The Boston Herald
Wednesday, January 15, 2003
Pols give Mitt power to cut
by Elisabeth J. Beardsley
House lawmakers approved sweeping new budget-cutting powers
for Gov. Mitt Romney last night, but with a short leash that slaps strict limits on where and
how long Romney can wield an unfettered budget ax.
After a two-hour debate, Speaker Thomas M. Finneran said
that as loath as lawmakers were to let Romney slash local aid to cities and towns, they had no
choice because the state is "tapped out."
"For better or for worse, they're going to begin to share
some of the reductions in finance that the state has been struggling with since September of 2001,"
Finneran said.
The bill's sudden passage on a 124-28 vote capped two days
of furious behind-the-scenes negotiations and public posturing in which House lawmakers
demanded more details from Romney.
Romney said last week he would cut $200 million from the
$5.5 billion local aid account, if a projected $600 million deficit in the current year materializes.
While the bill still requires Senate approval, Romney
spokeswoman Shawn Feddeman applauded House members for taking a step that had set most of
the state's mayors howling in protest.
"The House should be commended for recognizing the serious
fiscal situation the state finds itself in," Feddeman said, promising Romney would make any
cuts "fairly and equitably."
Local officials were resigned last night - insisting it's
even more important now for Romney to listen to municipal leaders' suggestions on how the state can help
them survive the cuts.
"All we're saying is don't kill us all at once," said
Medford Mayor Michael J. McGlynn, president of the Massachusetts Municipal Association.
Even House members who supported the bill emerged from the
debate with an angry edge, saying they want to put Romney's feet to the fire over his
campaign pledge to balance the budget without major cuts.
"I didn't make those promises, so let him do it," said Rep.
Carol A. Donovan (D-Woburn). Finneran shipped a leadership version of the bill to the House
floor late yesterday, after House lawmakers hashed through six hours of
internal debate over two days of private meetings.
While Romney wanted unlimited cutting powers in perpetuity,
the leadership bill slapped an 18-month sunset provision onto the expanded powers.
Even that foreshortened timeline was too much for rank-and-file lawmakers,
who voted 138-13 to scale the sunset back and force Romney's expanded cutting powers to lapse on
June 30 this year.
Rep. Thomas J. O'Brien, who filed the amendment shortening
the sunset, said 18 months was "a bit lengthy" to deal with a deficit in the current fiscal year.
"It makes no sense to extend the powers beyond this fiscal year," O'Brien
(D-Kingston) said.
The bill allows Romney to cut any local aid account, but it
also requires him to state "the reason for and effect of" any cut he makes - a provision Romney had
deleted.
While granting Romney broad authority to cut programs like
education aid, the bill bars the governor from touching the Legislature, constitutional officers and
the courts.
Finneran said lawmakers were aiming to protect the "constitutional separation
of powers."
House members also moved to hold Romney to his promise that
he would only look to local aid to solve part of the deficit - adopting an amendment limiting
the local aid cut to one-third of the shortfall.
That plan could backfire if House leaders' predictions of a
$900 million year-end deficit are realized.
House lawmakers also adopted an amendment requiring any
local aid cuts to be inflicted on equal proportions on all cities and towns. "Clearly there's no perfect
solution here," said Rep. David Linsky (D-Natick), sponsor of both amendments.
"This is an opportunity to try to do it in the most fair and equitable way possible."
And in a move that could widen Romney's legal exposure, the
House deleted his proposed six-month deadline for lawsuits over cuts.
Finneran's lieutenants methodically shot down attempts to
weaken the bill, including proposals to set up a $200 million loan fund to offset the local aid cut,
and to force Romney to tap the state's last $300 million in "rainy day" reserve
funds before making cuts.
The Senate is expected to approve the bill Thursday, with
some variations - including a lengthier sunset provision.
Elizabeth W. Crowley contributed to this report.
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The Commonwealth of
Massachusetts
Executive Department
Tuesday, January 14, 2003
Fact Sheet on Local Aid
Local aid has grown an average of 7.5 percent annually over the
last decade:
For the last 10 years, FY93-03, cherry sheet aid more than
doubled - from $2.5 billion to $5.1 billion. This is an average annual growth rate of 7.5 percent.
Cities and towns shared in the last fiscal crisis:
While the Massachusetts Municipal Association is insisting
on no local aid cuts during this grave fiscal crisis, during the last one there were three years of cuts
in a row, reaching a 10.8 percent cut in FY92, on top of a 4.7 percent cut in
FY91 and a 7.7 percent cut in FY90.
Growth in local revenues has been stable, while state revenues
have fluctuated:
State revenues are extremely volatile. The income tax,
especially capital gains, as well as corporate and business taxes, have collapsed as a result of the
recession. Property taxes have continued to grow. In FY02, property taxes
grew 6.3 percent, due primarily to new growth, but state revenues declined
14.6 percent.
State government has sharply reduced its payroll, but not local
government:
According to the monthly employment survey, Massachusetts
state government has shed 5,000 jobs from January, 2001 to November, 2002.
During that same period, local government employment figures have increased
5,200.
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The Boston Globe
Wednesday, January 15, 2004
Now pinched,
localities rode high tide of state aid for years
By Stephanie Ebbert
Globe Staff
Though city mayors and town managers are grappling with
proposed budget cuts that they deem devastating, their payout from the state has escalated
dramatically over the past decade, helping many municipalities to amass
healthy reserves.
Until this year's reduction, the state's aid to localities
was on a long trajectory skyward, more than doubling from $2.3 billion in 1992 to $5.6 billion last year.
Cities and towns, forced to comply with demands of the state's education
reform agenda, came to rely on the state funding, which was boosted in
accordance with the 1993 education reform measure. The state now contributes an average of 28 percent of municipal budgets,
up from 21.5 percent in 1992.
As state money flowed into schools - particularly poorer,
urban districts - some cities were basking in the economic boom, creating healthy reserves and
leftover "free cash" funds that blossomed during the 1990s. According to the
state Division of Local Services data, the state's 351 municipalities started fiscal
year 2002 last July with a total of $413 million in reserves - funds set aside for
emergencies or equipment purchases and building repairs. That's more than
four times what they had a decade ago. Most local governments also had
"free cash," money left unspent, at the end of fiscal 2002. Communities had a total of
$559.4 million in free cash at the close of the fiscal year, nearly six times the
sum they had in 1992, which followed a recession and three consecutive years
of local aid cuts.
To some fiscal analysts, the numbers indicate that the time
has come for municipalities to take a bite out of their own budgets and reserves - though
most communities still may not be able to weather cuts as large as the 10
percent reduction they expect from Governor Mitt Romney.
"They should turn to their reserves - this is the moment -
but just as it hasn't been adequate at the state level, it's going to be, in most instances, inadequate
at the city or town level as well," said Michael J. Widmer, president of the
Massachusetts Taxpayers Foundation, a budget watchdog group.
"Some communities who have been fortunate in terms of the
amount of state aid, economic growth, and their own management may be able to ride this out
with relatively minor damage," he added. "But I think that will be only a small
fraction of the 351 cities and towns."
Haverhill, for example, has no reserves and reports a
deficit of free cash, according to the state Department of Revenue. Other cities have so little
surplus on hand that its use would be spread thin in a municipal budget;
Revere posted more than $600,000 in free cash last year, but no reserves.
Others, like Cambridge, are flush with cash. The city does not tax to its
maximum limit and could take in $30.4 million more if it decided to raise
property taxes. Meanwhile, it has $28.7 million available to spend in free cash,
and had additional reserves of nearly $9 million last year, Department of
Revenue data show.
But Cambridge Mayor Michael A. Sullivan noted that the city
does not rely heavily on state aid, which represents just 12 percent of the city's budget,
according to Department of Revenue statistics.
"For communities that have taken the effort to look at
management, and to purposefully watch it, I don't think we should be harmed for our ability and
desire to do that," Sullivan said. In a meeting with Lieutenant Governor Kerry
Healey yesterday, he argued that cities with surpluses should not have to
shoulder a disproportionate share of the burden.
Some cities were able to use their flourishing real estate
markets to shore up their tax bases in recent years and were better able to handle the downturn
than the state, whose budget relies on taxing residents' and businesses' income
rather than property. While state revenues dipped 14.6 percent last year,
property taxes grew 6.3 percent, according to Romney's office.
New development does not count under the state's 2.5 percent
cap on tax growth, so Boston was able to tack on the value of new construction, and
property tax revenue has grown as much 6.5 percent in recent years. This
year, new development generated $16 million more than officials had even
anticipated and absorbed the city's $14 million budgeted reduction in local
aid, said Samuel R. Tyler, president of the Boston Municipal Research Bureau, a
business-funded city watchdog group.
In the meantime, Boston was a big beneficiary of the uptick
in state aid, and its reliance on the aid increased over time. In 1992, 21 percent of Boston's revenue
came from the state; last year, more than 31 percent did. While state aid was
focused on education, helping to increase teachers' salaries, reduce class sizes,
and recruit teachers to comply with the Education Reform Act, Boston also
addressed quality of life issues. With a diminished crime rate and a blossoming
economy, the city has benefited by mayoral initiatives in recent years
to refurbish playgrounds, plant trees, and plan events for the elderly.
"It was money that was used not only in terms of trying to
improve education ... but also just to make the city as a whole a more attractive place to live and
work," Tyler said.
Mayor Thomas M. Menino has argued against local aid cuts -
his State of the City speech last night urged the governor to allow more city taxes - but Boston
officials have refused to detail their current reserves. Last year, the city's free
cash was estimated at $182 million, and Menino had considered using $12
million to offset budget reductions. Boston would lose some $27 million in local
aid if Romney cuts 10 percent.
Tyler said he believes Boston should now be in a position to
tap as much as $30 million, though he cautioned that the city should keep a cushion because the
coming years are expected to be lean. Neither budget director Lisa Signori nor
Menino press secretary Carole Brennan returned phone calls for comment.
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The Boston Globe
Wednesday, January 15, 2003
Getting beyond Chicken Little on local aid cuts
By Scot Lehigh
Find the flashlight. Grab the first-aid kit. Run for the
basement.
Disaster looms for our cities and towns. Schools will be
devastated. Ambulances won't answer your call. Idled plows will leave the streets impassable.
If I sound a little overwrought, that's because, after
spending Friday morning at the Massachusetts Municipal Association's annual meeting, I've got a bad
case of the vapors.
Governor Mitt Romney went to the association's meeting
hoping for a little cooperation with the deficit he faces in the current budget. As it now stands,
Romney has emergency powers to slash some state spending but not local aid.
Given that local aid amounts to about a quarter of the state budget, holding it
harmless means much deeper cuts in human services. So Romney told the mayors and municipal officials that he would
be asking the Legislature to let him cut local aid as well. Worst case, there would be a 5 percent reduction in
the amount cities and towns receive this year.
The new governor was essentially asking the local officials
to share the pain. He might as well have asked Old Nick for a pitcher of ice water, for Romney had
barely departed when the mayors began sketching out the calamities that
would ensue if he got his way.
Their solution? Romney should raise taxes (or borrow) to
maintain local aid. Now, as most any competent budgeteer will tell you, there is slack in almost
every budget. "To say that none of the $5.5 billion in local aid can be cut is
crazy," says one former Democratic municipal official. "The duplication
of services that exists between state and local government is enormous."
But what you got from the assembled mayors were divinations
of disaster dire enough to make a doomsday prophet blush - punctuated by comments that
were positively self-parodic. Cut to North Adams's John Barrett, who demanded that Romney raise
taxes - and then noted that if the governor pared local aid 5 percent, the reduction to North Adams would be "almost half of
the reserves that we have left available." Reserves halved? Case closed: This is a
crisis of unprecedented proportion!
After listening to the mayors, I tried to get a simple
answer from the Municipal Association's executive director, Geoffrey Beckwith: What percentage
reduction could municipalities absorb and still maintain a decent level of
services? And tried again. And again and again and again.
"Our preference would be to talk directly to the governor
about that," was the best I could get. In other words, the MMA wants to posture in public before it
talks turkey in private. So let's move beyond the Chicken Little squawking to
some facts.
In the last fiscal crisis, a yawning budget hole also meant
that local aid had to be reduced substantially. But when Governor Weld eased the way for
municipalities to hold Prop. 2½ overrides to recoup in a temporary property
tax increase what they had lost in local aid, the plan went nowhere. Faced
with pushing a tax hike themselves rather than having someone else raise levies for
them, all but half a handful of mayors opted to forgo new taxes and suddenly
mustered the will to trim their budgets instead.
Second, since a low point in fiscal 1992, total local aid
has risen from $2.3 billion to $5.5 billion, or 140 percent. (Noneducation local aid is up from a 1992 low of
$919 million to $1.41 billion - an increase of 54 percent.) Even under
Romney's worst-case scenario, cities and towns would still receive $170 million more this
year than they did in fiscal year 2000, a budget that hailed from the sunny
uplands of fiscal prosperity.
Finally, municipalities are in better fiscal shape than the
state. Their tax revenues grew 6.3 percent in the last fiscal year, while the state's plummeted
14.6 percent. Localities added 2,800 employees from November 2001 to November 2002,
while the state cut 4,900 jobs. And the 150 municipalities that have thus far reported the figures had a total of $444 million
in free cash and stabilization funds as of July 1, or 7.5 percent of their fiscal year '02
budgets.
So, though mayoral rhetoric brims with apocalyptic predictions, Romney's
proposed local aid rescission shouldn't be disastrous. And if city halls around
the state honestly can't deal with a 5 percent reduction without major
disruption? What that really proves is that the figure in charge is merely
a good time mayor and not a manager for all seasons.
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The MetroWest Daily News
Wednesday, January 15, 2003
Editorial
The ups and downs of local aid
Cutting local aid six months after cities and towns began
spending it is no one's idea of good government practice. Neither is approving a budget based on
groundless optimism about an economic recovery.
The latter sin was committed last year by the Legislature
and former acting Gov. Jane Swift. They enacted a budget on the assumption that the economy
would be rosy in the first half of 2003, a guess that now appears to be off by
$600 million or more.
It is that mishap that Gov. Mitt Romney must now repair, and
cutting this year's local aid is just one of the distasteful strategies. The governor already
has the power to make emergency cuts in areas that account for 63 percent of
the budget, mostly in the area of health and human services. He is asking for
new powers to cut from the parts of the budget previously off-limits, primarily
aid to municipal governments and school districts.
The numbers are daunting: Swift already slashed $200 million
last October, mostly from human services. Romney says he'll have to cut another $600
million, a third of it from local aid. That will still leave $400 million to be cut
from other accounts, many of them serving the state's neediest citizens.
Romney proposes cutting 10 percent of the local aid payments
through the rest of the fiscal year, which translates, he said yesterday, to a $3.6 percent
reduction in the $5.5 billion appropriated for the year.
The response from city and town officials has been predictable. The effects will
be "devastating," they say. Municipal budgets are already strained by increases in the cost
of health care, by contracted pay increases and by a winter that has already drained the snow removal accounts of many
cities and towns. We feel their pain.
But as the pain spreads from the state to the local level,
it's helpful to put Romney's proposed 3.6 percent cut in context. According to the Mass.
Taxpayers Foundation, here are the increases in local aid over the last eight
fiscal years:
1995: 9.4 percent
1996: 9.2 percent
1997: 9.1 percent
1998: 10.5 percent
1999: 10.1 percent
2000: 9.1 percent
2001: 8.1 percent
2002: 2.4 percent
These statewide numbers don't hold for every city and town.
Some got more, some less. Likewise, different communities spent it differently. Some built up
rainy day accounts that will help them cope with whatever cut comes down the
pike in the next few weeks. Some put it into new hires, new programs or salary
increases that will be difficult or impossible to undo.
House members have asked Romney for more specifics. Which
accounts will he cut from? How will he make sure every municipality is treated fairly? What are
the revenue projections, and how will he adjust his plans if the numbers
change?
All are good questions and they should be answered before
the governor is given more authority. But as these cuts hit municipal budgets, local officials will
have to answer some questions as well, beginning with this one: What happened to
the money that flowed in during the fat years?
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The Brockton Enterprise
Tuesday, January 14, 2003
Editorial
Local aid cuts will be painful but will help
The state's budget crunch has brought out the whole cast of
characters, from those who think the sky is falling (Boston Mayor Thomas Menino, who says tax
hikes are the only option) to those who think there is plenty of cash lying
around (Brockton teacher union president Joseph O'Sullivan, who says teachers
will strike if they don't get an exorbitant 6.84 percent pay raise this
year).
The reality is somewhere in between, although elected
officials who are supposed to do something about the out-of-balance budget have abdicated
their responsibility and left it up to Gov. Mitt Romney to do the hard work and
take the heat. Romney is the only person willing to deal with the infinitely
disparate interests that have much at stake in how the budget gap is closed.
Examine this scenario: Menino is plotting to tax everything
from movies to meals so Boston doesn't have to cut back trash pickup from three times a week
to two times a week. What homeowner around here gets trash picked up twice
a week?
On the other end of the spectrum, the Brockton teachers
union and School Committee will continue negotiating today. The teachers have rejected a
three-year contract with nearly 12 percent in pay hikes and generous benefits.
If the School Committee were responsible, it would take that offer off the
table. How can any public employee (except a state legislator) accept a pay raise in
such dire circumstances?
These are two of many reasons people should support Romney's
plan to put local aid on the table. Romney needs this authority so he isn't limited to making
cuts to social services that would disproportionately affect the state's most
vulnerable residents (Jane Swift's cuts already did that). Local government
needs to share the burden of reining in government spending from trash pickup
to teacher salaries. Some local governments are sitting on sizeable reserve
funds while others need to make tough decisions about priorities and challenge
themselves to think outside the box and save money.
European police, fire and public works departments get along
with smaller, less expensive and more fuel-efficient vehicles. Why don't ours? Do public safety
officers really need $30,000 Chevy Trailblazers with all the goodies?
There is fat remaining in many cities and towns and Romney
wants that slimmed down. O'Sullivan says there's not much fat in the Brockton school
system, but there is especially in the administrative offices. Romney is seeking
flexibility to manage the state's finances, so he should provide the same for
local governments. Any barriers the state has thrown up that prevent local
government from operating more efficiently need to be eliminated, and promptly.
Local officials should be prepared to make their case to
taxpayers about what's essential. Tax hikes cannot be considered as long as raises are being offered.
The Legislature in no way should get credit for anything. The cowards on
Beacon Hill will probably give Romney the authority he wants because they
don't want to take the heat for making the cuts. They have proven they are
incapable of managing the state's finances and are best left on the sidelines.
The problems that need to be fixed from the Quinn bill to
the Pacheco Law are of their own making and they refuse to do anything about them. Romney will
be no hero to most people if he balances the budget. The pain will be spread far
and wide and few taxpayers will be able to see the forest for the trees.
But the bottom line is the bottom line and Romney apparently
is the only person capable of accepting reality in a world filled with charlatans like Menino,
O'Sullivan and 200 overpaid, underworked legislators.
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The Lawrence Eagle-Tribune
Tuesday, January 14, 2003
How about sharing our pain?
By Taylor Armerding
Staff Writer
Looks like we might get a chance in the next few months to
see if those who run and staff the public schools in our area communities are really "for the
children."
After all, that's their mantra when they are seeking money
from us, the taxpayers. More like a guilt trip, actually, but it is a constant refrain: How can
you even think of opposing an override for that new $60 million school, for that
new union contract, for that essential new program, when it's only going
to cost you a couple hundred more per year for 20 years? Aren't your children worth
that much? Sure, inflation was only 2 percent this past year, but how can you
oppose an 8-percent budget increase? It's for the children.
So, one might think that when economic times get truly
bleak, and there is a need for all sectors to sacrifice, they would be more than willing to do the best
they can with less. After all, it's for the children, right?
Don't hold your breath. With fledgling Gov. Mitt Romney
seeking authorization to cut local aid for the last half of the fiscal year in order to balance the state's
books, the word from a couple of our local superintendents -- Wilfredo Laboy of
Lawrence and Arthur Tate of Haverhill -- is that rather than work within those
limits, they will simply shut the schools down early.
I suppose there's a good chance they'll each be nominated
for president by a few thousand deliriously happy students whose summer vacation could begin in
April or May, but it does make their sloganeering about children sound a bit
hollow.
It makes me recall my own fifth-grade teacher, Miss
Smiddy, who used to ask me, when I was whining about this or that, "Are
you going to be a glass-half-full or a glass-half-empty person, Taylor Armerding?" In the case of
Superintendent Laboy, the glass is clearly half empty. Heck, even when it's 95
percent full, it's more than half empty in his view, since the risk to
the Lawrence schools, funded entirely by the state, is that their budget could get
cut from $110 million to $104.5 million.
That's significant, and Laboy wouldn't be a good advocate
for his system if he didn't protest at all, but it is a vast stretch to say, as he did, that it will
"completely dismantle us." Any good administrator should be able to cut 5
percent without shutting the entire operation down. Many area households,
confronted with wage freezes or layoffs, are having to do that and more.
And to say that he'd rather shut the schools down than see
students get less than a "quality" education rings hollow as well. The school budget in 1999, only
four years ago was $96.2 million. That's more than $8 million less than this
year, even with the threatened cut. Did none of the kids in 1999 get a
quality education? That's not what we were hearing at the time.
What we were hearing in 1999, in the pages of The Eagle-Tribune, was that
communities across the region, were sitting on an "embarrassment of riches ...
stashes of surplus taxes." Haverhill and Lawrence were among them, having
recovered from debt to being "firmly in the black."
If that money is gone, it's not because taxpayers got it
back. It is because government spent it. So how about school departments sharing our pain,
instead of just feeling it? As Laboy points out, 80 percent of his school budget is
salaries. A temporary 5 percent pay cut across the board could close most
of that gap. Why would any school staff oppose such a thing, when a quality
education of the community's children is at stake?
Taxpayers have sacrificed year after year "for the children." It's time for
government to prove it believes that slogan with more than words.
