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Governor’s budget would level-fund municipal aid

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Gov. Deval Patrick on Jan. 25 filed a $33.9 billion spending plan for fiscal 2013 that reflects the challenge of recovering from the 2007-2009 recession even as state tax collections continue to grow.

The governor’s budget recommendation would increase state spending by just over $1 billion dollars, about 3 percent over expected levels of spending in the current fiscal year. But almost all of the new spending would be directed toward fixed state obligations and to health care and safety net programs for which caseload and cost growth continues. Much of the rest of state and local programs in the budget would be level-funded or reduced.

State taxes are expected to increase by $940 million next year, to nearly $22 billion, based on a slowly expanding economy. Additional revenue would come from a modest tax initiative the governor has proposed that would remove the sales-tax exemption for soda and candy, and the tapping of $400 million from the state’s stabilization fund.

But growth in MassHealth, Commonwealth Care, non-health safety net programs, and legal obligations including debt service, pensions, collective bargaining and Chapter 70 school aid would outpace growth in revenues. Funding for MassHealth, including both the state and federal shares, is expected to grow by $771 million above original fiscal 2012 projections to $11.138 billion next year, even under aggressive cost-containment proposals outlined in the budget.

Funding amounts for the main municipal and school aid accounts were announced by Lt. Gov. Tim Murray at the opening session of the MMA Annual Meeting on Jan. 20.

Unrestricted General Government Aid, the main municipal account, would be level-funded at $834 million. The governor did not include the $65 million supplemental amount distributed last October from the fiscal 2011 year-end surplus, as had been requested by the MMA. Lottery revenues are projected to grow next year by at least $20 million over the original fiscal 2012 estimate, but these new funds would not be used to increase municipal aid. The governor did include a section in his budget bill that would repeat the supplemental distribution again next year if the fiscal 2012 year-end surplus is large enough.

Funding for the state’s obligation to Chapter 70 school aid would increase by $145 million, to $4.136 billion, although only 114 of the state’s 327 operating school districts would share in that increase; the rest would be level-funded. For many municipal and regional school districts, aid amounts would be reduced through state-imposed deductions to pay tuition to charter schools. Cherry Sheet charter school tuition assessments are slated to rise by almost $25 million next year to $361 million.

The $200 million distribution of Chapter 90 local road funds announced by Murray will to be included in special bond legislation filed separately from the governor’s budget recommendation. As was the case last year, the MMA has asked that the Legislature make this bill an early priority so that allocations for fiscal 2013 can be announced by April 1, in order to avoid delays in getting started on road projects.

For other municipal accounts, the governor proposed to level-fund the payment-in-lieu-of-taxes program at $26.3 million and the two main library aid programs at $16 million. The budget recommendation would increase funding for the gang prevention grant program from $5.5 million to $8 million.

For school accounts, the governor’s budget would level-fund student transportation reimbursements to regional school districts at $43.5 million, the special education “circuit breaker” account at $213.2 million, and payments to school districts losing school aid due to tuition paid to charter schools at $71.5 million.

The governor did include a number of law changes in his budget recommendation, including a provision supported by the MMA that would clarify that the state and local room-occupancy excise tax applies to Internet room resellers.

Following public hearings on the budget over the next couple of months, the House budget committee is expected to release a fiscal 2013 budget bill in mid-March for debate and approval before the end of the month. The Senate is expected to approve a budget by the end of May. The MMA is seeking a local aid resolution again this year on funding for the main municipal and school aid amounts. Last year the House and Senate reached agreement in mid-April.

Link to governor’s budget website
Link to Section 3 local aid numbers
Link to Division of Local Services for Cherry Sheet amounts for fiscal 2013
Link to DESE website for fiscal 2013 Chapter 70 numbers for each district