Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
His Excellency Deval L. Patrick
Governor of the Commonwealth
State House, Boston
Dear Governor Patrick,
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association offers comments on local government accounts and law changes in the fiscal 2010 budget bill enacted by the Legislature and before you for review.
The fiscal 2010 state budget law and other measures, such as municipal relief legislation, will have a major impact on whether cities and towns will be able to navigate through the current economic crisis and recover once the recession ends. The decisions made this year will have a long-term impact on the quality of municipal and school services for years to come. If cities and towns are unable to deliver basic essential services at an adequate level, the Massachusetts recession will be deeper and longer, and all residents and businesses will suffer adverse impacts.
State and Local Taxes
The MMA strongly supports the municipal taxes included in the budget bill that would give authority to cities and towns to adopt, by local vote, a sales tax on meals of 0.75 percent (Section 60 and related sections) and up to 2 additional percentage points on the existing municipal room occupancy excise (sections 51 and 52).
While these new municipal tax options cannot replace a strong state-local revenue-sharing program, they will help many cities and towns close budget shortfalls next year and provide alternatives to the property tax in the future, as is common in other states.
We applaud you, Lt. Governor Murray, and your Administration for the commitment to these proposals over the past two years in various municipal relief and budget bills. It is highly doubtful that these much-needed municipal revenue options would have been enacted without your help and leadership, and we thank you.
We are disappointed that the Legislature did not enact sections 32L and 32P in the Senate budget bill, or other language of similar intent, that would have updated the definition of “occupant” in the room occupancy statute to include “other transient accommodation.” This would have helped end some of the tax avoidance that has occurred as ownership and business practices have changed over the past decade. We hope that you will consider this reform to broaden the room occupancy excise base to provide a level playing field and appropriately apply the room occupancy tax in future municipal legislation that you propose.
The MMA also strongly supports the property tax provision (Section 25) that would make clear that poles and wires on public ways owned by telephone and other telecommunications companies are not exempt from the property tax, consistent with a the recent Appellate Tax Board decision. We are disappointed that the Legislature did not enact further reform to close the loophole that allows many telecommunications companies to avoid local property taxes on valuable machinery. We appreciate your longstanding support for ending this obsolete exemption.
The MMA strongly supports the increase in the state sales tax voted by the Legislature. The harshness of the recession and its impact on state and municipal finances has made it clear that spending cuts and savings initiatives alone cannot close state and local budget shortfalls. New revenues are necessary, and the MMA endorsed the sales tax increase as an important initiative to raise essential state tax revenues.
Municipal Health Insurance
Local officials and the MMA strongly opposed Section 17A of the Senate budget bill, which adopted the deeply flawed provision from the recommendations of the Special Commission on Municipal Relief to change how cities and towns make decisions on health insurance for municipal employees. We are pleased that this provision was not enacted and we do not have to seek a veto.
However, without meaningful municipal health insurance reform, costs will continue to grow faster than municipal revenues. The lack of reform this year will result in fewer police officers and firefighters and teachers and other school staff, and job losses will surely worsen next year.
Health insurance is an issue that must be addressed, and we wish to keep talking to you and your Administration about real reform that saves local government jobs while ensuring high-quality health insurance coverage for employees. The key to real reform is providing municipalities with the same ability to update health insurance plan design features (co-pays, deductibles and tiered networks) that the state has.
As you know, the state has exempted itself from any collective bargaining requirements concerning health insurance plan design and the employee-employer percentage share of premium costs. The MMA’s modest reform proposal would actually provide municipal unions with much greater input and power over municipal health insurance than the state grants to state employee unions, and would ensure that all municipal employees would have health insurance plans at least as generous as the coverage that state employees receive. This balanced reform would save tens of millions of dollars statewide, and would avoid the damaging pitfalls of a dollar benchmark standard, and exclude the unacceptable local aid takeaways or binding arbitration provisions that would make matters worse for cities and towns. We look forward to discussing this matter with you in detail over the coming weeks.
Municipal Aid
Municipal aid is essential to local government services, including policing streets, fire protection, emergency response, road and infrastructure maintenance, and education programs.
The Legislature appropriated $936 million for the new consolidated municipal aid account (1233-2350), a decrease of $377 million, or a cut of 29 percent below the original fiscal 2009 level of funding. At this amount, municipal aid will drop to levels last distributed in the mid 1990s, almost 15 years ago, without adjusting for inflation.
This new account would replace the longstanding Cherry Sheet Additional Assistance and Lottery distribution accounts that, since Proposition 2 1/2 was enacted in 1980, have provided revenues to help balance municipal budgets and ease reliance on the property tax.
The Legislature appropriates $27 million for the Cherry Sheet Payment-in-Lieu-of-Taxes program (0611-5510), a 10 percent cut.
These cuts will result in deep and painful service reductions, hardship, and layoffs throughout the state.
Public Safety Accounts
The MMA supports state assistance for targeted public safety reimbursement and grant programs that help keep neighborhoods and communities safe. The reduction planned for general municipal aid will negatively affect public safety funding and staffing levels across the state. This is especially a concern in cities and towns most at risk of increased crime.
The MMA supports the basic levels of funding for the Shannon Anti-Gang (8100-0111) grant programs.
The MMA supports funding for the state’s 50 percent share of the Police Incentive Pay (Quinn) program (8000-0040). At $10 million, the Legislature has under-funded the program by an estimated $48 million. Many cities and towns will be required to pay for any shortfall in the state’s share in this program leaving less to spending on other pubic safety expenses.
The budget bill includes language in the appropriation item that would close the Quinn program to police officers hired after July 1 and current officers who have not commenced participation. We support this language.
Further, we ask that you include in the next supplemental or deficiency budget that you file the strongest possible language to avoid the untenable result that state cuts in this account would translate into an unfunded mandate because of interpretations that cities and towns would have to make up the state’s funding shortfall. Section 128 of the budget bill includes language that would exclude benefits related the police incentive pay statute from any future collective bargaining contract for State Police officers, and similar language should be enacted for municipalities as well.
School Aid
The Legislature would reduce the Chapter 70 school aid account (7061-0008) by $79 million to $3.87 billion and reduce the allocation to individual municipal and regional school districts (Section 3) by a standard 2 percent. Section 3 of the budget bill includes language urging you to use $168 million of State Fiscal Stabilization Fund funds allocated to Massachusetts through the American Recovery and Reinvestment Act (ARRA) of 2009 to ensure that all districts have sufficient resources to reach the “foundation” level of spending.
The Legislature included in Section 3 the Chapter 70 formula change to accelerate required local contributions from the property tax and other municipal revenues. The MMA opposes this change absent other long overdue updates to other Chapter 70 components.
While the changes to Chapter 70 do reflect the critical state of state finances, it will continue the unsustainable trend of increasing reliance on the property tax to fund public education.
The Legislature appropriated $141 million for the special education “circuit breaker” program (7061-0012) to help school districts with the expense of high-cost special education placement. After the standard deductions for administrative and other purposes, reimbursements next year are expected to be limited to about 40 percent rather than the 75 percent proscribed in state law, and while a small portion of this cut may be addressed with some of the one-time ARRA IDEA funds, much of the reduction in the circuit breaker program will force deep cuts in other school and education services.
The MMA supports Section 136 that would place a limited freeze on tuition rates at private schools serving special education students.
The Legislature appropriated $41 million for partial reimbursements to regional school districts for student transportation expenses (7035-0006). This is an important account for school districts serving large land areas and is a key incentive for school district consolidation. The MMA supports this program, noting that it is severely under-funded.
Massachusetts School Building Authority
Section 63 of the budget bill would eliminate the 40 percent floor on the state’s share of eligible costs of school construction projects. This would increase the local share, paid mainly from the property tax, by as much as 15 percent for those municipalities and districts affected by the floor. The MMA strongly opposes this section.
Section 64 of the bill would eliminate the current statutory framework for awarding incentive points and allow the MSBA to determine and award incentive points without oversight. The MMA opposes this section absent further review.
Advisory Commissions
The budget bill on your desk contains two advisory commissions that we support.
The first panel, in Section 146, is a 17-member regionalization advisory commission. We strongly agree that all efforts should be made to maximize regionalization efforts that communities wish to advance, and to remove the many statutory and collective bargaining obstacles that exist now. We strongly believe the commission should have more than one municipal member (the language provides for 12 state officials, one MMA/local government representative, one regional [state] agency representative, and three gubernatorial appointees), and under separate cover, we will forward to your office the names of the MMA representative and several other municipal officials we will respectfully ask you to consider as gubernatorial appointees to ensure adequate municipal participation.
The second panel, in Section 145, is a special water infrastructure finance commission to develop a comprehensive, long-range water infrastructure finance plan for the commonwealth and municipalities. This is a vitally important environmental, economic development and public finance concern, and we believe this commission’s work would address an overlooked but critical problem facing Massachusetts. As similar language was vetoed last year, we ask you to reconsider and support the establishment of this commission.
Recovery High School
Section 65 of the budget bill would establish a “Recovery High School” funded by locally paid tuition equal to the statewide average per student Chapter 70 amount. The section 65 language provides no guidance on how Recovery Schools would be accountable to local municipal and school officials or to local voters for the use of public funds or for performance or to the place of these schools in education reform and special education law. The MMA opposes the establishment of Recovery Schools as a section in the fiscal 2010 budget.
Summary
In the midst of the greatest economic crisis in modern times, it is essential that state and local governments do whatever is necessary to support the provision of vital services that are important to our economy and our quality of life. That is why the outcome of the issues before you will determine the Commonwealth’s ability to compete and serve its citizens for years to come.
We strongly urge you to approve a budget that provides communities with the resources and tools that are necessary to safeguard the residents of Massachusetts today and in the future, and respectfully ask for your support for the local government priorities outlined above.
If you have any questions about our position on any provision, or wish to receive further input and comment, please do not hesitate to have your office contact us at any time.
Thank you very much.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA