Muncipalities across the commonwealth are facing potential cuts to local aid Gov. Deval Patrick proposed last week, in anticipation of the "fiscal cliff" combined with projected state tax revenues that are more than $500,000 lower than previously expected.
"The uncertainty of the fiscal cliff and the resulting slow down in growth, is the direct cause of our budget challenges," Patrick said. "Congress and the President must come to terms on a solution so the private sector will continue to make the kind of investments that create jobs, grow state and federal tax revenue collections and contribute to a lasting economic recovery."
Based on Patrick's proposal, four programs stand to be affected by cuts:
- Unrestricted local aid
- Special education circuit breakers
- Transportation cost reimbursment for homeless students
- Charter school reimbursement.
Exact figures will be hammered out by the legislature in the coming weeks. While Patrick can cut executive branch agencies through emergency mid-year '9C' cuts, the Legislature would have to approve expanded '9C' powers for Patrick to cut local aid.
The Legislature won't tackle the governor's proposal until after the New Year, as the body is currently in informal session.
"Our preliminary review is that we should be okay, although we are hoping that local aid will in the end be removed as part of the proposed cuts," Mayor Gary Christenson told Malden Patch via email. "This opinion is partly due to us anticipating these reductions for the past few months and planning accordingly."
"For example, we placed a temporary freeze on some of the vacant positions that have yet to be filled, which will...make it difficult on some of our departments moving forward. We have also been working closely with the City Council most notably Finance Chair Greg Lucey which has helped prepare us for these cuts.
"Obviously, if things change further then we will need to re-evaluate," he concluded.
The Governor's Proposal
In summary, the governor plans to balance the budget with the following reductions:
- $225 million in spending reductions through cuts in Executive Branch agencies. Combined with hiring controls the administration imposed in October, the total state workforce will have more than 6,000 fewer positions at the end of fiscal year 2013 than it did before the recession. A number of new investments for projects and programs in FY13 have been also been reduced or eliminated, including limiting new or restored funding for investments across a range of government services.
- $200 million from the Rainy Day Fund, bringing the total draw to $550 million in FY13 – leaving a balance of $1.2 billion, one of the highest in the country.
- $98 million in additional federal revenues in support of safety net programs operated by the state on behalf low-income residents.
- $25 million from a 1 percent reduction in the budgets of the Judiciary, Constitutional Officers and other non-executive departments.
- $20 million from a total of $113 million in savings in state borrowing and health care reform costs. The remainder of this funding will be used to offset some unavoidable deficiencies which must be funded this fiscal year.
- $20 million from a reduction in the amount of sales tax revenues that will automatically be transferred to the Massachusetts School Building Authority to support local school building costs.
- $11 million from certain reserve fund surpluses.
- $9 million from a 1 percent across-the-board reduction to unrestricted local aid. The governor has filed legislation that ensures if lottery profits exceed the $1.026 billion amount currently budgeted in FY13, all of such excess proceeds be committed to increasing the amount of unrestricted local aid.