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Advocacy Executive Director's Reports Reforms must pass to prevent fiscal meltdown
Cities and towns across Massachusetts are struggling mightily to deliver essential services and balance their budgets in the face of the greatest economic downturn in more than 70 years.
This summer, cities and towns suffered record-setting local aid cuts of $724 million, and communities have been forced to slash core education and municipal services, eliminate thousands of municipal employees from the workforce, and increase their reliance on property taxes and fees to fund what is left of local programs. Massive local aid cuts are taking their toll.
Gov. Deval Patrick’s recent announcement that he will spare Chapter 70 and unrestricted municipal aid from mid-year budget cuts was very welcome news, as is his commitment to working through the budget crisis with local aid as one of his core values. The governor and his team know that every local aid cut translates into more layoffs and service reductions at the local level, and cities and towns would be forced to cut more teachers from our classrooms, police officers and firefighters from our streets, and public works employees from our roads and parks.
But communities did NOT escape the fiscal 2010 mid-year budget reductions unscathed, as the administration implemented or proposed a total of $52.9 million in deep cuts to other key local programs as part of the $600 million plan to combat the latest chapter in the state’s fiscal crisis. These cuts will certainly have a harsh impact on many communities and important programs.
The $52.9 million in mid-year cuts include $18 million from regional school transportation, $10.8 million from payments in lieu of taxes, $7 million from the special education circuit breaker, $5.2 million from charter school reimbursements, $5 million from the Quinn Bill, $2 million from Shannon anti-gang grants, $2 million from the municipal police training committee, $1.5 million from school-based health programs, and $800,000 from library aid.
These cuts mean that local aid is now $777 million below the level set in the original fiscal 2009 budget. Communities can’t absorb any more reductions without dire economic and social consequences. Simply put, Massachusetts can’t cut its way to success by targeting local aid.
Now, more than ever, the governor and the Legislature must pass real reforms to provide meaningful relief to cities and towns and local taxpayers.
The following five reform measures must pass immediately:
1. Provide real savings to cities and towns by giving local government the same plan design authority that the state has to set health insurance plans.
The state must pass the MMA’s plan to give cities and towns the power to update municipal health insurance plans outside of collective bargaining – just as the state can – to save communities tens of millions of dollars statewide.
Cities and towns have worked hard to control health insurance costs as best they can, but they operate under a state law that reflects a double standard. Municipalities are required to negotiate and receive union approval to implement changes in their health insurance plans, while the state has exempted itself from this requirement and implements basic decisions on health insurance outside of collective bargaining. It is far past the time for this double standard to end, and the MMA again calls on the governor and the Legislature to give cities and towns the same authority as the state in designing health insurance plans for employees.
This one reform is the most effective way to bring immediate fiscal relief to all cities and towns, and it is urgently overdue. Local officials do not see the health insurance language offered in the companion to House 1 or in the report of the Special Commission on Municipal Relief as reform; those proposals have been universally rejected in public hearings by city and town officials as unworkable, unacceptable and a step backward. The one sure way to achieve real and appropriate health insurance savings for cities and towns is to grant municipalities the same basic management authority that the state enjoys.
2. Reform and fix the Quinn Bill.
The state must fix the Quinn Bill mess by passing legislation to clarify that cities and towns are not responsible for paying the state’s share of the Police Career Incentive Program. The state created the program, known as the Quinn Bill, in 1970, promising to fund 50 percent of the costs. This year, the state decided to end this promised partnership and is looking to fund only 4 percent of the program, even though none of the communities that participate in the program would have joined if they had known that the state would eventually step away from the program. Now police unions are in court trying to force cities and towns to make up the $48 million that the state cut from its share, which would represent an outrageous new unfunded mandate on municipalities. The governor has proposed a commission to explore what the successor program to the Quinn Bill should look like, and this is a valuable effort. The immediate need, though, is passage of relief legislation.
3. Close the telecommunications property tax loophole on equipment.
The MMA applauds the Legislature and the governor for passing legislation codifying the Appellate Tax Board ruling that telecommunications companies are subject to local taxation on poles and wires over public ways, which is generating $26 million for cities and towns. The MMA is calling on the state to enact the second half of telecom tax reform by eliminating the remaining obsolete and unwarranted exemption of telecommunications equipment from the personal property tax, which would provide up to $25 million in local revenues that the telecommunications companies are avoiding under the current scheme. Failure to close this tax loophole would harm cities and towns and local taxpayers while providing unwarranted benefits to the telephone industry.
4. Fix charter school funding.
Charter schools are an increasing burden on municipal finances, and the current funding system drains resources from public school districts. For fiscal 2010, Chapter 70 school aid deductions from municipal and regional school districts to pay tuition to charter schools are expected to total $280 million. This is only partially offset by reimbursements that total $80 million, resulting in a net loss of $200 million. School aid losses due to charter schools affect 199 municipal and regional school districts. The state and localities are struggling to spend an adequate amount on public education, and the charter school finance scheme is eroding the local capacity to deliver quality education. The MMA is not opposed to charter schools in principle, yet local officials strongly object to this funding system. Until the system is fixed, municipal leaders and the MMA support a moratorium on new charter school openings next year and on any expansion of existing schools. We do support legislation allowing for in-district charters as a workable alternative. In the short-term, the state should at least provide a circuit-breaker to ensure that future losses to charter schools will not consume a greater percentage of the Chapter 70 aid than what a city or town now receives.
5. Pass pension funding relief.
Pass legislation allowing cities and towns to extend their pension funding schedules by 10 years, to 2040, to protect local taxpayers from unnecessarily high assessments during this time of fiscal crisis. Unless the funding schedules are extended, market losses due to the recession will trigger steep increases in annual pension payments and force budget cuts to key municipal and school services. Without this change, cities and towns will be forced to needlessly increase taxpayer spending on pensions at the worst possible time.
The bottom line is that cities and towns need immediate and meaningful relief now. Fiscal 2010 is balanced on a razor’s edge (if at all). Fiscal 2011 looks to be grimmer and more damaging than either of the past two years.
Real reform means removing municipal health insurance decisions from collecting bargaining, fixing the Quinn Bill to end the threat of a new $48 million unfunded mandate, closing the $25 million telecom equipment tax loophole that benefits the telephone company but hurts local taxpayers, reforming the flawed charter school funding system that harms local school districts, and extending pension funding schedules to prevent needless cost increases next year. Failure to pass these five vital reforms will deepen the local fiscal crisis and will harm our communities, local taxpayers, and our prospects for economic recovery.
The stakes are high, and the time for reform is upon us.
Advocacy Executive Director's Reports Reforms must pass to prevent fiscal meltdown
Reforms must pass to prevent fiscal meltdown
Cities and towns across Massachusetts are struggling mightily to deliver essential services and balance their budgets in the face of the greatest economic downturn in more than 70 years.
This summer, cities and towns suffered record-setting local aid cuts of $724 million, and communities have been forced to slash core education and municipal services, eliminate thousands of municipal employees from the workforce, and increase their reliance on property taxes and fees to fund what is left of local programs. Massive local aid cuts are taking their toll.
Gov. Deval Patrick’s recent announcement that he will spare Chapter 70 and unrestricted municipal aid from mid-year budget cuts was very welcome news, as is his commitment to working through the budget crisis with local aid as one of his core values. The governor and his team know that every local aid cut translates into more layoffs and service reductions at the local level, and cities and towns would be forced to cut more teachers from our classrooms, police officers and firefighters from our streets, and public works employees from our roads and parks.
But communities did NOT escape the fiscal 2010 mid-year budget reductions unscathed, as the administration implemented or proposed a total of $52.9 million in deep cuts to other key local programs as part of the $600 million plan to combat the latest chapter in the state’s fiscal crisis. These cuts will certainly have a harsh impact on many communities and important programs.
The $52.9 million in mid-year cuts include $18 million from regional school transportation, $10.8 million from payments in lieu of taxes, $7 million from the special education circuit breaker, $5.2 million from charter school reimbursements, $5 million from the Quinn Bill, $2 million from Shannon anti-gang grants, $2 million from the municipal police training committee, $1.5 million from school-based health programs, and $800,000 from library aid.
These cuts mean that local aid is now $777 million below the level set in the original fiscal 2009 budget. Communities can’t absorb any more reductions without dire economic and social consequences. Simply put, Massachusetts can’t cut its way to success by targeting local aid.
Now, more than ever, the governor and the Legislature must pass real reforms to provide meaningful relief to cities and towns and local taxpayers.
The following five reform measures must pass immediately:
1. Provide real savings to cities and towns by giving local government the same plan design authority that the state has to set health insurance plans.
The state must pass the MMA’s plan to give cities and towns the power to update municipal health insurance plans outside of collective bargaining – just as the state can – to save communities tens of millions of dollars statewide.
Cities and towns have worked hard to control health insurance costs as best they can, but they operate under a state law that reflects a double standard. Municipalities are required to negotiate and receive union approval to implement changes in their health insurance plans, while the state has exempted itself from this requirement and implements basic decisions on health insurance outside of collective bargaining. It is far past the time for this double standard to end, and the MMA again calls on the governor and the Legislature to give cities and towns the same authority as the state in designing health insurance plans for employees.
This one reform is the most effective way to bring immediate fiscal relief to all cities and towns, and it is urgently overdue. Local officials do not see the health insurance language offered in the companion to House 1 or in the report of the Special Commission on Municipal Relief as reform; those proposals have been universally rejected in public hearings by city and town officials as unworkable, unacceptable and a step backward. The one sure way to achieve real and appropriate health insurance savings for cities and towns is to grant municipalities the same basic management authority that the state enjoys.
2. Reform and fix the Quinn Bill.
The state must fix the Quinn Bill mess by passing legislation to clarify that cities and towns are not responsible for paying the state’s share of the Police Career Incentive Program. The state created the program, known as the Quinn Bill, in 1970, promising to fund 50 percent of the costs. This year, the state decided to end this promised partnership and is looking to fund only 4 percent of the program, even though none of the communities that participate in the program would have joined if they had known that the state would eventually step away from the program. Now police unions are in court trying to force cities and towns to make up the $48 million that the state cut from its share, which would represent an outrageous new unfunded mandate on municipalities. The governor has proposed a commission to explore what the successor program to the Quinn Bill should look like, and this is a valuable effort. The immediate need, though, is passage of relief legislation.
3. Close the telecommunications property tax loophole on equipment.
The MMA applauds the Legislature and the governor for passing legislation codifying the Appellate Tax Board ruling that telecommunications companies are subject to local taxation on poles and wires over public ways, which is generating $26 million for cities and towns. The MMA is calling on the state to enact the second half of telecom tax reform by eliminating the remaining obsolete and unwarranted exemption of telecommunications equipment from the personal property tax, which would provide up to $25 million in local revenues that the telecommunications companies are avoiding under the current scheme. Failure to close this tax loophole would harm cities and towns and local taxpayers while providing unwarranted benefits to the telephone industry.
4. Fix charter school funding.
Charter schools are an increasing burden on municipal finances, and the current funding system drains resources from public school districts. For fiscal 2010, Chapter 70 school aid deductions from municipal and regional school districts to pay tuition to charter schools are expected to total $280 million. This is only partially offset by reimbursements that total $80 million, resulting in a net loss of $200 million. School aid losses due to charter schools affect 199 municipal and regional school districts. The state and localities are struggling to spend an adequate amount on public education, and the charter school finance scheme is eroding the local capacity to deliver quality education. The MMA is not opposed to charter schools in principle, yet local officials strongly object to this funding system. Until the system is fixed, municipal leaders and the MMA support a moratorium on new charter school openings next year and on any expansion of existing schools. We do support legislation allowing for in-district charters as a workable alternative. In the short-term, the state should at least provide a circuit-breaker to ensure that future losses to charter schools will not consume a greater percentage of the Chapter 70 aid than what a city or town now receives.
5. Pass pension funding relief.
Pass legislation allowing cities and towns to extend their pension funding schedules by 10 years, to 2040, to protect local taxpayers from unnecessarily high assessments during this time of fiscal crisis. Unless the funding schedules are extended, market losses due to the recession will trigger steep increases in annual pension payments and force budget cuts to key municipal and school services. Without this change, cities and towns will be forced to needlessly increase taxpayer spending on pensions at the worst possible time.
The bottom line is that cities and towns need immediate and meaningful relief now. Fiscal 2010 is balanced on a razor’s edge (if at all). Fiscal 2011 looks to be grimmer and more damaging than either of the past two years.
Real reform means removing municipal health insurance decisions from collecting bargaining, fixing the Quinn Bill to end the threat of a new $48 million unfunded mandate, closing the $25 million telecom equipment tax loophole that benefits the telephone company but hurts local taxpayers, reforming the flawed charter school funding system that harms local school districts, and extending pension funding schedules to prevent needless cost increases next year. Failure to pass these five vital reforms will deepen the local fiscal crisis and will harm our communities, local taxpayers, and our prospects for economic recovery.
The stakes are high, and the time for reform is upon us.
Written by MMA Executive Director Geoff Beckwith
