BELCHERTOWN – Gov. Deval Patrick will cut local aid to cities and towns across the state to close a budget deficit that continues to grow. The cuts will cost Belchertown $200,000 or more for the current fiscal year with deeper cuts expected for 2010.
Patrick, before an audience at the Mass. Municipal Association in Boston on Friday, said an additional $1.1 billion in cuts need to be made on top of the $1.4 billion gap closed back in October.
$128 million of those cuts will be in local aid. The cuts come from the Lottery and Additional Assistance accounts with another $375 million in cuts scheduled for fiscal year 2010,
“As a result, state revenues are falling and wreaking havoc with the state budget. We have tough choices among miserable options,” said Patrick. “My job is to make those choices and I have.”
He told the audience of local officials that though he spared local aid in the last round of cuts, he could not do so this time. “We committed to cut local aid only as a last resort. Unfortunately, we have reached the last resort,” said Patrick.
Chapter 70 education money would not be cut in the current fiscal year. He said communities can expect level-funding for 2010.
The governor said he is working closely with the Obama administration and the Congress on federal stimulus money that could raise education funding for next year and beyond.
Patrick proposed to give cities and towns the ability to raise money through a one percent increase in meal and hotel room occupancy taxes. He said the change could raise $150 million of additional revenue that would go directly back to communities.
The request to the legislature would be on top of a one-percent increase proposed by the governor.
He wants to eliminate the property tax exemption for telephone poles and telecom switching stations when he plans to file a second Municipal Partnership Act this week.
Currently, telecommunication companies do not pay local property taxes for the permanent fixtures that are visible throughout communities in the state.
Patrick and his team plan to unveil the cuts and areas of additional revenue sources this week.
On Friday, Town Administrator Gary Brougham said Belchertown could lose over $200,000 to $500,000 or more in local aid when the cuts are revealed.
Brougham recalled Patrick’s visit to Belchertown back in October when the first round of cuts happened. He said Patrick felt at the time, as the governor spoke to a roomful of municipal leaders, that he adequately trimmed enough so as not to repeat the process.
“Here we are now just eight or ten weeks after that visit to Belchertown and we have another $1.2 billion deficit,” said Brougham. “What we’re being told is that they need to balance the ’09 budget and although municipal aid was held harmless in the first cut, it can no longer leave us outside of the cuts.”
On Jan. 14 the legislature granted the governor additional 9C powers. Originally under 9C, the governor made cuts in spending that fell under authority of the executive branch when an imbalance occurred.
With the expanded powers, the governor now has the authority to cut non-executive branch items in the budget, which includes local aid.
Brougham said with only five-months left in the current fiscal year, many of Belchertown’s departments have already spent or drawn down their budgets, particularly the DPW with the completion of seasonal work.
State Sen. Stanley C. Rosenberg, the Senate Chair of the Special Commission on Municipal Relief, spoke by phone on Sunday about the situation.
Rosenberg said the governor filed a relief package last year for municipalities in the early stages of the financial crises. He said the legislature, at the time, only approved one item that allowed municipalities to join the Group Insurance Commission.
“We are just a couple of weeks away from releasing a package. We’re looking at all the proposals that he (Gov. Patrick) put forward so far, plus another round of significant number of additional proposals for regulatory relief,” said Rosenberg. “Taking a look at mandates, increasing compliance with existing fees for communities as well as the local options taxes that he proposes.”
Rosenberg said the legislature will file a relief package in the next few weeks that is similar to the one proposed by the governor. He said the legislature plans to take a different approach, as they will examine state fees that have not been adjusted in some time.
He said communities, such as Belchertown, should realize the governor’s cuts are real and will happen.
“For next year there will be cuts and, as you can see, they’re deeper cuts than this year,” said Rosenberg. “The legislature has not yet wrestled with how deep the cuts should be. Usually the governor and the legislature are in the same ball park except when it comes to local aid increases and local aid decreases.”
He added, “We don’t want to do cuts to the municipalities, but the recession now is so deep and with a free-fall of all state revenue sources, that it is just unavoidable at this point.”
During the last two recessions, according to Rosenberg, the state did not have to cut local aid until the middle to the last half of the economic downturns. This time, though, the depth of the crisis compels the governor and the legislature to make cuts early on.
“That should be a real eye-opener for people to understand that this is an unprecedented situation.” said Rosenberg.
He said there will be revenue “tools” available but that the tools will not work in certain communities. For example, hotel room occupancy taxes would benefit Belchertown little as would increases in the local meal tax.
Rosenberg said cities and towns that would benefit from the increased revenue, should share it in an equitable fashion with adjacent communities that prop up those establishments.
He calls the situation a world-wide economic crisis that has affected all industries and parts of the economy.
“We are very hopeful, but we are also extremely worried that this is the closest thing to the Great Depression that most anybody has lived through,” said Rosenberg. “We are hoping that we can get this under control, but the states do own this problem. The states have to deal with it.”
When the governor and the legislature unveil their budgets and proposals over the next few days, cities and town face a future with decreased budgets and years of economic uncertainty ahead.