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Local Aid and Finance Legislature passes FY10 state budget
The Legislature today approved the $27.4 billion state spending plan for fiscal 2010 that was released by a House-Senate conference committee last night.
The governor now has 10 days to consider which sections to sign or veto, meaning that a state budget will be in place before the start of the fiscal year on July 1.
The compromise budget would fund general unrestricted municipal aid at $936 million, a level that is $71 million more than the appropriation in the Senate budget, but substantially lower than the House’s allocation – and 28 percent lower than the original fiscal 2009 appropriation.
The Legislature added some funding back to municipal aid by extending the new 6.25 percent state sales tax rate – raised from 5 percent – to meals.
In the face of plummeting state revenues, however, the budget relies on $1.5 billion in one-time federal stimulus funds, which already raises concerns about the state’s ability to maintain its spending levels in fiscal 2011. House and Senate leaders acknowledged that, even with the federal support, the lean budget will cause thousands of public sector layoffs.
In response the Legislature’s action, Gov. Deval Patrick repeated his pledge to veto the sales tax increase unless an ethics reform bill also reaches his desk.
• Link to DLS Web site for updated local aid amounts based on state budget bill enacted by Legislature
• MMA letter to governor regarding FY10 budget enacted by Legislature
• Download text of conference committee budget bill (with local aid amounts beginning on p. 196) (1.7M PDF)
Chapter 70
The Legislature approved the Senate’s Chapter 70 aid numbers, which reflect a 2 percent reduction below fiscal 2009 amounts for each school district, a total cut of $79 million statewide.
The budget document includes a suggested distribution of the federal stimulus (ARRA) education funds of $168 million to bring districts up to foundation. This is $12 million less than the $180 million recommended in the Senate version of the budget, but the same overall total as the House and governor. [The amounts for individual districts may be different than in the earlier versions of the budget.]
The governor has discretion over how much and how to distribute these federal stimulus funds, and the Legislature is including the allocation as a recommendation to the governor.
• Fiscal 2010 Chapter 70 aid, net school spending requirements, and federal stabilization grants based on conference committee budget bill (link to Department of Elementary and Secondary Education)
Local-option taxes
The budget includes landmark local-option taxing authority, allowing a local-option meals tax of three-quarters of 1 percent and allowing a 2 percent increase in the local room occupancy tax.
By vote of the local legislative body, communities would have the authority to impose a .75 percent local meals tax beginning in the second quarter of the fiscal year (Oct. 1), if the tax is adopted at least 30 days prior to the beginning of the quarter (before Sept. 1). Communities that adopt the tax after Sept. 1 would begin collecting it at the beginning of the third quarter (Jan. 1). Restaurants will submit the revenue with their state sales tax payments, and the state will allocate the funds back to the community in which they were raised.
The 2 percent increase in the local hotel-motel tax is accomplished by increasing the maximum levy by 2 percent in existing statutes.
In both cases (meals and lodging), communities should consult the Department of Revenue on specific details after the governor signs the budget.
The Senate had initiated the local-option meals tax and room tax increase in its version of the budget.
Health insurance
In another significant victory for local government, the conference committee budget excluded Senate provisions concerning municipal health insurance. Local leaders had argued strenuously that the Senate provisions would be a major step backward – and were worse than no action at all. The MMA and local officials argued that a proposed dollar benchmark system, coupled with a binding arbitration mandate, would have had very harmful impacts all across the state.
The MMA will continue to work with legislators to push for real reform and plan design authority for cities and towns. The MMA argues that this approach is the most effective way to achieve meaningful relief for communities and taxpayers, while ensuring quality health plans for municipal employees.
Telecommunications tax loophole
The Legislature adopted a Senate provision to close the tax loophole that the telephone company has used to avoid paying local property taxes on its poles and wires. Communities started collecting the tax last year, after the Appellate Tax Board ruled in favor of collecting the tax, which is worth $26 million statewide.
Because of constitutional concerns, the budget would codify the ATB decision for fiscal 2010 and beyond, but would not apply the change retroactively. This means that cities and towns will likely be required to keep fiscal 2009 collections in their overlay accounts, as directed by the Division of Local Services. For fiscal 2010 and beyond, though, these funds will be fully available to be appropriated in local budgets.
Quinn Bill
The state budget passed by the Legislature includes only $10 million for the police career incentive program (Quinn Bill), far less than the $58 million required for full funding. This will result in a substantial unfunded mandate in those communities locked into collective bargaining obligations that require them to make up the state shortfall. It could also lead to litigation in communities that decide to pay their share of the program, but not to fund the state’s share.
The MMA will continue to aggressively call on the state to clarify that cities and towns must not be required to make up for the state’s retreat from the program.
Other accounts
In other key accounts, the budget provides $40.5 million for regional school transportation reimbursements, a cut in the program but still $10 million more than the amount in the Senate’s budget bill.
Funding for the payment-in-lieu-of-taxes program is set at $27.27 million, $3 million below the fiscal 2009 level.
The special education circuit breaker program is funded at $141 million, a deep cut below full funding, which means that communities will only receive partial funding.
Local Aid and Finance Legislature passes FY10 state budget
Legislature passes FY10 state budget
The Legislature today approved the $27.4 billion state spending plan for fiscal 2010 that was released by a House-Senate conference committee last night.
The governor now has 10 days to consider which sections to sign or veto, meaning that a state budget will be in place before the start of the fiscal year on July 1.
The compromise budget would fund general unrestricted municipal aid at $936 million, a level that is $71 million more than the appropriation in the Senate budget, but substantially lower than the House’s allocation – and 28 percent lower than the original fiscal 2009 appropriation.
The Legislature added some funding back to municipal aid by extending the new 6.25 percent state sales tax rate – raised from 5 percent – to meals.
In the face of plummeting state revenues, however, the budget relies on $1.5 billion in one-time federal stimulus funds, which already raises concerns about the state’s ability to maintain its spending levels in fiscal 2011. House and Senate leaders acknowledged that, even with the federal support, the lean budget will cause thousands of public sector layoffs.
In response the Legislature’s action, Gov. Deval Patrick repeated his pledge to veto the sales tax increase unless an ethics reform bill also reaches his desk.
• Link to DLS Web site for updated local aid amounts based on state budget bill enacted by Legislature
• MMA letter to governor regarding FY10 budget enacted by Legislature
• Download text of conference committee budget bill (with local aid amounts beginning on p. 196) (1.7M PDF)
Chapter 70
The Legislature approved the Senate’s Chapter 70 aid numbers, which reflect a 2 percent reduction below fiscal 2009 amounts for each school district, a total cut of $79 million statewide.
The budget document includes a suggested distribution of the federal stimulus (ARRA) education funds of $168 million to bring districts up to foundation. This is $12 million less than the $180 million recommended in the Senate version of the budget, but the same overall total as the House and governor. [The amounts for individual districts may be different than in the earlier versions of the budget.]
The governor has discretion over how much and how to distribute these federal stimulus funds, and the Legislature is including the allocation as a recommendation to the governor.
• Fiscal 2010 Chapter 70 aid, net school spending requirements, and federal stabilization grants based on conference committee budget bill (link to Department of Elementary and Secondary Education)
Local-option taxes
The budget includes landmark local-option taxing authority, allowing a local-option meals tax of three-quarters of 1 percent and allowing a 2 percent increase in the local room occupancy tax.
By vote of the local legislative body, communities would have the authority to impose a .75 percent local meals tax beginning in the second quarter of the fiscal year (Oct. 1), if the tax is adopted at least 30 days prior to the beginning of the quarter (before Sept. 1). Communities that adopt the tax after Sept. 1 would begin collecting it at the beginning of the third quarter (Jan. 1). Restaurants will submit the revenue with their state sales tax payments, and the state will allocate the funds back to the community in which they were raised.
The 2 percent increase in the local hotel-motel tax is accomplished by increasing the maximum levy by 2 percent in existing statutes.
In both cases (meals and lodging), communities should consult the Department of Revenue on specific details after the governor signs the budget.
The Senate had initiated the local-option meals tax and room tax increase in its version of the budget.
Health insurance
In another significant victory for local government, the conference committee budget excluded Senate provisions concerning municipal health insurance. Local leaders had argued strenuously that the Senate provisions would be a major step backward – and were worse than no action at all. The MMA and local officials argued that a proposed dollar benchmark system, coupled with a binding arbitration mandate, would have had very harmful impacts all across the state.
The MMA will continue to work with legislators to push for real reform and plan design authority for cities and towns. The MMA argues that this approach is the most effective way to achieve meaningful relief for communities and taxpayers, while ensuring quality health plans for municipal employees.
Telecommunications tax loophole
The Legislature adopted a Senate provision to close the tax loophole that the telephone company has used to avoid paying local property taxes on its poles and wires. Communities started collecting the tax last year, after the Appellate Tax Board ruled in favor of collecting the tax, which is worth $26 million statewide.
Because of constitutional concerns, the budget would codify the ATB decision for fiscal 2010 and beyond, but would not apply the change retroactively. This means that cities and towns will likely be required to keep fiscal 2009 collections in their overlay accounts, as directed by the Division of Local Services. For fiscal 2010 and beyond, though, these funds will be fully available to be appropriated in local budgets.
Quinn Bill
The state budget passed by the Legislature includes only $10 million for the police career incentive program (Quinn Bill), far less than the $58 million required for full funding. This will result in a substantial unfunded mandate in those communities locked into collective bargaining obligations that require them to make up the state shortfall. It could also lead to litigation in communities that decide to pay their share of the program, but not to fund the state’s share.
The MMA will continue to aggressively call on the state to clarify that cities and towns must not be required to make up for the state’s retreat from the program.
Other accounts
In other key accounts, the budget provides $40.5 million for regional school transportation reimbursements, a cut in the program but still $10 million more than the amount in the Senate’s budget bill.
Funding for the payment-in-lieu-of-taxes program is set at $27.27 million, $3 million below the fiscal 2009 level.
The special education circuit breaker program is funded at $141 million, a deep cut below full funding, which means that communities will only receive partial funding.
