The Department of Revenue's Division of Local Services annually notifies cities, towns, and regional school districts of the aid and assessments the Commonwealth will provide them in the upcoming fiscal year. These notifications were originally printed on cherry-colored paper, and were therefore given the name "cherry sheets."
In Fiscal Year 2001, cherry sheet appropriations will total $4.8 billion, providing cities and towns with a direct local aid increase of $202 million, 4% over Fiscal Year 2000 levels. This represents the eighth consecutive annual local aid increase. Since Fiscal Year 1992, cherry sheet aid has increased by $2.7 billion, or 130%, demonstrating the Cellucci-Swift Administration's continuing commitment to the Commonwealth's municipalities.
CHERRY SHEET PROGRAMS
The direct local aid distributed to cities and towns through the cherry sheets is comprised of 28 line-item appropriations administered by a variety of state agencies and departments. These programs, and their Fiscal Year 2001 funding levels, are described below.
Treasurer and Receiver-General
In Fiscal Year 2001, teachers' pensions and the local share of the racing tax are funded at Fiscal Year 2000 levels. Payments-in-lieu of taxes for state-owned land will increase by $3 million, representing the fourth year of a five-year plan to fully fund the program. In Fiscal Year 2001 the Administration recommends redirecting 10% of the funds currently distributed as Additional Assistance to assist municipalities with costs associated with developing affordable housing. In Fiscal Year 2001 the distribution of lottery proceeds to cities and towns will be $730 million, an increase of $14 million over estimated Fiscal Year 2000 spending. The increase reflects the Cellucci-Swift Administration's commitment to distribute funds to cities and towns through the lottery formula. If the State Lottery Fund revenue growth exceeds current projections in Fiscal Year 2001, the additional increase will be distributed through the same formula at the end of the fiscal year.
1 The General Appropriations Act for Fiscal Year 2000 appropriates $670 million for
Lottery distribution. The $716 million estimate includes a projected surplus of
$46 million to be distributed to cities and towns.
The Department of Housing and Community Development administers the State Urban Renewal and Urban Revitalization and Development Grant programs. These programs reimburse cities and towns for a portion of the costs related to urban renewal projects, which are targeted at redeveloping downtown areas, neighborhoods, industrial parks, and commercial zones. Fiscal Year 2001 funding for the Urban Revitalization and Development Grant program is level-funded at the Fiscal Year 2000 service level. The State Urban Renewal program is being phased out and is, therefore, receiving decreased funding in Fiscal Year 2001.
The Commonwealth also provides reimbursements to cities and towns for tax exemptions granted to qualifying veterans, blind persons, surviving spouses, and elderly persons, as well as reimbursements for tax abatements. Fiscal Year 2001 funding for these reimbursements will provide the same level of support as in Fiscal Year 2000.
The Department of Veterans' Services, within the Executive Office for Administration and Finance, administers veterans' benefits programs, which reimburse cities and towns for 100% of the costs of benefits for veterans and their dependents. These benefits include assistance for food, clothing, shelter, heat, medical, and burial expenses. Fiscal Year 2001 funding will ensure that service levels can continue at Fiscal Year 2000 service levels.
Board of Library Commissioners
The Board of Library Commissioners oversees two cherry sheet programs: aid to local public libraries and aid to regional public libraries. The state aid distributed through these two programs assists municipalities in providing free library services at local libraries and defraying the costs of regional public library services. With state aid, regional libraries are able to provide support services to municipal libraries, including interlibrary loans, research and reference searches, and the delivery of materials between libraries. The Fiscal Year 2001 funding level for libraries is equal to the Fiscal Year 2000 funding level.
The cherry sheet contains aid for several education programs. Fiscal Year 2001 total cherry sheet education funding will receive a net increase of $181 million over Fiscal Year 2000 levels. Direct financial assistance distributed to school districts through the Education Reform formula will increase by $132 million, reflecting the Cellucci-Swift Administration's commitment to maintaining investments made in education reform.
Included in the $132 million increase is $5.5 million to address the disparate wage differences that occur in the various labor market areas within the state. The $5.5 million represents the first year of a four-year commitment to raise wage adjustment factors in the foundation budget so that the salary levels upon which the formula is based are equalized.
School Building Assistance reimbursements, which provide municipalities and regional school districts with financial assistance for the planning and construction of school buildings, will increase by approximately $54 million in Fiscal Year 2001. In addition, the Fiscal Year 2001 budget recommendation includes legislation intended to enhance the quality and effectiveness of the School Building Assistance program.
Additionally, the Commonwealth will increase Fiscal Year 2001 funding for regional school transportation by $8 million, representing the final year of a three-year commitment to fully fund the program.
The Executive Office of Public Safety administers the police career incentives program, through which the Commonwealth reimburses cities and towns for 50% of the costs associated with providing incentive education programs to police officers. These incentives are offered in the form of salary increases as the officers earn undergraduate and graduate degrees. The Fiscal Year 2001 recommended funding provides a $4 million increase over Fiscal Year 2000.
Transportation and Construction
To reimburse municipalities for costs incurred in the construction, maintenance, and policing of local streets and roads, the Commonwealth distributes Highway Fund revenues (funded through the motor vehicle fuels excise tax) to the 351 cities and towns in Massachusetts. In Fiscal Year 2001, Highway Fund distributions will equal Fiscal Year 2000 distributions.
NON-CHERRY SHEET LOCAL AID
The Cellucci-Swift Administration will continue to pursue a comprehensive local aid policy to ensure the fiscal stability of each city and town in the Commonwealth. To achieve this goal, the state administers local aid programs in addition to those that appear on the cherry sheet. These programs provide either programmatic assistance or direct monetary aid to communities, and like cherry sheet aid, are an important part of the Administration's effort to support the delivery of quality local services. In Fiscal Year 2001, the Administration will continue a commitment to local aid by increasing funding for housing development assistance, education, the District Attorneys, and water and sewer assistance.
Housing Development Assistance
In Fiscal Year 2001, the Administration will seek to provide incentives to municipalities to expand the availability of affordable housing. Certain types of residential development are perceived as a burden to some local communities because potential tax revenues from the development often cannot cover the costs associated with it, particularly the costs of educating additional children. To remove this disincentive to develop affordable housing and assist communities with the additional costs, the Cellucci-Swift Administration recommends redirecting 10% of the funds currently distributed as Additional Assistance to communities based on a formula that stresses housing development. The formula will be developed by the Secretary of Administration and Finance, the Director of Housing and Community Development, and the Commissioner of the Department of Revenue by March 31, 2000, and will focus on encouraging the development of moderately priced homes and multi-family units.
In addition to the education aid distributed through the cherry sheet, the Fiscal Year 2001 budget recommendation includes $11.6 million for a new program to lower the class sizes of students in kindergarten through third grade in those districts where more than 30% of these students are from low-income families.
District Attorneys and Public Safety
The Fiscal Year 2001 recommendation for District Attorneys reflects the Cellucci-Swift Administration's strong commitment to law enforcement. The budget includes an additional $4.2 million for the District Attorneys, which represents a 6% increase over Fiscal Year 2000 appropriations.
Water and Sewer Assistance
In Fiscal Year 2001, the Cellucci-Swift Administration will address statewide infrastructure concerns with continued support of funding for the financing of local water and sewer improvement projects. This budget provides $2.5 million, a $636,955 increase above Fiscal Year 2000 funding, which will allow the Massachusetts Water Pollution Abatement Trust, through the conduit of the State Revolving Fund, to support new drinking water projects throughout Massachusetts. The Administration also funds nearly $39 million for clean water contract assistance that will support both existing loans and new loans to be made in Fiscal Year 2001. Currently, the Trust issues 0% interest loans to communities for local water and sewer projects. In Fiscal Year 2001, the Administration recommends increasing the interest rate on State Revolving Fund loans to 2%, still the lowest rate offered by any state in the country. This change will allow the Trust to issue loans to a greater number of communities.
In addition, this budget continues to provide funding of $54 million to reduce water and sewer rates that would otherwise increase as a result of water pollution abatement projects. The Fiscal Year 2001 recommendation also includes $1 million (1599-3250) to develop and evaluate proposals to privatize the Massachusetts Water Resources Authority (MWRA). The proposals will be reviewed to determine if private operation of the MWRA would increase the efficiency of operations and long-term maintenance of the authority. If a proposal is found to be cost-effective, the winning contractor will reimburse the Commonwealth for the cost of the review.