BOSTON (AP) - With a booming economy and increased aid from the state, Massachusetts
cities and towns are in better financial shape than they have been in years, local budget
statistics suggest.
The strong finances are reflected in a
record amount of "free cash" being reported by municipal governments to the
state Revenue Department.
"The overall fiscal climate for
cities and towns is sound. And that's good news," said Geoff Beckwith, executive
director of the Massachusetts Municipal Association.
But Beckwith also said there continue to
be "giant needs" locally for money to fix up everything from roads and bridges
to town halls, libraries and sewer treatment plants.
As of the end of fiscal 1997, cities and
towns that report to the department - not all do - said they had $397.9 million in free
cash.
That was a record high, said Joseph
Chessey, deputy commissioner of the Division of Local Services for the Revenue Department.
As recently as the end of fiscal 1992,
when the state was just emerging from a recession, the cities and towns declared only
$79.3 million in free cash. But that number has been rising ever since.
By the end of fiscal 1996, free cash had
risen to $355.3 million.
Not all communities have reported yet
for the end of fiscal 1998, but it looks as if fiscal 1998 figures will again show an
increase, said Chessey, who served 10 years as mayor of Chicopee.
"Times are, I think, in the
commonwealth, fantastic," Chessey said. "Just looking at the bottom lines we
have here, free cash has gone up consistently over the last five years."
Chessey said communities can use their
free cash as a reserve for unexpected expenses, citing his own experience as a mayor who
was glad to be able to tap into $200,000 in free cash when a boiler blew up in a school
building.
Chessey said that, as a rule of thumb, a
financially healthy community should have 5 percent of its budget in free cash.
Cambridge City Manager Bob Healy
reported having $32 million in free cash at the end of fiscal 1997. That number had dipped
to about $10 million at the end of fiscal 1993.
He said there are always people who have
good ideas for spending the surplus - and Cambridge has used some of its free cash
recently for affordable housing and open-space acquisition.
There's a temptation to "be a hero
and go out and blow all the dough," he said. But he also said: "Any good
business always has a reserve and that's really what the free cash is. ... The good times
we're in don't last forever."
Beckwith, whose organization represents
cities and towns around the state, said the reasons for the rise in free cash included
increases in state aid to local schools under the state's education reform law.
The state also has gradually been
returning a greater share of revenues from the state lottery to cities and towns. A
portion of the lottery revenues was funneled into the state's budget to help out during
the state's fiscal crisis in the early 1990s.
State officials announced in August that
the state was sending out about $4.2 billion in local aid this fiscal year, an increase
from about $2.5 billion in fiscal 1993. Education aid alone accounted for much of the
increase. It was up to about $2.6 billion this year from about $1.3 billion in fiscal
1993.
Beckwith said that, with Proposition
2½, the state's property-tax-limiting law, in place, it remains difficult for communities
to invest in needed - but expensive - infrastructure projects.
But he said, "It's a much stronger
platform than we were on seven or eight years ago."
Beckwith noted that the state's
education reform plan, which mandated funding increases to make sure kids all over the
state got an adequate education, runs out in the next budget year.
What happens next will be crucial to the
351 cities and towns, he said.
"We're heading towards a
crossroads, and we just need to be able to anticipate that," he said. "We just
need to be sure it's navigated without any collisions."