MMA letter to governor urging support for local accounts in state budget

His Excellency Deval Patrick
Governor of the Commonwealth
State House, Boston

Dear Governor Patrick:

On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association is writing regarding the fiscal 2013 general appropriations bill (H. 4200) sent to you by the Legislature on June 28.

Municipal officials in every corner of the state greatly appreciate the commitment made to local government in the Legislature’s spending plan during another very challenging year for government finances at all levels. It is clear that investing in communities was recognized as an integral part of a sound strategy for our economic recovery.

Municipal Aid

The Legislature would restore the Cherry Sheet Unrestricted General Government Aid (UGGA) account to the fiscal 2011 level of funding of $899 million. The MMA strongly supports this higher level of support for local government to help pay for municipal services and avoid over-reliance on the property tax. This account is the top state budget priority for cities and towns this year.

Unrestricted municipal aid has been cut deeply since the national recession hit Massachusetts hard in mid-2008, and this essential source of support for municipal services has fallen from $1.314 billion in the original fiscal 2009 general appropriations act to $834 million in last year’s GAA, a decrease of $480 million, or 37 percent. It is particularly important to return to funding the UGGA program with a guaranteed revenue stream with fiscal 2013 funds, which will allow cities and towns to use their municipal aid to fund municipal operations and services, including public safety, public education and public works. As you know, it would be imprudent for communities to use one-time funds for ongoing personnel and operations, which is why the Legislature’s $899 million appropriation is so important, especially since UGGA will be funded with local Lottery funds.

The Legislature’s UGGA appropriation for fiscal 2013 would guarantee that cities and towns receive all of their Lottery revenues – funds that are intended by law and history to go directly to municipalities as a discretionary local revenue source to fund municipal services and reduce the property tax burden. Current estimates of fiscal 2013 Lottery revenues show that the UGGA account will be funded entirely, or almost entirely, by the Lottery, with very little or no state tax contribution. This in itself is a major shift. In fiscal 2008, the non-Lottery contribution to unrestricted municipal aid totaled more than $493 million. Today it is virtually non-existent. Further, the strong growth in Lottery revenues this year, at an expected record level of more than $950 million, certainly supports this higher municipal aid amount at $899 million. If, for some reason, the UGGA account is funded at less than $899 million, that would represent a Lottery diversion, and would be a matter of great concern to cities, towns and local taxpayers. We deeply appreciate your anticipated support for this priority.

In addition to the main municipal aid account, there are several other important general municipal aid and public safety grant programs that are funded in the budget that local officials strongly support, including:

• The $26.3 million appropriation for the Cherry Sheet payment-in-lieu-of-taxes (PILOT) for state-owned land program (1233-2400). This is an important account for those cities and towns that host state facilities that require local government services, particularly public safety services, and we appreciate that this amount was included in your original budget submission;

• The $6.25 million appropriation for the Gang Violence Prevention (Shannon) grant program (8100-0111); and

• The $500,000 appropriation (1233-2401) for smart growth school cost reimbursements due to be paid under Chapter 40S to cities and towns that have adopted smart growth zoning districts under Chapter 40R.

School Aid

Chapter 70 School Aid

The Legislature approved a substantial increase for the Chapter 70 school aid program (7061-0008) to ensure that every municipal and regional school district is able to at least reach the “foundation” level of school spending that forms the basis of the state’s landmark education finance reform law.

We support the $4.17 billion appropriation and the allocation language in Section 3 that would achieve foundation level spending, restart in a limited way the “target aid” equity provision adopted in 2006 but held in abeyance during the fiscal crisis, and also ensure that every district receives an increase of at least $40 per student, a major step to benefit every community and school district in the Commonwealth. These three items (foundation funding, minimum aid, and target aid) are vital elements of a strong investment in every student and district in Massachusetts.

Special Education “Circuit Breaker”

We strongly support the $242 million appropriation for the special education “circuit breaker” account (7061-0012) to fully fund the state’s statutory 75 percent share of certain special education costs over four-times the state average foundation budget per-student level. This an important program that helps all school districts with the increasingly burdensome cost of complex and expensive special education services. Full funding of this account is extremely important, because otherwise communities are forced to divert essential resources away from other school and education priorities to make up for any shortfall in the state’s obligation.

McKinney-Vento Unfunded Mandate

We strongly support the appropriation (7035-0005) to provide $11.3 million to cover the mandate imposed on cities and towns to transport certain students living in temporary housing. Earlier this year, State Auditor Suzanne Bump determined that state acceptance of the federal McKinney-Vento Act related to the education of homeless students was an unfunded state mandate under the state’s Local Mandate Law. This new budget account is necessary because otherwise cities and towns would be forced to use property tax revenues or school aid to finance a new state-mandated cost.

Student Transportation in Regional Schools

We support the appropriation of $45.5 million (7035-0006) that would reimburse regional school districts for a portion of the cost of transporting students. This is an important program for the state’s smaller and less-populated municipalities and school districts where lengthy bus trips cannot be avoided. Regional districts and member cities and towns appreciate the modest $2 million increase in funding over the fiscal 2012 level, recognizing that this is still far below the 100 percent funding level originally intended in state law.

Reimbursements for Losses Related to Charter Schools

We support the $71.5 million appropriation (7061-9010) to reimburse municipalities and school districts for a portion of school aid deductions used to pay tuition to charter schools. We remain concerned that this amount will not be sufficient to fully fund the state’s obligation under this program at a time of charter school expansion, and underscore that the estimated deduction of school aid from public schools to send tuition to charter schools is estimated at $366 million.

Law Changes

Community Preservation Act

City and town officials very much appreciate and strongly support the provisions in the budget bill (sections 69-83, 155 and 218) that would update and expand the very productive Community Preservation Act (CPA) program to give cites and towns more flexibility for raising and using local funds. These sections would modestly expand the allowable use of CPA funds to include renovation and construction of certain recreational facilities not currently eligible for CPA funding. They would also allow cities and towns to adopt the CPA law with a 1 percent or more property tax surcharge and use other municipal revenues to qualify for the maximum state match of 3 percent.

The MMA and municipal leaders support the temporary framework for additional funding based on the transfer of $25 million from any fiscal 2013 year-end state surplus amounts.

Special Education Rate Freeze

We support Section 169, which would provide a limited cap on special education rates set by the state’s Operational Services Division (OSD). This modest restriction on growth in special education costs is very important to local school districts with limited ability to increase spending next year.

Summary

On behalf of local leaders across Massachusetts, we thank you very much for your abiding interest in the fiscal health and stability of local government. The budget before you for consideration reflects a true spirit of partnership and dedication to cities and towns and local taxpayers. We are confident that the final budget will continue that partnership and build a strong foundation for progress.

If you or your staff have any questions or require any additional information, please do not hesitate to have your staff contact me or MMA Legislative Director John Robertson at (617) 426-7272 at any time.

Again, thank you for your service, leadership and support for local government.

Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA

CC: The Honorable Jay Gonzalez, Secretary for Administration and Finance
Ms. Pam Kocher, Director of Local Policy, A&F