Lawmakers poised to restore local aid

From The Beacon, Summer 2013

Local officials are right to feel that the governor’s last-minute veto of $177 million in unrestricted municipal aid was unnecessary and unjustified. Fortunately, the Legislature will be taking action to restore fiscal 2014 local aid to its intended levels, and cities and towns should be made whole by the end of July.

Nevertheless, the veto has placed a cloud over community finances at a time when local officials normally expect greater certainty for the year ahead.

The good news is that the Legislature’s other local aid increases, highlighted by a $130 million boost to Chapter 70 school aid and full funding of the Special Education Circuit Breaker account at $252 million, were not touched by the governor’s veto pen.

But cities and towns use Unrestricted General Government Aid to fund their schools, so when the governor announced his 19 percent local aid veto, he was slashing dollars targeted for education at the local level, even though funding schools is the administration’s highest priority.

During his press conference on the budget, Gov. Deval Patrick was asked why he cut $177 million from local aid. His response was, “There are a lot of other programs where we know exactly where the money is going; local aid is a kind of unaccounted for – is that the right way to say it? – the least specific of the line items, and we’ve taken it down by just about 20 percent, and as I say, I think this will get resolved, I hope it gets resolved in the next few weeks.”

We strongly disagree. Unrestricted local aid is clearly accounted for by thousands of local citizens who serve as mayors, councillors, selectmen, managers, finance committee members or participants in town meetings. Local leaders allocate these funds in a highly transparent manner and use their local aid to hire teachers, police officers, firefighters, EMTs, librarians, public works employees, aides for the elderly and youth, veteran’s agents, building inspectors, and conservation agents, just to name a few! Local aid is budgeted in a highly democratic way to provide the essential services that are necessary for everyday life and a thriving economy.

Vetoing a huge amount from one line item may have been an efficient way to technically “balance” the budget as part of the governor’s tangle with the Legislature over the transportation tax package, but no one at the State House or in city and town halls sees this as a valid public policy position.

The fiscal 2014 state budget that was sent to the governor’s desk relies on approximately $420 million in new tax revenues from the still-in-play transportation finance bill, with $240 million earmarked for transportation-related items, including regional transit systems, the MBTA, and MassDOT’s operating budget. The remaining $180 million was used to fund all other aspects of the state’s $34 billion operating budget.

If the transportation tax package had never been proposed in the first place, no one – that’s right, no one – would have proposed or defended rolling back unrestricted local aid to 1986 levels to balance the state budget, making up for all of this lost revenue by zeroing in on local aid. Instead, state leaders would have marbled the impact across billions and billions of dollars worth of line items, or they would have increased their use of the state’s $1.3 billion stabilization fund.

The choice never has been between new taxes for the state budget or funding local aid. It has been about whether to secure new taxes to pay for our state’s transportation system.

The governor’s recent objection to the $800 million bill enacted by the House and Senate concerns the possible loss of $135 million in toll revenues in 2017, a stance that was not reflected in the transportation finance legislation that he filed in March. Legislative leaders have responded by saying this concern is premature, noting that under the law the tolls will likely remain in place anyway.

The Legislature passed the tax bill on June 26 and enacted the budget on July 1. The governor returned the tax bill to the Legislature on July 2, temporarily decoupling the $420 million in new tax revenues available to underwrite a portion of the budget in fiscal 2014.

Thus, the governor faced a dilemma when the deadline for signing the budget arrived. Would he sign the budget with the reasonable expectation that the transportation revenues would be secured for the year ahead? Or would he impose $420 million in vetoes and claim a balanced budget, safe in the knowledge that his tax package and local aid vetoes would be overridden shortly thereafter, undoing the damage?

He chose the latter approach and legislators immediately disagreed with the local aid veto. House Speaker Robert DeLeo put it clearly when he said that lawmakers “will protect the cities and towns of Massachusetts” and restore the funds by overriding the veto.

Over the final two weeks in July, House and Senate leaders expect to complete the back-and-forth with the governor on the transportation finance package and then immediately vote to bring unrestricted municipal aid back up to $920 million.

The bottom line is that this massive local aid veto would impose great fiscal pain on cities, towns and local taxpayers, and, as a matter of public policy, is unwarranted and unjustified. Although lawmakers have pledged to restore our local aid and make communities whole, this veto should not have been issued in the first place.