Gov. announces mid-year budget cuts; seeks 1% from local aid

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Due to lower-than-expected state revenues, Gov. Deval Patrick today announced that the state is facing a $540 million shortfall in its fiscal 2013 budget, and he unveiled a plan to close the budget gap this year.

He announced that he is using his “9C” emergency budget powers to implement $225 million in immediate cuts to state-funded programs in executive agencies under his control, and he proposed legislation to expand his 9C authority so that he can cut $9 million, or 1 percent, from Unrestricted General Government Aid as well as the judiciary, constitutional offices and the Legislature.

His plan would also withdraw $200 million from the state’s rainy day fund.

Link to Executive Office for Administration and Finance website for the governor’s announcement as well as his budget reduction plans and proposed legislation

Using his existing authority to declare a fiscal emergency and reduce executive branch spending, generally referred to as 9C powers, the governor has unilaterally reduced funding for state agency accounts under his control by $225 million. Many of these cuts will be painful for cities, towns and school districts.

The MMA has identified $28.75 million in 9C cuts from local government accounts, effective immediately:
• $11.5 million (4.8 percent) from the Special Education Circuit Breaker program
• $6 million (41.2 percent) from Municipal Regionalization and Efficiencies Incentive Grants
• $5.25 million (46.5 percent) from the McKinney-Vento homeless student transportation account
• $2.5 million (71.4 percent) from the Chapter 70 “pothole” account
• $1.3 million (2.9 percent) from veterans’ benefits reimbursements
• $1 million (2.2 percent) from Regional School Transportation
• $1 million (1.4 percent) from Charter School Reimbursements
• $83,000 (0.7 percent) from school-based health programs
• $68,000 (0.9 percent) from Universal Pre-Kindergarten
• $45,000 (1.8 percent) from the Municipal Police Training Committee

In addition, the governor said a shortfall in sales tax collections will reduce the total sales tax revenue amount that flows to the School Building Assistance program by $20 million, though Administration and Finance officials say this should not affect planned projects. (Communities with pending projects are advised to contact the School Building Assistance Bureau to receive an update on the status of their projects.)

The governor’s announcement that he was filing legislation to expand his 9C powers in order to reduce non-executive accounts came as a surprise to the Legislature and local officials. The governor’s bill includes language saying that any unexpected increases in Lottery profits would go to cities and towns before the end of the year. While this provision could potentially offset a portion of the proposed $9 million UGGA cut, it is not guaranteed and, given the economy, appears quite unlikely.

The MMA will strongly oppose any cut to unrestricted municipal aid, because doing so would destabilize local budgets in the middle of the fiscal year and force reductions in services.

Municipal aid has already been cut by 32 percent ($416 million) below fiscal 2009 levels.

The Legislature is meeting only in “informal” sessions until the new two-year legislative session begins early next month, making it unlikely that the governor’s bill would be taken up before the end of the year.