss to charter schools next year under House 1.
The governor would also create a new reporting requirement for charter schools focused on year-end surplus amounts. The MMA is pushing for an overall reform in charter school funding, as well as a safety net provision to prevent losses to charter schools from growing above this year’s level.
New taxes
Companion legislation filed along with the governor’s budget proposes to use revenue raised from a 1 percent increase in the state meals tax ($125 million) and a 1 percent increase in the state hotel-motel room occupancy tax ($24 million) to offset a portion of the cuts to municipal aid. The plan calls for the $150 million to be distributed to all cities and towns in order to reduce the overall municipal aid cut to about $220 million.
Each community would receive a share of the $150 million based on their share of the original levels of fiscal 2009 municipal aid (Lottery and Additional Assistance). After receiving these funds, the state would use a special reserve fund of $6 million to make sure no community receives a fiscal 2010 local aid cut that exceeds 10 percent of their original combined Lottery, Additional Assistance and Chapter 70 aid total. This mitigation funding is contingent on the Legislature enacting the taxes proposed by the governor.
The governor also filed legislation to give cities and towns the authority to levy, at local option, a 1 percent meals tax (worth an estimated $125 million statewide) and 1 percent increase in the hotel-motel tax (worth an estimated $24 million statewide). The bill would also close telecommunications property tax loopholes (both the $26 million loophole for poles and wires and a loophole on switching equipment that is worth between $25 million and $50 million).
Under the plan, 100 percent of the local-option meals and hotel-motel tax revenue would remain in the community.
Municipal health insurance
Instead of supporting the MMA’s legislation to give cities and towns the same authority the state has to design health insurance plans for employees, the administration has filed a proposal that falls short of meaningful reform and, in many cases, may make it even more difficult to achieve savings.
The MMA’s proposal would allow cities and towns to update their insurance plans outside of collective bargaining. This approach would save communities more money, more quickly and more effectively than any other alternative, including joining the state’s Group Insurance Commission pool, which doesn’t work for a large number of communities.
The governor’s proposal would require cities and towns to receive union approval for any insurance changes and would penalize communities by cutting local aid for those who are unable to convince unions to make a change.
The MMA argues that the proposed rules could make it even harder to secure health insurance savings.
Municipal Partnership Act II
The governor’s “Municipal Partnership Act II” contains a number of provisions supported by the MMA, including:
• Procurement reform by changing the thresholds
• Flexibility in pension funding, especially during the next several years due to investment losses and the budget crisis
• Removing collective bargaining obstacles to regionalization efforts
• Eliminating costly contract advertising requirements
The MMA is analyzing the legislation now, and will share the details as soon as they become available.
• Link to details of Emergency Recovery Bill
• Link to details of Municipal Partnership Act II
Local Aid and Finance Governor’s FY10 budget plan calls for $375M local aid cut
Governor’s FY10 budget plan calls for $375M local aid cut
Facing a budget gap of more than $3 billion for next year due to the severe national recession, Gov. Patrick today filed a fiscal 2010 state spending plan that includes a $375 million cut in municipal aid (Lottery and Additional Assistance) below the original fiscal 2009 funding levels.
The budget bill, known as House 1, would combine Lottery and Additional Assistance into a new category called Unrestricted General Government Aid, and each community would receive 28.5 percent less than their original fiscal 2009 amount for these accounts.
In an effort to offset these cuts, the governor is proposing to raise additional revenue through meals and lodging taxes and the closure of a telecommunications property tax loophole.
The governor’s budget proposal would level-fund Chapter 70 aid for each city and town ($3.95 billion statewide), maintain funding for the payment-in-lieu-of-taxes (PILOT) program at $30.3 million, and fully fund the veteran’s benefits and school lunch programs.
Aside from the primary local aid accounts, House 1 would cut the police career incentive account by $8 million (16 percent, underfunding the account by $14 million), reduce funding for regional school transportation by $8 million (13 percent), and reduce library aid accounts by $4 million (14 percent).
• Link to governor’s budget Web site
• Link to Division of Local Services Web site for fiscal 2010 Cherry Sheet numbers, by community
• Download administration’s estimates, by community, of revenue that could be derived from 1 percent local-option meals and lodging taxes as well as partial closure of the telecommunications property tax loophole (96K Excel file)
• See also: Governor releases details of mid-year local aid cuts
Charter school funding
The governor’s budget recommendation includes several changes to charter school law that would allow more charter schools in districts that are at or near the current school aid withholding cap of 9 percent of required “net school spending,” so long as the charter school would serve “at risk” students. The new cap would be 12 percent.
The governor also proposed to create a new state budget account to fund facilities payments to charter schools and incremental tuition costs due to new students and normal growth in the per-student tuition charge. For fiscal 2010, this would reduce the charter school tuition assessment paid by public school districts but would also reduce the reimbursement amount. Local officials are advised to carefully check both of these Cherry Sheet items to calculate the “net” amount, as many communities may see an increase in their net loss to charter schools next year under House 1.
The governor would also create a new reporting requirement for charter schools focused on year-end surplus amounts. The MMA is pushing for an overall reform in charter school funding, as well as a safety net provision to prevent losses to charter schools from growing above this year’s level.
New taxes
Companion legislation filed along with the governor’s budget proposes to use revenue raised from a 1 percent increase in the state meals tax ($125 million) and a 1 percent increase in the state hotel-motel room occupancy tax ($24 million) to offset a portion of the cuts to municipal aid. The plan calls for the $150 million to be distributed to all cities and towns in order to reduce the overall municipal aid cut to about $220 million.
Each community would receive a share of the $150 million based on their share of the original levels of fiscal 2009 municipal aid (Lottery and Additional Assistance). After receiving these funds, the state would use a special reserve fund of $6 million to make sure no community receives a fiscal 2010 local aid cut that exceeds 10 percent of their original combined Lottery, Additional Assistance and Chapter 70 aid total. This mitigation funding is contingent on the Legislature enacting the taxes proposed by the governor.
The governor also filed legislation to give cities and towns the authority to levy, at local option, a 1 percent meals tax (worth an estimated $125 million statewide) and 1 percent increase in the hotel-motel tax (worth an estimated $24 million statewide). The bill would also close telecommunications property tax loopholes (both the $26 million loophole for poles and wires and a loophole on switching equipment that is worth between $25 million and $50 million).
Under the plan, 100 percent of the local-option meals and hotel-motel tax revenue would remain in the community.
Municipal health insurance
Instead of supporting the MMA’s legislation to give cities and towns the same authority the state has to design health insurance plans for employees, the administration has filed a proposal that falls short of meaningful reform and, in many cases, may make it even more difficult to achieve savings.
The MMA’s proposal would allow cities and towns to update their insurance plans outside of collective bargaining. This approach would save communities more money, more quickly and more effectively than any other alternative, including joining the state’s Group Insurance Commission pool, which doesn’t work for a large number of communities.
The governor’s proposal would require cities and towns to receive union approval for any insurance changes and would penalize communities by cutting local aid for those who are unable to convince unions to make a change.
The MMA argues that the proposed rules could make it even harder to secure health insurance savings.
Municipal Partnership Act II
The governor’s “Municipal Partnership Act II” contains a number of provisions supported by the MMA, including:
• Procurement reform by changing the thresholds
• Flexibility in pension funding, especially during the next several years due to investment losses and the budget crisis
• Removing collective bargaining obstacles to regionalization efforts
• Eliminating costly contract advertising requirements
The MMA is analyzing the legislation now, and will share the details as soon as they become available.
• Link to details of Emergency Recovery Bill
• Link to details of Municipal Partnership Act II
Written by MMA Executive Director Geoff Beckwith
