MMA testifies as Legislature begins its budget process

The House and Senate budget committees have begun holding eight joint public hearings across the state to hear comments on the governor’s $28 billion state budget recommendation for fiscal 2011.

The governor’s budget bill, filed on Jan. 27, would level-fund the main municipal and school aid accounts, at a total of $5 billion. Previewing his budget at the MMA Annual Meeting in January, the governor announced that his plan would make sure that no municipality or school district receives less Chapter 70 school aid or unrestricted general government aid (formerly Additional Assistance and Lottery distributions) than it did in fiscal 2010.

At a Feb. 22 budget hearing in Amherst focused on municipal and school accounts, the MMA asked that the Legislature approve a Local Aid Resolution in March using the governor’s local aid recommendations. [The Legislature last approved a Local Aid Resolution in March 2008 for fiscal 2009.]

• View the MMA’s written testimony on the state budget bill

Municipal officials testified that cities and towns need at least level-funded local aid next year and expanded cost-cutting powers in order to have any chance of avoiding another year of layoffs and harsh cuts in local government services.

Local officials told legislators that early Cherry Sheets would help municipalities and school districts make tough revenue and spending decisions in what is shaping up to be another difficult fiscal year.

MMA panelists noted that Lottery revenues used to fund the main municipal aid account are projected to increase by $20 million next year and that the Cherry Sheet “unrestricted general government aid” account has been cut by $377 million (about 30 percent) since the beginning of fiscal 2009.

The MMA panel told lawmakers that they were pragmatic at the local level and have used the limited tools available to them to keep local budgets in balance. They said they appreciated the difficult vote taken by legislators last year to give cities and towns the new meals tax and an expanded room occupancy excise, and that these options have been widely used and will be used more to balance fiscal 2011 budgets.

In addition to budget items, municipal officials asked legislators to enact legislation filed by the governor to allow cities and towns limited authority to extend pension funding schedules to avoid sharp spikes in assessments next year, and to clarify that cities and towns are not responsible for the state’s share of the police incentive pay program, generally known as the Quinn Bill.

Panelists also asked for the enactment of an MMA bill to give cities and towns authority to make health insurance plan design decisions outside of collective bargaining, as the state does for its employees. The reform would help cities and towns manage runaway health insurance costs at the local level.

The panel of city and town officials included MMA Vice President and Natick Selectman Josh Ostroff, Northampton Mayor Clare Higgins, Easton Selectman Colleen Corona, Deerfield Town Administrator Bernie Kubiak, and MMA Executive Director Geoff Beckwith.

The Feb. 22 hearing was chaired by Sen. Stephen Brewer, vice chair of the Senate Committee on Ways and Means, and Rep. Stephen Kulik, assistant vice chair of the House Committee on Ways and Means.

At the first budget hearing, in Boston on Feb. 16, Treasurer Timothy Cahill gave state budget writers some good news, saying that Lottery profits are expected to grow to $883 million next year based on sales of almost $4.5 billion. The amount available to distribute to cities and towns on the Cherry Sheet would increase by $36 million above the original fiscal 2010 estimate.

A new Lottery estimate for fiscal 2011 announced by the treasurer is $10 million higher than the amount the governor used as the basis for level-funding the unrestricted general government account in his budget.

Part of the growth in Lottery revenue is due to the introduction of the successful multi-state Powerball game, which is expected to increase Lottery proceeds by $25 million next year.

With Lottery revenue expected to increase both this year and in fiscal 2011, the amount of state tax revenues needed to pay for general municipal aid would be $400 million less than it was at the beginning of fiscal 2009. State tax revenues covered 42 percent of the combined additional assistance and Lottery distributions before the mid-year fiscal 2009 cuts. Level-funding of the combined accounts (now the single unrestricted general government aid account) at $936 million in fiscal 2011 would lower the level of state tax contributions to municipal aid to a historic low of 15 percent of the total.

The budget hearings are scheduled to wrap up on March 5.

The House Ways and Means Committee budget recommendation for fiscal 2011 is expected to be released in mid-April and approved by early May. The Senate version of the budget is expected to be adopted by late May.