Gov. signs budget, issues vetoes

Gov. Deval Patrick signed the $27.4 billion state budget for fiscal 2010 yesterday afternoon, two days before the beginning of the fiscal year, while vetoing $147 million in spending that had been approved by the Legislature on June 19.

Due to the still-floundering economy, the budget makes deep cuts in spending while adding taxes for state and local government in order to avoid even harsher cuts in government programs. In a sign of the times, funding for the community policing grant program, which was originally funded at $21 million in fiscal 2009, has been eliminated.

The budget relies heavily on revenues from the state’s “rainy day” fund and the American Recovery and Reinvestment Act (ARRA), setting the stage for another harsh budget season next year.

While the main municipal and school aid accounts escaped veto, several smaller accounts affecting local government were reduced by the governor, including a $2.25 million cut to Cherry Sheet regional library aid, $1 million from kindergarten expansion grants, and $1 million from the special education “circuit breaker” program. The governor vetoed the entire $3.5 million Chapter 70 hardship reserve account.

The House and Senate were expected to take up some of the vetoes during sessions in July.

The new budget law (Chapter 27 of the Acts of 2009) includes the deep cuts in municipal aid that have been part of the state’s budget plan since the governor filed his recommendation in January. Final funding for the Unrestricted General Government Account – $936 million – is roughly at the level originally recommended by the governor. It reflects a cut of $377 million (29 percent) from the original fiscal 2009 levels of funding for Additional Assistance and Lottery distributions (which have been consolidated in this year’s budget).

The state revenue appropriation for Chapter 70 school aid at $3.9 billion reflects a 2 percent across-the-board cut totaling $79 million. The governor has announced that he will distribute $167 million in ARRA funds to those school districts that need additional revenue to reach the minimum “foundation” level of spending. Because of the changes being made in school aid and required local contribution amounts throughout the long state budget process, many regional school districts are now expected to recalculate assessments for member cities and towns, which could require a new round of budget reviews.

The new budget law includes an increase in the state sales tax rate from 5 percent to 6.25 percent and an expansion of the sales tax base to include alcoholic beverages. The law also expands local government taxing authority, which had long been sought by local officials and the MMA, to include a 0.75 percent local-option sales tax on meals and a local-option 2 percentage point increase in the room occupancy excise rate.

The budget also reforms property tax law to clarify that telecommunications poles and wires over public ways are not exempt from local taxation.

The Division of Local Services and the Department of Elementary and Secondary Education have prepared updated Cherry Sheets and guidance on budget provisions, which are available on their Web sites.

• Link to DLS Web site for Cherry Sheet amounts based on fiscal 2010 state budget
• Link to DESE Web site for guidance on budget provisions