- Governor's Message
- Secretary's Message
- Budget Narrative
- Issues in Brief
- Health Care Cost Containment
- Eliminating the Achievement Gap
- Youth Violence Prevention
- Job Creation - Broad Strategies
- Life Sciences Strategies
- Accountability and Transparency
- Human Resources Modernization
- Shared Services Reforms
- Office of Access and Opportunity
- IT Consolidation
- State Facilities Management
- Procurement Reforms
- Quasi-Public Reforms
- Budget Transparency
- Strategic Asset Management
- Higher Education
- Local Aid Municipal Partnership
- Proprietary Schools
- Homelessness Reforms
- Criminal Justice Reform
- Police Training Initiatives
- Indigent Defense Reforms
- Energy and Investment Program
- Enhanced Recycling
- Transportation Reform
- Pension and Other Post-Employment Benefits
- Responsible Budgeting
- 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 Municipal Partnership
[ index ]
FY2012 House 1 Budget Recommendation:
Issues in Brief
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
Governor’s Investment Proposal
The fiscal year 2012 budget continues the Patrick-Murray Administration’s unprecedented support for cities and towns. The Administration’s approach to fiscal year 2012 continues to give cities and towns tools they need to manage costs, with the overarching goal of preserving local services for residents and taxpayers.
Municipal Health Insurance Proposal
The Governor will file legislation to provide cities and towns across the Commonwealth the tools they need to reign in municipal health insurance costs. This legislation will help municipalities achieve real healthcare cost savings and preserve local services in fiscal year 2012. This could save more than $94 million in year one for those cities and towns that have not joined the state health insurance system.
The proposal is premised on two simple principles: municipalities must be able to achieve material savings in health insurance costs and preserve local services in fiscal year 2012, and labor must have a meaningful role in the process. The proposal will allow municipalities to require expedited collective bargaining to negotiate a new health insurance benefit plan that is equivalent in cost to the state’s health insurance benefits offered through the GIC. If the municipalities and unions don’t reach agreement within a limited period of time, the municipality will be required to go into the GIC or otherwise have health insurance coverage equivalent in cost to the GIC. This legislation is intentionally crafted to delegate many of the details of the process to regulation to facilitate legislative enactment and ensure savings in fiscal year 2012.
The Governor’s proposal also requires that all municipalities have eligible retired local employees enrolled in Medicare as their primary source of health insurance coverage, as this federal program covers a substantial portion of their health costs. (Estimated savings: $15 to $30 million remaining to be saved from requiring municipalities who have not already done so to move eligible retirees to Medicare.)
Aid to cities and towns, or local aid, represents approximately 16% of the Commonwealth’s annual budget. In fiscal year 2012, local aid programs account for $5.05 billion. The recommendation for local aid reflects the Patrick-Murray Administration’s unprecedented commitment to a strong partnership between the state and its cities and towns, even in a very challenging fiscal year.
- The fiscal year 2012 Chapter 70 funding is $3.99 billion, a $140 million increase of state funding to cities and towns over fiscal year 2011.
- Funding for the special education circuit breaker, which goes directly to municipalities, increases by $80 million from fiscal year 2011 to fiscal year 2012.
- Increasing Chapter 90 Local Road Program funding for fiscal year 2012 to $200 million, $45 million more than fiscal year 2011 and $80 million more than the last year of the prior administration.
- Level funding of State Owned Land (PILOT), Regional School Transportation, Charter School Reimbursements, Library Aid, Veterans’ Benefits and Tax Reimbursements to Veterans, the Blind and Widows.
- Unrestricted General Government Aid (UGGA) will be funded at $833.9 million in fiscal year 2012. While this is a $65 million reduction (7.2%) from fiscal year 2011, $10 million from this reduction will be used to support a competitive grant program to drive regionalization and other efficiency initiatives as well as a performance management, accountability and transparency program for local government.
- A task force will be established to develop a rationale for the distribution of additional dollars that may be appropriated in the future based on elements of the work of the Hamill-Higgins 2006 Municipal Finance Task Force (Partnership Aid proposal) and the work of the Federal Reserve which take into account a municipality’s economic and financial capacity. This task force will be charged with developing a new formula that also incentivizes performance results and best practices.
Additional Initiatives for Fiscal Year 2012
The Administration’s approach to fiscal year 2012 includes additional tools to support municipalities in managing through this fiscal crisis and beyond, including:
- Expansion of the local property tax base by closing the loophole on telecommunications equipment exemption. (Estimated revenue: $26 million.)
- Establishing a $9.7 million Regionalization and Efficiency Incentive Grant Program to provide financial support for one-time or transition costs related to regionalization and other efficiency initiatives, with allowable applicants to include municipalities or regional planning agencies, councils of governments or counties serving as the administrative or fiscal agent on behalf of municipalities. The new fiscal reality demands that we invest in and incentivize innovation among local governments to find new and more efficient ways to delivery local services.
- $300,000 for the development of a program to enhance performance management, accountability, and transparency for local governments. This initiative will be overseen by municipal officials and administration officials with the support of the Collins Center for Public Management at the University of Massachusetts Boston. The goal is to develop a set of common accountability and performance measures that can be adopted by all municipalities and to determine how to provide the necessary support and tools to municipalities, including education, training, standardized software and reporting, and technical assistance to municipalities to participate in the program.
- Establishing a Municipal Procurement Program within the state Operational Services Division to create state-wide contracts specifically needed by cities and towns that will leverage purchasing power and save money.
- Filed a new pension reform initiative providing for a comprehensive overhaul of the pension system that would ensure the long-term sustainability and credibility of the system and save communities an estimated $2 billion over 30 years in pension costs and an estimated $1 billion in reduced retiree health benefit costs for new employees over the next 30 years.
|UNRESTRICTED GENERAL GOVERNMENT AID (UGGA) REDUCTION FY08 - FY12:||($480.8)|
|ENACTED OPPORTUNITIES FOR COST SAVINGS AND REVENUES||$397.2|
|Local pension funding relief||$200.0|
|Join GIC (first year savings reported) *||$44.0|
|Local option meals tax||$97.3|
|Increased Ch.90 Local Road Program Funding by $5M in FY11||$5.0|
|Eliminated exemption on telecommunications poles and wires||$26.0|
|Local option room occupancy tax||$24.9|
|PROPOSED OPPORTUNITIES FOR COST SAVINGS AND REVENUES||$187.8|
|New municipal health plan design proposal (first year savings) **||$94.0|
|Increase Ch.90 Local Road Program Funding for FY12||$45.0|
|Eliminate exemption on telecommunications machinery||$26.0|
|Transfer retirees into Medicare ***||$22.5|
|Electronic posting of procurement notices||$0.3|
|TOTAL OF ENACTED AND PROPOSED SOLUTIONS:||$585.0|
|Value of opportunities for cities and towns
even after accounting for local aid reduction:
|ADDITIONAL REVENUE AND COST SAVINGS INTIATIVES FOR MUNICIPALITIES|
|Chapter 70: Increased state funding over FY08||$265.8|
|Filed new pension reform ($2B) and OPEB ($1B) initiatives:||$3B over 30 years|
|* Based on savings
reported by municipalities who have joined
** ANF adjustment of MTF estimate for municipalities who have not joined GIC.
*** Estimated savings range $15M - $30M for municipalities not currently in Medicare.
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