- Governor's Message
- Secretary's Message
- Budget Narrative
- Issues in Brief
- Education Investment
- Higher Education
- Local Aid and Municipal Partnership
- Pension Reform
- Debt Refinancing Strategy
- Human Resources Modernization Project
- Massachusetts Geographic Information Systems
- Federal Single Point of Contact
- Shared Services Model
- Access and Opportunity
- Line Item Consolidation
- Capital to Operating Transfer
- Information Technology Consolidation
- Capital Gains Revenue in the Budget
- Long-Term Retirement Liabilities
- Limiting Certain Tax Expenditures
- Health Care Reform
- Commonwealth Health and Prevention Fund
- Veterans and Soldiers' Homes
- Life Sciences Initiatives
- Reforming Community Supervision
- Police Training Initiative
- Update on County Sheriffs Transition
- Energy Management
- Expanded Bottle Bill
- Update on Transportation Reform
- Civic Engagement
- Budget Transparency
- GFOA Award
- User Guide
- Organization Chart
- Budget Development
- Financial Statements
- Appropriation Recommendations
- Operating Transfers
- Local Aid - Section 3
- Outside Sections
- Tax Expenditure Budget
- Capital Budget
- Federal Stimulus
Local Aid and Municipal Partnership
[ index ]
FY2011 House 2 Budget Recommendation:
Issues in Brief
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
Local Aid and Municipal Partnership
Governor Deval Patrick has made significant investments in Massachusetts’ 351 cities and towns over the last three years. One of his first policy initiatives was the Municipal Partnership Act, comprehensive legislation that includes tools to strengthen communities. The Patrick-Murray Administration has maintained a strong commitment to education, funding Chapter 70 at record levels. He has protected local aid even in this challenging fiscal climate. And he has provided communities with the tools they need to help balance their own budgets – reducing the pressure on the property tax and protecting essential services like police and fire. The Patrick-Murray Administration continues this commitment in fiscal year 2011 by proposing over $5.2 billion in total local aid in fiscal year 2011.
Fiscal Year 2011 – Preservation of Local Aid
Local aid is a substantial component of the Commonwealth’s annual budget and a top funding priority for the Patrick-Murray Administration. Despite fiscal challenges, the Governor’s fiscal year 2011 budget recommendations preserve over $5.2 billion in direct local aid to cities and towns with General Fund dollars. In fiscal year 2010, the state’s budget provided $5.2 billion dollars to support direct local aid; however, $172 million was supported through the American Recovery and Reinvestment Act’s (ARRA) State Fiscal Stabilization Fund to help fund the Chapter 70 program. Cities and towns were concerned about the sustainability of relying on these one-time federal stimulus dollars and the budget uncertainty that results from relying on federal stimulus funds. The House 2 budget recommendations include solutions that allow the Administration to sustain the level of support provided to cities and towns in fiscal year 2010 using entirely General Fund dollars. The use of General Fund dollars eliminates the uncertainty of future budget reductions in the State’s two largest sources of local aid that would result from the phase out of the federal stimulus funds. For fiscal year 2011, Section 3 Local Aid, is being held completely harmless to budgetary reductions. This is a major accomplishment that demonstrates the Administration’s commitment to partnering with cities and towns.
Section 3 of the Commonwealth’s budget provides each of the 351 cities and towns with the amount of local aid they are expected to receive from state General Fund dollars and/or other dedicated revenues sources. For fiscal year 2011, there are two categories of aid specified in Section 3: Chapter 70 and Unrestricted General Government Aid. The following chart displays the funding levels for Section 3 for fiscal year 2010 and the Governor’s recommendations for fiscal year 2011.
|Program||FY10 Estimated Spending||FY11 H.2|
|Chapter 70 Aid Total||$4,042,022,844||$4,048,324,258|
|General Fund Dollars||$3,869,847,585||$4,048,324,258|
|Federal Stimulus Funds||$172,175,259||$-|
|Unrestricted General Government Aid||$936,437,803||$936,437,803|
|Total Section 3 Aid||$4,978,460,647||$4,984,762,061|
Unrestricted General Government Aid (UGGA)
This local aid account distributes flexible dollars that are used to fund non-school portions of municipal budgets. The UGGA account was created in fiscal year 2010, replacing a mechanism to direct local aid to municipalities through formulas that are outdated and rarely recalculated. In fiscal year 2010, this account was not reduced as part of the October 9C budgetary reductions, and in fiscal year 2011 the Patrick-Murray Administration is able to maintain its commitment to Unrestricted General Government Aid at the fiscal year 2010 level of $936 million. In addition to the funding commitment to this category of local aid, the Administration is also proposing the establishment of a local aid commission to evaluate local aid formulas.
The Administration’s commitment to education is clear from its decision to fund Chapter 70 education local aid at an all time high level of $4.048 billion. By running the Chapter 70 formula using the relevant and updated factors for fiscal year 2011, every district is fully funded at foundation and all districts are held harmless from reductions to fiscal year 2010 levels (at a cost of over $90 million). Additionally all ARRA funds used in fiscal year 2010 to support education are now funded with additional General Fund dollars (at a cost of $172 million). The Administration is thus mitigating any risks or concerns associated with the loss of one-time federal stimulus funds, continuing the Administration’s strong commitment to education.
*FY10 GAA includes $172M in federal stimulus ARRA funds.
Other Cherry Sheet Aid to Cities and Towns
Named for the cherry-colored paper on which it was originally printed, the Cherry Sheet is the official notification by the Commissioner of Revenue to municipalities and regional school districts of estimated state aid to be paid and charges to be assessed over the next fiscal year. The following chart displays all operating accounts, other than Section 3 aid, that appear on the cherry sheets to support vital local programs including libraries, Payment in Lieu of Taxes (PILOT) and Regional School Transportation, among others.
|Program||FY2010 GAA||FY2010 9C Reductions||FY2010 Estimated Spending||FY2011 H.2|
|Tax Reimb Vet, Blind, Widows||25,301,475||-||25,301,475||25,301,475|
|State Owned Land||27,270,000||-||27,270,000||27,270,000|
|Regional Library Local Aid||12,341,160||(514,000)||11,827,160||8,781,475|
|Municipal Libraries Local Aid||7,107,657||(284,000)||6,823,657||6,823,657|
|Local Share Racing Tax**||1,179,000||-||1,179,000||962,000|
|Regional School Transportation||40,521,840||-||40,521,840||40,521,840|
|School Food Services Program||5,426,986||-||5,426,986||5,426,986|
|Charter School Reimbursement***||79,751,579||(5,174,307)||74,577,272||74,577,272|
|Police Career Incentive Payment||10,000,000||-||10,000,000||5,000,000|
grow by $7 million from FY10 to FY11 and the
increase of $19.9M is the result of the
consolidation of annuities account.|
**Based on projections and not budgetary decisions.
***Based on revised spending estimates.
Payment in Lieu of Taxes on State Owned Land (PILOT): Many cities and towns are home to state-owned property, such as facilities or office buildings, do not benefit from the property tax revenue associated with these properties. To ease this burden, the PILOT program was established to partially reimburse cities and towns for this revenue loss. The Administration maintains the same amount of support for PILOT in fiscal year 2011 as in fiscal year 2010 affirming the Administration’s commitment to reduce pressure on local property taxes.
Regional School Transportation: The Administration recently restored a fiscal year 2010 budgetary 9C reduction to this program due to revenue collections exceeding earlier estimates. This program is important for supporting regional schools and it is recommended that this account be level funded at $40.5 million to avoid any potential negative impacts on the students and teachers in regional schools districts.
Full Funding for Veterans’ Benefits: The budget increases Veterans’ benefits by $7 million to $37 million, reflecting anticipated caseload increases in this needs-based program for fiscal year 2011 and our obligations to cities and towns for veterans who are entitled to benefit payments. Total funding for Veterans’ benefits, including annuities payments, equals $56.9 million in fiscal year 2011.
Library Funding Waivers: The Governor’s budget again removes the cap on the number of waivers that the Board of Library Commissioners can grant in fiscal year 2011 to libraries not meeting certain funding requirements. This enables libraries to maintain certification and access popular regional library lending networks at a time when more local residents are turning towards libraries as a resource.
School Lunch Program: The budget maintains fiscal year 2010 funding of $5.4 million for the school lunch program, which plays a critical role in ensuring that all children are ready to learn by supporting nutritionally balanced, low-cost or free lunches to eligible children each school day. At $5.4 million, this account leverages over $157 million in federal funds in fiscal 2010 and will continue to leverage important federal dollars in fiscal year 2011.
Other Programs at Reduced Levels: In some cases, including local share racing tax and charter school reimbursements, these reductions reflect expected spending at the local level. In others (Police Career Incentive, regional libraries), cuts have been made to help achieve budgetary balance and savings. In connection with the proposed reduction to the Police Career Incentive Program, the Governor’s budget recommendation includes a provision absolving municipalities form having to cover the portion of the costs for the program previously funded by the state.
Additional Tools for Municipalities - A Continued Commitment
Through its Fiscal Year 2011 budget and legislation filed and submitted to the Joint Committee on Municipalities and Regional Government last week, the Patrick-Murray Administration is proposing a number of new tools to support cities and towns, including:
- A 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 the first year of the proposed new schedule.
- An optional Early Retirement Incentive program for cities and towns.
- A rate freeze on special education private placements that could save $3.2M
- Relief from library “maintenance of effort” requirements and decertification rules
- Allowing regional school districts to share superintendents, providing savings and efficiencies
- Allowing regional school districts greater access to stabilization funds
- Allowing cities and towns to participate in consolidated state energy procurements that will leverage government purchasing and save energy costs.
The Governor also proposes a comprehensive evaluation of two key local aid accounts:
- A Chapter 70 study commission to finally begin addressing long standing concerns about the formula.
- local aid study commission to evaluate local aid formulas
Commitment to the Environment
In July, 2008, Governor Patrick signed into law the Green Communities Act, establishing the Green Communities Program. Operated through the Department of Energy Resources, the program provides $7 million to communities to support energy efficiency, renewable energy and other innovative energy projects.
Commitment to Public Safety
The Administration recognizes that ensuring safe cities and towns is critical to the prosperity of the Commonwealth, and in fiscal year 2010 played an instrumental role in winning $71 million in federal recovery funding for local police and fire departments.
Commitment to Partnership
The Administration continues to pursue savings and other tools for municipalities to relieve pressure on the property tax, increase government efficiency, and preserve critical services at the municipal level.
- Healthcare savings: Signed into law opportunity for municipalities to join the Group Insurance Commission, the state health insurance program. Communities that have joined have saved millions of dollars.
- 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.
- Regionalization: Proposed tools to encourage and facilitate regionalization of municipal services, which if enacted could save millions of dollars. Also created the Regionalization Advisory Commission, examining opportunities for communities to achieve cost savings, efficiencies and improve services.
- Closed telecom tax loophole: eliminated exemption for telephone poles and wires, generating $26 million for communities. Also proposed eliminating exemption for telecom machinery, which would generate an additional $26 million.
- Local Option Revenues: Signed into law local option meals and hotel taxes to give communities new tools to balance their budgets, generating up to $250 million annually for cities and towns.
- Partnership: Created the Municipal Affairs Coordinating Cabinet, which held over 20 listening sessions across the Commonwealth with municipal leaders. Also created the Edward J. Collins Center for Public Management, providing an array of services for local government.
- Procurement: Proposed tools for reforming municipal procurement and advertising requirements, providing savings and efficiencies.
- Local Authority: Proposed provisions allowing municipalities more legal flexibility in certain areas, which would dramatically reduce need for special legislative exemptions.
- Proposed tools allowing enhanced flexibility and improved processes in municipal finance.
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