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Local Aid and Finance MTF report: Fiscal pressures expected to continue for cities, towns
Massachusetts cities and towns “are facing enormous fiscal pressures which will only worsen over the next two years and likely beyond,” according to the Massachusetts Taxpayers Foundation’s latest annual report on the fiscal condition of the state’s municipalities.
On top of “major cuts in local aid” during two recessions this decade, the report predicts that cities and towns face “further cuts in state aid in fiscal 2011, made worse by the end of federal stimulus dollars that have been supporting Chapter 70 education aid.”
“Local aid in 2009 was 6 percent below what it would have been had that aid kept pace with inflation since 2001,” the report finds, “and the gap will widen significantly in 2010 and beyond.
“With cuts in local aid, cities and towns are increasingly dependent on the property tax to support local services.”
According to the report, released on Nov. 30, municipal health care costs have increased at five times the rate of inflation since 2001.
The Taxpayers Foundation calls for “comprehensive reform” to address the dramatic increase in health insurance costs and the large jump in unfunded pension liabilities.
New growth actually declined slightly in 2008 and 2009, and it has been virtually flat over the decade. Because of the large decline in building permits since the recession began, the Taxpayers Foundation concludes that communities will likely see a sharp decrease in this revenue source in the next two years.
Fewer and fewer communities have excess capacity (the amount of additional revenue that a city or town may raise through property taxes without an override). In 2009, 276 municipalities (nearly 80 percent of all communities in the state) had no excess capacity, a number that has risen every year since 2000, when only 162 communities, fewer than half, had reached their property tax levy limit. In 2009, just 12 communities accounted for 80 percent of the statewide total of $205 million in excess capacity. Cambridge alone had 45 percent of the statewide total.
While overrides can provide some additional revenue, the proposals approved by voters in fiscal 2009 – a total of $37 million statewide – accounted for less than one quarter of 1 percent of total municipal revenue for the year.
Municipal Financial Data is the Massachusetts Taxpayers Foundation’s annual compilation of basic financial information for the state’s 351 cities and towns. In addition to comparing community expenditures, revenues, tax rates, debt, and other characteristics, the booklet includes statewide totals for key municipal financial statistics over the last 10 years.
• Link to Massachusetts Taxpayers Foundation Web site to download report
Local Aid and Finance MTF report: Fiscal pressures expected to continue for cities, towns
MTF report: Fiscal pressures expected to continue for cities, towns
Massachusetts cities and towns “are facing enormous fiscal pressures which will only worsen over the next two years and likely beyond,” according to the Massachusetts Taxpayers Foundation’s latest annual report on the fiscal condition of the state’s municipalities.
On top of “major cuts in local aid” during two recessions this decade, the report predicts that cities and towns face “further cuts in state aid in fiscal 2011, made worse by the end of federal stimulus dollars that have been supporting Chapter 70 education aid.”
“Local aid in 2009 was 6 percent below what it would have been had that aid kept pace with inflation since 2001,” the report finds, “and the gap will widen significantly in 2010 and beyond.
“With cuts in local aid, cities and towns are increasingly dependent on the property tax to support local services.”
According to the report, released on Nov. 30, municipal health care costs have increased at five times the rate of inflation since 2001.
The Taxpayers Foundation calls for “comprehensive reform” to address the dramatic increase in health insurance costs and the large jump in unfunded pension liabilities.
New growth actually declined slightly in 2008 and 2009, and it has been virtually flat over the decade. Because of the large decline in building permits since the recession began, the Taxpayers Foundation concludes that communities will likely see a sharp decrease in this revenue source in the next two years.
Fewer and fewer communities have excess capacity (the amount of additional revenue that a city or town may raise through property taxes without an override). In 2009, 276 municipalities (nearly 80 percent of all communities in the state) had no excess capacity, a number that has risen every year since 2000, when only 162 communities, fewer than half, had reached their property tax levy limit. In 2009, just 12 communities accounted for 80 percent of the statewide total of $205 million in excess capacity. Cambridge alone had 45 percent of the statewide total.
While overrides can provide some additional revenue, the proposals approved by voters in fiscal 2009 – a total of $37 million statewide – accounted for less than one quarter of 1 percent of total municipal revenue for the year.
Municipal Financial Data is the Massachusetts Taxpayers Foundation’s annual compilation of basic financial information for the state’s 351 cities and towns. In addition to comparing community expenditures, revenues, tax rates, debt, and other characteristics, the booklet includes statewide totals for key municipal financial statistics over the last 10 years.
• Link to Massachusetts Taxpayers Foundation Web site to download report
Written by MMA Publications/Web Director John Ouellette
