Governor Deval Patrick's proposed FY2011 budget has spared cities and towns a reduction in local aid, news which has heartened local officials.

The Governor's proposed full funding of Chapter 70 at $4.048 billion ensures that federal stimulus dollars used to backfill the account in FY2010 will be replaced by state General Fund dollars in FY2011. This ensures that every school district will receive Chapter 70 funding that meets or exceeds the level of funding received last year.

The budget announcement came on the heels of the Governor signing legislation that will lead to the turnaround of under performing schools, promote innovation and choice and eliminate achievement gaps that persist despite the widely acknowledged success of the state's landmark Education Reform Act of 1993. Of particular interest to cities and towns is news that the Commonwealth is now positioned to strongly compete for an estimated $250 million in federal Race to the Top education dollars.

Governor Patrick also proposed funding unrestricted local aid at $936 million for FY2011, the same level as in the current budget.

In addition to throwing these fiscal lifelines to cities and towns at a time when the state faces a $3 billion gap between revenue resources and program needs, Governor Patrick has also recently proposed several major pieces of legislation. These bills would deliver significant new tools to help protect essential local services, reduce pressure on property taxes and strengthen communities' financial footing for the long-term.

Included in these proposals is municipal pension relief, a limited early retirement incentive program and a new Green Communities grant program to encourage development of energy efficiency and renewable energy projects to relieve local budgets.

Pension relief would allow local pension systems to extend their funding schedules subject to certain conditions while requiring that future asset gains be used to shorten schedules, not reduce payments. This is in response to unprecedented market losses incurred by local pension funds that would otherwise result in significant increases in annual pension payments required to fully fund systems on existing funding schedules.

In a separate set of proposals, Governor Patrick has also called for further reform of the state's pension system, much of which is drawn from the recommendations of a special commission that studied the system last year, with potential savings of $2 billion over 30 years, much of that derived from setting higher ages for retirement.

Municipal early retirement provides an option incentive program structured in such a way to ensure that desired near-term savings exceed the present value cost to the pension system while still giving city and town managers sufficient flexibility to structure the program in a way that avoids adverse operating impacts. Employees must have at least 20 years service and must be paid out of a municipal operating budget. Eligible employees would receive a maximum of three years additional age or creditable service, or a combination of the two, the sum of which cannot exceed three.

The Green Communities Grant Program will be available this fiscal year to help finance municipal energy efficiency and renewable power projects in eligible communities. Up to $7 million in grants will be available in late June, with communities competing for awards of up to $1 million each. Applications, to be filed with the Department of Energy Resources (DOER), must be received by May 14. To be eligible for these grants, a community must have already taken steps to seek official Green Community status. For more information on these requirements visit the DOER website.

In addition, the Governor last week announced a series of cost-cutting energy management solutions, including a bulk energy purchasing system designed to consolidate fiscal management, reduce waste and cut the energy bills of state agencies and municipalities alike.

In short, the Patrick-Murray Administration is proposing a wide assortment of initiatives with potential benefit to cities and towns while at the same time not cutting back on bedrock financial assistance such as Chapter 70 and unrestricted local aid.

Robert Nunes


& the City and Town Editorial Board