Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
From The Beacon, October 2012
For a while, it was comforting to believe that Massachusetts would continue to outperform the rest of the nation and enjoy a faster and fuller recovery from the Great Recession, with stronger-than-average job gains, revenue increases and consumer investment. But our state does not exist in isolation; national and international factors have a dramatic impact on our regional economy, and we now see those factors at work, slowing our economic gains and stalling progress.
Our unemployment rate has inched back up to 6.3 percent, better than the national rate of 8.1 percent, but worse than at any time in the past year. Further, state revenues during the first two months of the fiscal year have come in $60 million below expectations, reflecting weaker economic performance than hoped, and raising fears of a stall that could have the Bay State revisit the budget woes of recent years.
Although communities in Massachusetts have recovered more quickly than the national average, this is not sustainable if the national economy continues to sag. Communities in the Bay State will only thrive if all cities and towns across the country are doing well, which is why we must vigorously push for federal action to support a strong national economic recovery.
Last month, the National League of Cities released the results of its annual survey of city economic conditions. This highly respected report is a valuable barometer in assessing the trends that affect local government finances and the performance of local economies. The NLC’s analysis shows that our nation’s communities are still suffering and are continuing to cut jobs and curtail vital infrastructure investments. More than 40 percent of local fiscal officials report that they are less able to meet city needs than in the previous year. And for the third year in a row, local property tax revenues are down.
The NLC’s analysis shows that communities are responding with balanced measures that rely on both revenues and budget cuts. In other words, community officials are making the tough calls and taking action to implement efficiencies and ensure adequate revenues to fund key programs that serve their citizens.
The study confirms that this leadership and action by local officials has made a difference, because overall the report reflects a greater level of stability than in recent years, indicating that a recovery could be around the corner, unless that recovery is blocked by other events.
Even the most passive observer is aware that European fiscal calamities have dampened investment returns on Wall Street and have contributed to growing gloom among economists. Perhaps the U.S. can play a leadership role in straightening out that mess, but probably only indirectly.
The much greater threat is our federal government’s slide toward a devastating fiscal cliff, and the threat of a double-dip recession if damaging cuts in domestic programs are allowed to take place beginning in January, just a few months from now. The 2011 legislation that raised the U.S. debt ceiling put in place a process of “sequestration,” or deep, automatic, across-the-board cuts in federal domestic and defense spending, unless Congress and the White House can agree on more palatable and balanced deficit-reduction measures.
But federal gridlock has prevented any agreements, and federal lawmakers have merely kicked the can down the road by adopting a temporary federal budget that will keep the government operating until March 2013. In the meantime, the threat of sequestration looms large – and with it the prospect of economy-killing cuts that will increase unemployment and slash programs and spending that stimulate our economy.
The continuing stalemate on Capitol Hill is perplexing. There is widespread consensus among economic experts that a federal deficit-reduction strategy that relies only on cuts and ignores the federal government’s need for increased tax revenues will catapult the nation into another recession. But for now, politics is trumping good policy. The only hope may be that a lame-duck Congress will be willing to compromise and act with greater reasonableness to avert a slash-the-budget sequestration process.
In September, the State and Local Government Leadership Center at George Mason University outlined the magnitude of cuts that would come if federal inaction triggers the automatic budget reductions, based on a report by the federal Office of Management and Budget. The impacts would include the following: $1 billion would be cut from Title 1 education programs and nearly $1 billion from special education (IDEA) funding; eight key grant programs would be reduced, including Community Development Block Grants; the WIC Supplemental Nutrition Program would lose $500 million; FEMA’s disaster relief fund would be cut by nearly $600 million; financial aid for college students would lose $140 million; the Clean Water and Safe Drinking Water Revolving Fund infrastructure loan program would lose $200 million; Head Start would be cut by $600 million; $2 billion would be taken from Section 8 rental assistance programs; and Unemployment Insurance administrative support would be reduced by more than $200 million.
This analysis does not even capture the threat to essential federal transportation funding, which would see billions of dollars in cuts, because the recently enacted transportation investment law is built on an expectation of increased federal budget support in the next two years for highway and transit programs. Across-the-board cuts would clearly undo that pledge.
The OMB reported another startling development: the sequestration cuts would also hit the Build America Bonds that were created under the federal economic stimulus law of 2009. Under the BAB program, local and state governments were promised significant federal subsidies to reduce interest payments, providing an important incentive to move forward with important job-creating infrastructure investment initiatives. The program was wildly successful, triggering $181 billion in sales and funneling vital dollars into key projects across the country. The OMB, however, is now claiming that direct payment BAB subsidies would be subject to sequestration, which would have the federal government renege on as much as $255 million in promised subsidies.
The BAB example is instructive because it shows that the across-the-board cuts from sequestration would be more far-reaching and destructive than most people imagine. Indeed, the negative impact would hit virtually every aspect of municipal and state finances.
Our nation’s economy is caught somewhere between stagnation and slow crawl. The only way to guarantee a stronger recovery is to shore up the essential programs that cities and towns use to grow local economies, stimulate investment, create jobs, and secure opportunities for families and businesses. Federal budget cuts, either through sequestration or other means, would do the opposite.
Every day, city and town leaders across Massachusetts and the nation size up difficult problems, make decisions, roll up their sleeves, take action, and move forward. They know that deferring difficult tasks usually makes the problem worse. Gridlock usually spells disaster.
If selectmen, mayors, councilors, managers, and finance officials in town and city halls can step up and solve local budget problems, even in the worst conditions since the 1930s, it’s not too much to ask Congress to do the same.