Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
His Excellency Charles Baker
Governor of the Commonwealth
State House, Boston
(Delivered electronically)
Dear Governor Baker,
On behalf of the cities and towns of the Commonwealth, we are writing with comments on H. 5050, the fiscal year 2023 general appropriations act on your desk for review and approval. The investments in cities and towns in this budget bill reflect a strong partnership with local government, as municipal and state leaders work together to deliver essential services and get our economy back on track.
As you know, state tax collections have far exceeded expectations since you filed your budget proposal in January. We are pleased that with this new information, the Legislature’s $52.7 billion fiscal year 2023 state budget plan reflects an agreement between Senate and House leaders to increase tax revenue estimates for fiscal year 2023 by $2.66 billion. As a result, several key local aid accounts received higher funding levels, and we respectfully ask for your support for these increases.
Unrestricted General Government Aid (UGGA)
H. 5050 includes $1.231 billion for Unrestricted General Government Aid (line item 1233-2350 and Section 3), an increase of $63.1 million, or 5.4%, over the fiscal 2022 level of funding. Increasing UGGA has been a key MMA priority throughout the process. With property taxes tightly capped by Proposition 2½, cities and towns rely on state revenue sharing to provide municipal and school services, ensure safe streets and neighborhoods, and maintain vital infrastructure. These services are fundamental to our state’s economic recovery, success and competitiveness. We respectfully ask you to support the UGGA funding level approved by the Legislature. This is a very high priority for municipalities throughout the state, as these funds will all be devoted to balancing local budgets and maintaining the local programs and services that residents rely on every day.
Chapter 70
H. 5050 would fund Chapter 70 aid at $5.998 billion through two line items (7061-0008, the main Chapter 70 account, and 7061-0009, a supplemental Chapter 70 account addressing minimum aid). This reflects an impressive commitment to fund the Student Opportunity Act (SOA) according to the original intended schedule, a solid achievement given the initial delay caused by the economic disruption at the onset of the pandemic. In addition to keeping the commitment to fund the SOA, and in recognition of the challenges facing 135 “minimum aid” districts that would have received only a $30 per student increase over the previous year, item 7061-0009 doubles the minimum aid increase to $60 per student. We respectfully ask you to support these critically needed appropriation levels for school districts across the Commonwealth.
Special Education Circuit Breaker
We strongly support the $441 million included in H. 5050 for Special Education Circuit Breaker (7061-0012), which reimburses school districts for the high cost of educating students with disabilities. This amount reflects an increase of $67 million over the current fiscal year. The Student Opportunity Act expanded the circuit breaker by including out-of-district transportation, to be phased in over three years. The fiscal 2023 budget reflects years two and three of the schedule in the Student Opportunity Act, achieving full funding one year ahead of schedule.
Charter School Mitigation Payments
We strongly support the $243 million in H. 5050 for charter school mitigation payments (7061-9010), which represents an increase of $89.2 million over the current fiscal year. This funds the state’s statutory obligation for charter school mitigation payments as outlined in the Student Opportunity Act, pushing the state to phase in the plan by fiscal 2023, a full year ahead of schedule.
School Transportation
H. 5050 level funds regional school transportation (7035-0006) at $82.1 million, representing a reimbursement rate of 85% of DESE’s estimated costs for fiscal 2023. H. 5050 fully funds the McKinney-Vento account for transportation of homeless students (7035-0008) at $22.9 million, and level funds out-of-district vocational transportation (7035-0007) at $250,000. While the regional school transportation and out-of-district vocational transportation accounts do not meet the required funding according to DESE, we ask you to support the appropriations that are currently before you in H. 5050. In addition, we respectfully ask you to include full funding for these accounts in fiscal 2023 using fiscal 2022 surplus revenues in the Commonwealth’s fiscal 2022 close-out spending bill that you will file shortly.
PILOT Funding
We strongly support the increased funding for Payments-in-Lieu-of-Taxes (PILOT) for state-owned land included in H. 5050 (1233-2400), bringing the line item to $45 million, a $10 million increase over fiscal year 2022. This has been a key priority for many years. Inadequate PILOT funding has created a significant hardship for smaller communities with large amounts of state-owned property, and this 29% increase is very welcome news, and will provide an important boost. With state tax collections rising by unprecedented amounts, this is an appropriate time to move the PILOT program much closer to full funding, which is why H. 5050 increases this account by such a large, and much-needed, percentage.
Rural School Aid
We urge you to support funding Rural School Aid (7061-9813) at $5.5 million in H. 5050, providing rural school assistance to eligible towns and regional school districts. These grants will help schools facing the challenge of declining enrollment identify ways to form regional school districts or regionalize certain school services to create efficiencies.
Outside Section – Retiree COLA Provision
Section 134 of the budget would allow retirement boards that have accepted Section 103 of Chapter 32 to award a cost-of-living-adjustment of up to 5% to retirees, rather than the current limit of up to 3%. While MMA appreciates the concern driving this provision, we oppose this section due to its negative impact on unfunded pension liabilities. Adoption of a higher COLA, even if limited to one year, would increase the pension obligations for all participating communities for at least 15 to 20 years, requiring increased annual appropriations to fund the cost. Cities and towns have already approved budgets for fiscal 2023, and have pension funding schedules in place that do not contemplate a COLA above 3%. Any such increase in fiscal 2023 would have direct financial implications for communities, and could jeopardize other essential services provided by municipalities. Further, most communities in the state participate in regional pension systems, and do not have direct decision-making authority regarding the adoption of a higher COLA. Communities and local property taxpayers in these regional systems would be required to fund higher pension costs for many years, without any meaningful voice in the decision. Similarly, the composition of many municipal retirement boards is such that the panels are not accountable to the municipal government, creating the same gap that leaves those who would fund the new higher pension liabilities out of the decision-making process. For these reasons, we respectfully urge you to return this section with strengthened language to ensure direct municipal approval of proposals by local and regional retirement boards to increase the fiscal 2023 COLA above 3 percent.
Outside Section – Community Preservation Act
Section 174 of H. 5050 directs the comptroller to transfer $20 million of the fiscal year 2022 budget surplus to the Massachusetts Community Preservation Trust Fund. This provision would increase the state’s match from an estimated 35% to 43%, approximately the same state match percentage as fiscal year 2022. The number of CPA communities has reached 187, and this budget item will benefit cities and towns that have adopted higher local property taxes to address environmental and housing challenges. We strongly support this transfer and ask for your favorable consideration.
Summary
This is a critical time for cities and towns, our residents, and our economy. You and Lieutenant Governor Polito have been outstanding partners for communities across the Commonwealth every single day of the past seven years, and we are deeply grateful for your leadership. We look forward to working with you during the coming months to ensure that every region of the state recovers from the hardships and challenges of the pandemic and has the resources and support to propel the Massachusetts economy forward. We believe the priorities outlined above will establish fiscal stability and sustainability at the local level, and ensure that the residents of Massachusetts receive the essential municipal and school services they expect and deserve.
If you have any questions or need additional information regarding any of the municipal priorities highlighted above, please do not hesitate to have your office contact MMA Senior Legislative Analyst Jackie Lavender Bird at 617-426-7272, ext. 123, or jlavenderbird@mma.org at any time.
We thank you very much for your support, dedication and commitment to the cities and towns of Massachusetts.
Sincerely,
Geoffrey C. Beckwith
MMA Executive Director & CEO
Cc:
The Honorable Karyn Polito, Lieutenant Governor of the Commonwealth
Secretary Michael Heffernan, Executive Office of Administration and Finance
Senior Deputy Commissioner Sean Cronin, Division of Local Services