Enacted cost savings, revenues, reforms and efficiencies
Healthcare savings: Created the opportunity for municipalities to join the Group Insurance Commission, the state health insurance program. As of summer 2010, 26 municipalities and regional school districts have joined the GIC, providing millions of dollars in savings across the state. DOR estimates communities could save $120M if all municipalities statewide moved to GIC plan design as it existed in January 2010.
Closed telecom tax loophole: Eliminated the exemption on telephone poles and wires, generating $26 million for communities. Proposed eliminating exemption on telecom machinery, which would generate $26 million more.
Local Option Meals Tax: Signed into law local option meals tax (0.75%). As of summer 2010, 79 cities and towns have adopted the local option meals tax. Estimated revenue for a full year if all communities statewide adopted the meals tax is approximately $86.4 million.
Local Option Room Occupancy Tax: Signed into law increased local option room occupancy tax (additional; 2%). As of summer 2010, 75 communities have adopted the increase in the local option room occupancy tax of 2% for a total tax of 6%. Estimated revenue for a full year if all communities statewide adopted the room occupancy increase is approximately $24.9 million (from 2% increase).
Provided Municipal Pension Relief
Pension Savings: Signed into law provision merging underperforming local pension funds with state pension fund. Savings can be achieved by both underperforming and well-performing local funds. Also signed into law Pension Reform Phase 1, eliminating the most egregious abuses in pension systems that cost money and compromise the integrity of the system.
- Local Pension Funding Relief: Proposed local pension funding relief initiative to help local systems address unprecedented asset losses in a fiscally responsible way. Communities could save up to $200 million statewide in year one of the proposed new schedule.
- Early Retirement Program: Optional Early Retirement Incentive program for cities and towns, a tool to help communities address budget challenges in a fiscally responsible way.
Public Safety: In FY2010 advocated for and won $71 million in federal recovery funding for local police and fire departments.
Energy and Environment: Launched the Green Communities grant program, providing $7 million to communities to support energy efficiency, renewable energy and other innovative energy projects.
Capital Improvements: Historic levels of investment in municipal grant programs, Chapter 90, transportation, land conservation, public housing, economic development. Funded FY2011 Chapter 90 local road program at $155 million, an increase of $5 million over FY2010. Since coming into office Governor Patrick has distributed annual bond funding for Chapter 90 of $150 million, compared to $120 million in bond-funded Chapter 90 distributions during the prior administration. The Governor's increased Chapter 90 distributions from FY2008 through FY2011 provided an additional $125 million in total for the Chapter 90 program over the bond funding level for the program when he took office.
Procurement law changes:
- Allows cooperative purchasing agreements with out of state procurement units.
- Allows municipalities to accept online/electronic bids and proposals on their own website or on the Commonwealth's procurement website, Comm-PASS. This section provides environmental and financial benefits and allows for greater flexibility for municipalities and bidders.
- Allows procurement officers to use reverse auctions to buy products and services from sellers who bid against each other for the product or service being auctioned. This process provides a method of acquiring best pricing from qualified bidders.
- A construction bond is required for contracts of more than $25,000, an increase from the existing levels of $2,000 for municipalities and $5,000 for the Commonwealth.
- Increased threshold for repairs and maintenance to public buildings to trigger public bidding laws. Allows municipalities to award contracts of up to $25,000 based on sound business practices; contracts above $25,000 would require solicitation of at least 3 price quotes.
- Cities and towns now authorized to lease public buildings for up to 30 years, instead of up to 10 years.
Regionalization: Cities, towns and other governmental units in Massachusetts can now join a statewide mutual aid agreement to provide police, fire, emergency medical, and other public safety assistance to other municipalities.
Streamlining abatement process: Local assessors can grant expedited abatements for abandoned property without receiving prior DOR approval. Under this section the commissioner will issue guidelines granting authority to abate for reasons in the public interest. Current law requires an informal hearing, limitations on the number of units, and written plan and procedures.
Shared Superintendents: Allows school districts, including regional school districts, to select a superintendent jointly with other school committees, and the superintendent would serve as the superintendent of all the districts that select him or her. This would help save costs, find efficiencies and help move toward regionalization for some districts.
Budgetary flexibility regarding libraries: Proposed temporary relief from library "maintenance of effort" requirements and decertification rules during fiscal crisis.
Budgetary flexibility regarding regional school funds: Allowing regional school districts greater access to stabilization funds, assisting regional school districts in coping with the continued budget stresses at the local level.
Proposed cost savings and revenues not yet enacted
Healthcare Savings: Proposed transferring eligible retired local employees into Medicare as their primary source of health insurance coverage, which could save more than $115 million if municipalities move both eligible retired teachers and municipal employees into Medicare. (The state requires this of their employees.) (The Readiness Finance Commission report estimated that if municipalities move their eligible retired teachers into Medicare, total savings of roughly $135 million could be realized. The majority of these savings, approximately $115 million, would accrue to cities and towns that have not yet adopted Section 18, and the remaining $20 million in savings would accrue to their retired teachers.)
Telecom tax loophole: Proposed eliminating exemption on telecom machinery, which would generate $26 million more.
Pension Reform: Proposed Pension Reform Phase 2, continuing to reform and modernize the system to provide cost savings and strengthen the integrity of the system. Estimated savings of $2 billion over 30 years, including $750 million for cities and towns.
Special Education Rate Freeze: In FY2011 House 2 budget, proposed a rate freeze on special education private placements that could save communities $3.2M. A freeze was proposed and implemented in the prior year (FY2010) as well.
Procurement Savings: Proposed to allow municipalities and state agencies to post notices of procurements on the internet instead of in a local newspaper. Municipalities could post the notices on either their own or the commonwealth's website. Savings to municipalities could amount to as much as $250,000 per year statewide.
Proposed cost savings and revenues not yet enacted (no savings estimates)
Local Aid: Continued support for Local Aid and Chapter 70 funding at historic levels.
Proposed comprehensive evaluations of two key local aid accounts: $250K in a reserve account to study the adequacy of the Chapter 70 foundation budget and a local aid study commission to evaluate local aid formulas.
Healthcare savings: Proposed pro-rating insurance for part-time municipal employees.
Local Legal Flexibility: Proposed provisions allowing municipalities more legal flexibility in certain areas, dramatically reducing need for special exemptions.
Energy cost savings and efficiencies: Proposed energy performance contract opportunities for cities and towns for energy efficiency improvements and energy cost savings.
Proposed improvements in municipal finance procedures and policies:
Proposed allowing taxation of the true value of land in phased condo developments. Currently, the land value implicit in the reserved right to build additional new condo units escapes taxation. Only the value of the units built in the first phase are captured.
Proposed direct property tax relief
Destination resort casino plan supports broad-based, direct property tax relief: The Governor's destination resort plan, proposed in September 2007, included provisions offering property tax relief to struggling homeowners across the state. Under the Governor's plan, half of new destination resort casino state revenue would be dedicated each year to broad based, direct property tax relief for more than one million homeowners, resulting in real savings to Massachusetts homeowners.
Proposed Homeowner Property Tax Circuit Breaker: In legislation that accompanied his first budget proposal upon taking office, Governor Patrick proposed a Homeowner Circuit Breaker designed to apply to homeowners of all ages, based on income. Under the plan, an estimated 100,000 families and individuals across the Commonwealth would qualify for a state tax credit of up to $870 per year. This credit represents a nearly 25 percent offset to the 2007 average state-wide property tax bill of $3,800. To fund the Homeowner Circuit Breaker, Governor Patrick proposed legislation to close a number of corporate tax loopholes. Closing the unintended loopholes, would help relieve the burden on homeowners and small businesses and assure that all Massachusetts businesses are treated fairly and equitably.
Proposed Municipal Property Tax Exemption Fund : Upon taking office the Governor proposed direct property tax relief in conjunction with new modest local option meals tax and increase to the local room occupancy tax. The Patrick-Murray Administration's first Municipal Partnership Act legislation provided for 25 percent of the new revenue generated by the local option meal and room occupancy taxes to fund a Municipal Property Tax Exemption Fund, which would be used to reimburse municipalities for property tax exemptions given to senior citizens through existing programs.
- The Administration extended the deadline by which cities and towns may join the state employee health plan, enabling them to save money on offering high-quality coverage for municipal employees. To date 19 communities and 7 school districts have signed up.
- The Administration has provided cities and towns with steady Lottery aid despite significant shortfalls in actual Lottery receipts.
- The Administration has eliminated an obsolete property tax exemption for telecommunications firms and gave municipalities the authority to impose local option meals and hotels taxes. The Administration has also proposed additional municipal tools and pension reforms, pending before the Legislature.