Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
We are writing to express our deep appreciation for the many provisions in the House Ways and Means Committee budget proposal (H. 3900) that benefit and support cities and towns across the Commonwealth, and we welcome the opportunity to offer comments and insights on proposed amendments that will be before you next week, during your deliberations on the fiscal 2024 state budget.
We thank Speaker Mariano, Chair Michlewitz, and the members of the House Ways and Means Committee for their commitment to cities and towns by increasing local aid in several key education accounts, including funding year three of six of the landmark Student Opportunity Act, and doubling Chapter 70 minimum aid to $60 per pupil.
In addition, the House Ways and Means Committee proposal fully funds the state’s statutory requirement for Charter School Mitigation payments, as well as regional school transportation, and transportation for homeless students under McKinney-Vento. Rural School Aid receives a 45% increase over the current fiscal year, and Payments-in-Lieu-of-Taxes (PILOT) to cities and towns are funded to hold communities harmless from recent property valuation changes. In addition, the proposal includes permanent support for universal school meals, which would have a tremendous impact for student nutrition and success across the Commonwealth. These are all extremely important investments, and demonstrate leadership and a powerful commitment to municipalities and school districts.
PLEASE SUPPORT THE FOLLOWING KEY MUNICIPAL AND EDUCATION AMENDMENTS
In this letter, we are respectfully asking you to support appropriation amendments to build on the progress included in the House Ways and Means proposal, as outlined below, as well as some non-appropriation provisions key to maintaining local government operations:
Please Increase Unrestricted General Government Aid
As you know, cities and towns are struggling with high inflation, supply chain disruptions, and local revenues that are capped by Proposition 2½. Communities are facing extremely tight budgets and very difficult and painful choices. Because of this, our main focus for fiscal 2024 is increasing Unrestricted General Government Aid (1233-2350), which represents the critical revenue sharing partnership between state and local government. We appreciate that the House Ways and Means proposal, in keeping with past practice, links the increase in UGGA to the increase in the consensus revenue forecast. This is a practice that worked well for many years, but starting in fiscal 2020, the practice of using estimated revenues, rather than actual revenues, has started to leave cities and towns behind in terms of revenue sharing growth.
As a result, we are asking for a much-needed update to the revenue-sharing model, one that calculates growth based on actual tax collections, using a three-year average of revenue collections, rather than projecting growth entirely on estimated revenues. Using actual collections would more accurately reflect the state’s financial picture and would also provide the critical financial partnership needed for municipalities to continue to deliver essential services.
While we all hope that the state’s recent level of tax growth will continue, we understand that you need to be cautious about the future. Our concern for local governments is that if the base of UGGA is not adjusted for fiscal 2024, and subsequent tax collections for future years are more modest, cities and towns will continue to lag behind. While the state has experienced record revenue growth, local property tax revenues are capped, and other municipal funds are just starting to recover to pre-pandemic levels, putting major pressure on local budgets for fiscal 2024. One-time federal funds, such as those through the American Rescue Plan Act and Elementary and Secondary School Emergency Relief, are being thoughtfully spent on one-time investments following federal rules, and should not be used to plug operating budget holes, as this would create an inevitable and damaging fiscal cliff next year, weaken municipal bond ratings, drive up borrowing costs, and bring a fiscal reckoning in fiscal 2025.
We offer our enthusiastic support for Amendment #1056 (Unrestricted Local Aid) – Filed by Rep. Sabadosa, this amendment would address key municipal needs by raising the UGGA increase from a below-inflation level of 1.6% in the current proposal to 6.13%, which would reflect the three-year average of growth above actual state tax collections, as detailed above. The financial impact would be a further increase of $55.8 million to the UGGA account (1233-2350). This is similar to the Legislature’s very welcome action on UGGA last year, when members of the House and Senate recognized that a 2.7% increase was inadequate, and you and your colleagues doubled the UGGA increase to 5.4%, providing much-needed relief to communities across the state.
Amendment #1314 (Chapter 70 Minimum Aid) – Please support building on the very welcome increase for Chapter 70 Minimum Aid of $60 per student in H. 3900 to $100 per student, as filed by Rep. Muradian. This amendment would positively impact the 119 school districts that remain “minimum aid” districts. The Governor’s budget provided just $30 per student in new aid, an average increase of 0.7% to these districts. Amendment #1314 would provide an average increase of 2.3%, helping these communities preserve existing school services.
Amendment #1359 (Special Education) – Please support the creation of a special reserve account for extraordinary special education cost relief. Amendment #1359, filed by Rep. Owens, would help offset the significant cost increases anticipated for fiscal 2024. This would directly address the decision by the Operational Services Division (OSD) in October 2022 that allows private special education schools to increase their tuition rates by 14% in fiscal 2024, impacting every district that places students out of district to meet their students’ educational needs.
Amendment #650 (Local and Regional Public Health Excellence Grants) – Please support a further $15 million increase to the Local and Regional Public Health Excellence Grants account (4512-2022), filed by Rep. Kane.
Amendments #142 & #977 (Smart Growth Opportunities & Mixed Use Units) – Please support Amendments #142 and #977, filed by Rep. Vitolo and Rep. Kearney, respectively. Both amendments would make important changes to Section 3A of the Zoning Act, expanding the opportunities for Smart Growth and mixed-use zoning as part of the recent MBTA Communities zoning law. These changes would provide important flexibility for many of the 177 MBTA Communities to expedite housing production while accommodating local interests in maintaining affordability, commercial corridors, and other considerations.
Amendment #1210 (Vocational School Transportation) – Please support Amendment #1290, filed by Rep. Ferguson, to fund the out-of-district vocational transportation account (7035-0007) at $5.1 million, matching the amount in House 1. This amount reflects an 89% reimbursement rate of fiscal 2024 estimated claims from the Department of Elementary and Secondary Education.
Amendment #674 (PILOT Funding) – Please support Amendment #674, filed by Rep. D’Emilia, to increase the account for Payments-in-Lieu-of-Taxes for state-owned land by an additional $3.5 million, building on the great progress in H. 3900.
Amendment #1104 (Ambulance Ground Transportation) – Please support Amendment #1104, filed by Rep. Mahoney, which would increase the emergency Medicaid rate to be on par with Medicare. Emergency ambulance providers in Massachusetts are a mix of fire-based services and private EMS providers. Cities and towns rely on EMS responses to be rapid, as delays could be life-threatening. This change would significantly assist efforts to recruit and retain staff in order to avoid elongated response times. The MMA is proud to partner with the Fire Chiefs of Massachusetts (FCAM), Professional Firefighters of Massachusetts (PFFM), and the Massachusetts Ambulance Association (MAA) in support of this amendment.
Amendment #502 (Community Preservation Act CPA) – Please support Amendment #502, filed by Rep. Schmid, which would direct the Comptroller to transfer $30 million to the Massachusetts Community Preservation Trust Fund, prior to sending the net surplus for fiscal 2023 to the Commonwealth’s stabilization fund.
Amendment #845 (Shannon Grant) – Please support Amendment #845, filed by Rep. Madaro, to increase funding for the Shannon Grant program (8100-0111) by $1 million. This anti-gang grant program helps cities and towns respond to and suppress gang-related activities.
STRENGTHENING MUNICIPAL FINANCES IN FISCAL YEAR 2024 AND BEYOND
Preserving the Lottery as the Foundation of Unrestricted Local Aid
As we discuss the need for a strong state-local fiscal partnership, the conversation also involves the largest revenue source that the state uses to fund local aid: the Massachusetts State Lottery. More than 50 years ago, the Lottery was established for the sole purpose of supporting cities and towns. According to the State Lottery Commission, in the most recently completed fiscal year (fiscal 2022) the Lottery generated $1.105 billion in net proceeds to the state, supporting approximately 94.6% of the Commonwealth’s annual appropriation for Unrestricted General Government Aid.
An outside section of the House Ways and Means proposal would authorize an online Lottery (iLottery). We greatly appreciate the interest in expanding Lottery operations to compete in a rapidly changing market. But due to the overwhelming needs of local government, the MMA strongly urges against the use of iLottery proceeds for programs outside of local aid, even for incredibly laudable causes.
The MMA has been, and continues to be, actively engaged in conversations with the State Treasurer’s office about the expansion of the Lottery to an online platform. Authorizing iLottery products makes sense, given the expanded gaming marketplace and competition from online sports betting. However, we ask that all Lottery proceeds continue to be used to fund local aid. This would preserve the Lottery’s historical connection to cities and towns and maintain the Lottery as the Commonwealth’s most important resource in funding Unrestricted General Government Aid.
The MMA is concerned that an expansion to online platforms would reduce revenue raised by the Lottery’s traditional in-person products. Few states that have started an iLottery are comparable to the size and scope of the Massachusetts State Lottery, and data regarding the cannibalization of in-person games by online offerings is too new to offer a reliable guide. In a mature market such as Massachusetts, it is highly probable that a portion of iLottery revenues would come at the expense of existing games.
For this reason, as this measure moves through the Legislative process, the MMA respectfully urges that online Lottery proceeds be exclusively used for the Lottery’s intended focus, which is to support Unrestricted General Government Aid. This is consistent with the Lottery’s mission to serve cities and towns, and necessary to protect a vital revenue stream that accounts for the overwhelming amount of discretionary local aid that cities, towns, and taxpayers rely on to fund essential municipal and school services and balance local budgets.
A Partnership for Improved Public Health
Even before the Commonwealth experienced a global pandemic, state and local governments were working to raise uniform standards of public health across the state. We deeply appreciate and applaud Rep. Garlick and Rep. Kane for leading this important work in the House, and for advocating for a program to address disparities in local health department capacity. Amendment #1406 is an appreciated positive step toward advancing language that is more accommodating to cities and towns, signaling the Commonwealth’s intention to fully fund the program.
Due to the precarious fiscal situation that many cities and towns are facing in their fiscal 2024 budgets, municipal officials are particularly sensitive to new mandated costs. The $140 million per-year preliminary cost estimate was developed by the Legislature’s Special Commission on Local and Regional Public Health in its June 2019 report, and there is no recent comprehensive fiscal analysis of the proposal to fully understand the magnitude of the financial impact this would have on cities and towns. Given all that has changed since the 2019 report, it will be crucial to work with the Department of Public Health to fully identify the necessary funding needs from the state to fully fund this initiative.
We look forward to working with the Legislature to support language that avoids an unfunded mandate for municipalities while promoting this important transformation for local boards of health. In recent years, the Legislature has made great strides addressing unfunded local mandates, and we look forward to continued collaboration on this important issue.
Again, we would like to express our gratitude to Speaker Mariano, Chair Michlewitz, and the members of the House Ways and Means Committee for presenting a fiscal blueprint that makes important and timely investments in cities and towns across the state. Local governments are excited to build on their partnership with state leaders to tackle the critical issues facing the Commonwealth right now — from economic challenges and housing, to climate change mitigation, transportation, and public health. In order to be full partners in advancing these vital priorities, communities need fiscal stability at the local level. The investments made in the House Ways and Means proposal, combined with the priority issues outlined above, will strengthen local governments and give them the capacity to advance these shared goals.
If you have any questions, please do not hesitate to have your office contact me, MMA Senior Executive and Legislative Director Dave Koffman at firstname.lastname@example.org, or MMA Senior Legislative Analyst Jackie Lavender Bird at email@example.com at any time.
Thank you very much for your support, dedication and commitment to the cities and towns of Massachusetts.
Geoffrey C. Beckwith
MMA Executive Director & CEO