MMA Action Alert

Gov. Downgrades Fiscal 2010 Revenues by $600 Million

• Administration Prepares Mid-Year Cuts, Seeks Expanded 9C Authority
• Local Aid Accounts in Jeopardy
• Call Your Legislators Today to Rally for Municipal Relief Items

With state tax revenues falling far below the benchmark needed to keep the state budget in balance, Gov. Deval Patrick today officially lowered the state tax revenue forecast for fiscal 2010 by $600 million, throwing Massachusetts state government sharply into the red and setting t he stage for mid-year budget cuts just a few months into the fiscal year.

For fiscal 2010 so far, tax collections are falling $212 million short of the benchmark after three months, and the Governor’s own revenue commissioner projected a revenue shortfall of $400 million to $600 million for the year.

Under state law, the Governor now has 15 days to develop a plan to close the shortfall. The Governor has said that he will announce his plan to close the budget shortfall by October 30, and use his so-called Section 9C budget-cutting authority to reduce executive branch agency spending, triggering up to 2,000 more state layoffs and program reductions. The Governor has said that “local aid is on the table because it is unavoidable.” The Governor’s effort to secure expanded 9C powers would enable him to reduce the major general municipal aid account (the combined Lottery and Additional Assistance amount) and Chapter 70 education aid. However, the Administration has the ability to reduce many other local aid programs, including reimbursement accounts and grants, with his existing powers. The Legislature is expected to provide him with expanded 9C powers, as such a request has never been denied.

PLEASE CALL YOUR LEGISLATORS TODAY and ask them to protect municipal aid. Cities and towns have been severely harmed by the deep local aid cuts implemented since the beginning of the fiscal crisis. The fiscal 2010 state budget slashed total local aid by $724 million below the original fiscal 2009 budget, the largest local aid cut in history. Communities in every corner of Massachusetts have implemented layoffs, deep cuts in services, relied even more on property taxes and, now, are adopting local option tax increases. It is crucial for your legislators to know how any mid-year cuts would throw your budget out of balance and cause even more widespread disruption and pain.

PLEASE ACT TODAY TO CALL ON YOUR LEGISLATORS AND THE GOVERNOR TO PASS KEY MUNICIPAL REFORMS NOW. This is the time for state leaders to provide major municipal relief items. Ask your Representatives, Senators and the Governor to immediately support and pass the following 5 top priorities:

• HEALTH INSURANCE PLAN DESIGN POWER: Pass the MMA’s plan to give cities and towns the power to update municipal health insurance plans outside of collective bargaining, which is what state government does, and would save tens of millions of dollars statewide;

• CLOSE THE TELECOM EQUIPMENT LOOPHOLE: End the telecom property tax loophole on equipment, which would generate $25 million locally (the state ended the loophole on poles and wires last summer);

• STOP THE QUINN BILL UNFUNDED MANDATE: 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 – 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;

• FIX CHARTER SCHOOL FUNDING: Charter schools are a major burden on nearly 200 cities, towns and school districts, causing a net loss of $200 million in Chapter 70 school aid – the state should oppose any expansion of existing and new charter schools (the MMA supports legislation allowing in-district charter schools) until the system is fixed, and in the short-term the state should provide a circuit-breaker to prevent any district from a ny further Chapter 70 losses;and

• 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.

The MMA will keep you updated and fully informed of all developments. If you have any questions, please do not hesitate to contact MMA Legislative Director David Baier (at dbaier@mma.org or 617-426-7272 ext. 120) or MMA Deputy Legislative Director John Robertson (at jrobertson@mma.org or 617-426-7272 ext. 122) at any time. Thank you.