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Municipal Government ‘Municipal relief’ bill advances
A much-anticipated “municipal relief bill,” a package of cost-saving and efficiency measures intended to help cities and towns endure local aid cuts, has been sent to the House Committee on Ways and Means.
The package (H. 4526), which contains more than 100 sections, was reported favorably by the Joint Committee on Municipalities and Regional Government. The bill would codify many of the recommendations released by the Legislature’s Special Commission on Municipal Relief last May. The MMA supports all the initiatives included in the bill.
One key component is a proposed 10-year extension of the funding schedule for municipal pensions, from 2030 to 2040, to help amortize unprecedented losses experienced during the previous two years. Without the extension, cities and towns will face dramatic pension cost increases in fiscal 2011 to make up for the losses.
The pension provision mirrors a bill filed by the governor in that it would set several conditions that must be met in order to qualify for the extension: the retirement system would have to do an actuarial valuation as of Jan. 1, 2010; any new schedule would have to appropriate an amount at least as high as the previous funding schedule called for in fiscal 2011; the amortization component of the funding schedule would be decreased from 4.5 percent ascending to 4 percent ascending; and appropriations for the new funding schedule could not be reduced in any year from the previous year.
The MMA has expressed a concern about the second condition, arguing that a funding schedule approved by the Public Employee Retirement Administration Commission that reduces the unfunded liability to zero by 2040 should not have an artificially high starting point (i.e., matching at least what would have been appropriated under the previous funding schedule).
H. 4526 includes a local-option municipal early retirement program, proposed by the governor, that would require both executive and legislative approval at the local level. The municipal executive would be required to limit the total number of eligible municipal employees and would have the authority to determine which employees are eligible. Eligible employees would receive a total of three years of age or creditable service toward retirement. They would have to forego any right to accrued vacation or sick time. The chief executive officer would be limited to replacing 30 percent of the salary and benefits of retirees in fiscal 2011, 45 percent in fiscal 2012, and 60 percent in fiscal 2013.
The following are some other highlights of the relief package:
• Section 44 would establish a statewide, local-option public works mutual aid program, allowing participating cities and towns to effectively share resources for day-to-day operations, maintenance and repair activities.
• Section 43 would authorize cities and towns to enter into statewide mutual aid agreements to provide police, fire, emergency medical, public works and other public safety assistance to other municipalities in emergency situations.
• Section 111 would adjust the threshold requiring payment bonds for both public building and public works repair and construction projects, from $2,000 to $25,000.
• Section 22 would allow cities, towns and school districts to participate in cooperative purchasing agreements with public agencies outside of Massachusetts.
• Sections 60-70 and 98 would increase flexibility in municipal and regional school district borrowing by extending the allowable borrowing terms. The provisions would also increase flexibility for emergency borrowing, expedite the process for achieving savings through refinancing, and remove overly restrictive requirements for amortization of debt.
The relief bill, however, does not include the MMA’s top legislative priority: the removal of health insurance plan design from collective bargaining, which would save cities and towns between $75 million and $100 million statewide. The bill also does not include a Senate provision, opposed by the MMA, that would have made health insurance changes subject to binding arbitration.
During the development of this legislation, the MMA worked closely with Sen. Stan Rosenberg and Rep. Paul Donato, chairs of the Special Commission on Municipal Relief, as well as Sen. James Eldridge, the Senate chair of the Joint Committee on Municipalities and Regional Government.
• Summary of municipal relief bill (112K PDF)
• Text of municipal relief bill (396K PDF)
Municipal Government ‘Municipal relief’ bill advances
‘Municipal relief’ bill advances
A much-anticipated “municipal relief bill,” a package of cost-saving and efficiency measures intended to help cities and towns endure local aid cuts, has been sent to the House Committee on Ways and Means.
The package (H. 4526), which contains more than 100 sections, was reported favorably by the Joint Committee on Municipalities and Regional Government. The bill would codify many of the recommendations released by the Legislature’s Special Commission on Municipal Relief last May. The MMA supports all the initiatives included in the bill.
One key component is a proposed 10-year extension of the funding schedule for municipal pensions, from 2030 to 2040, to help amortize unprecedented losses experienced during the previous two years. Without the extension, cities and towns will face dramatic pension cost increases in fiscal 2011 to make up for the losses.
The pension provision mirrors a bill filed by the governor in that it would set several conditions that must be met in order to qualify for the extension: the retirement system would have to do an actuarial valuation as of Jan. 1, 2010; any new schedule would have to appropriate an amount at least as high as the previous funding schedule called for in fiscal 2011; the amortization component of the funding schedule would be decreased from 4.5 percent ascending to 4 percent ascending; and appropriations for the new funding schedule could not be reduced in any year from the previous year.
The MMA has expressed a concern about the second condition, arguing that a funding schedule approved by the Public Employee Retirement Administration Commission that reduces the unfunded liability to zero by 2040 should not have an artificially high starting point (i.e., matching at least what would have been appropriated under the previous funding schedule).
H. 4526 includes a local-option municipal early retirement program, proposed by the governor, that would require both executive and legislative approval at the local level. The municipal executive would be required to limit the total number of eligible municipal employees and would have the authority to determine which employees are eligible. Eligible employees would receive a total of three years of age or creditable service toward retirement. They would have to forego any right to accrued vacation or sick time. The chief executive officer would be limited to replacing 30 percent of the salary and benefits of retirees in fiscal 2011, 45 percent in fiscal 2012, and 60 percent in fiscal 2013.
The following are some other highlights of the relief package:
• Section 44 would establish a statewide, local-option public works mutual aid program, allowing participating cities and towns to effectively share resources for day-to-day operations, maintenance and repair activities.
• Section 43 would authorize cities and towns to enter into statewide mutual aid agreements to provide police, fire, emergency medical, public works and other public safety assistance to other municipalities in emergency situations.
• Section 111 would adjust the threshold requiring payment bonds for both public building and public works repair and construction projects, from $2,000 to $25,000.
• Section 22 would allow cities, towns and school districts to participate in cooperative purchasing agreements with public agencies outside of Massachusetts.
• Sections 60-70 and 98 would increase flexibility in municipal and regional school district borrowing by extending the allowable borrowing terms. The provisions would also increase flexibility for emergency borrowing, expedite the process for achieving savings through refinancing, and remove overly restrictive requirements for amortization of debt.
The relief bill, however, does not include the MMA’s top legislative priority: the removal of health insurance plan design from collective bargaining, which would save cities and towns between $75 million and $100 million statewide. The bill also does not include a Senate provision, opposed by the MMA, that would have made health insurance changes subject to binding arbitration.
During the development of this legislation, the MMA worked closely with Sen. Stan Rosenberg and Rep. Paul Donato, chairs of the Special Commission on Municipal Relief, as well as Sen. James Eldridge, the Senate chair of the Joint Committee on Municipalities and Regional Government.
• Summary of municipal relief bill (112K PDF)
• Text of municipal relief bill (396K PDF)
