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."