Legislation Progress

This bill was passed on January 31, 2008.

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Legislation as Filed

Please note: Below you will find the legislation as filed by Governor Patrick. After being filed, bills are sent to the Massachusetts legislature where they may be amended or altered.

Text of Filing Letter

January 28, 2008

To the Honorable Senate and House of Representatives:

Pursuant to the provisions of Article II, Section 8, Paragraph 1, Clause (2) of the Amendments to the Constitution, as amended by Article LXXXIX, I am filing for your consideration the attached legislation, entitled "An Act relative to the financial condition of the City of Salem." Mayor Kimberly Driscoll, Senator Berry and Representative Keenan have asked me to file this bill to allow the City of Salem either to borrow or to amortize to cover the deficit incurred by the poor decisions of its past School Business Manager.

The City discovered a $4.7 million deficit in the school account soon after a change in personnel. The City has rectified the reporting structure and changed the way that the budget is presented. The City has also closed $3.5 million of the deficit through cuts and revenues. Additionally, the community has activated and raised $300,000 privately in order to avoid the layoff of 14 teachers.

With the hard work already done by the City, I believe that it is untenable to allow further teacher layoffs so deep into the current fiscal year. I therefore request your prompt enactment of this legislation.
 





Respectfully submitted,
Deval Patrick

 

Full Text of Legislation

RELATIVE TO THE FINANCIAL CONDITION OF THE CITY OF SALEM

(a) Notwithstanding any general or special law, city charter provision or local ordinance to the contrary, the city of Salem, with the approval of the commissioner of revenue, in this act called the commissioner, may borrow, at 1 time or from time to time, sums approved by the city council and then by the commissioner, but in no event in an amount in the aggregate more than $1,000,000 for the purpose of maintaining and operating the schools during fiscal year 2008. The commissioner may limit this borrowing to an amount or amounts less than the amount or amounts approved by the city council. Bonds or notes issued under this act for school operating purposes may be issued for a term of not more than 7 years and shall be backed by the full faith and credit of the city. The bonds and notes shall be eligible to be issued as qualified bonds or notes under chapter 44A of the General Laws. Indebtedness incurred under this act shall not be included in determining the statutory limit of indebtedness of the city under section 10 of chapter 44 of the General Laws but, except as provided in this act, shall otherwise be subject to said chapter 44. Amounts raised to pay indebtedness incurred under authority of this section shall be subject to section 21C of chapter 59 of the General Laws.

(b) The maturities of each issue of bonds or notes authorized under this act, including any refunding bonds, may, if approved by the city officers authorized to issue and approve these bonds or notes, and by the commissioner, be arranged so that for each issue the amounts payable in the several years for principal and interest combined are as nearly equal as is practicable in the opinion of the officers authorized to issue and approve the bonds or notes, or in the alternative, in accordance with a schedule providing for a more rapid amortization of principal.

(c) All proceeds of any loan shall be deposited in a separate fund which shall be set up on the books of the city of Salem and be maintained separate and apart from all other funds and accounts of the city. This fund shall be called the City of Salem Financial Stability Fund, in this act called the fund. The council, with the approval of the commissioner, may authorize disbursements from the fund for purposes that the mayor considers appropriate to maintain and continue school operations. Funds borrowed for school operating purposes may be applied, with the approval of the director of accounts in the department of revenue, in this act called the director, as general revenue for purposes of section 23 of chapter 59 of the General Laws. The director may establish rules and procedures that he considers appropriate relating to disbursements from the fund and the reporting and accounting for these disbursements.

SECTION 2. As an alternative to borrowing authorized under section 1, and notwithstanding any general or special law, city charter provision or ordinance to the contrary, the city of Salem may capitalize a sum not to exceed $1,000,000, the amortization amount, and fund the amortization amount in equal or decreasing annual installments over a period starting with fiscal year 2009 and not exceeding 7 years. For fiscal year 2009, and fully subject to section 21C of chapter 59 of the General Laws, the board of assessors of the city of Salem, may, subject to the approval of the commissioner, deduct such portion of the amortization amount as the commissioner approves as consistent with this act, from the amount to be assessed under section 23 of chapter 59. Under the conditions imposed in this act, the assessors of the city of Salem may similarly deduct such portion of the amortized amount in any year until the amortization is completed not later than fiscal year 2015.

SECTION 3. Prior to the approval by the commissioner of any borrowing authorized by section 1, or amortization authorized by section 2, of this act, the city of Salem shall accept section 37M of chapter 71 of the General Laws for the purpose of consolidating the financial functions of the school committee with those of the city. No revocation of this acceptance shall be valid or effective in any year during which bonds, notes or an amortization amount authorized by this act remain outstanding.

SECTION 4. (a) With respect to fiscal year 2009, and in any other year in which bonds, notes or an amortization amount authorized under this act remain outstanding, not later than 10 days after the adoption of the city budget, or July 1, whichever is earlier, the assessors and mayor shall submit to the director a pro forma tax rate recapitulation for the following fiscal year, together with a copy of the adopted budget and such supporting revenue and expenditure information as the director may prescribe. The director shall ascertain whether the city budget for that fiscal year contains reasonable revenues from taxation and other sources to meet the appropriations and other amounts required by law to be raised under section 23 of chapter 59 of the General Laws, and the director shall report his findings to the mayor and city council. If the director determines that the city budget as presented would not permit certification of the tax rate for the applicable fiscal year, he may recommend further action to achieve a balanced budget. In this case, no tax rate for the year shall be approved until submission of an annual tax rate recapitulation based on the actions the city has approved or taken to achieve a balanced budget.

(b) In any year during which bonds, notes or an amortization amount authorized under this act remain outstanding, the commissioner of revenue shall not certify the annual tax rate of the city of Salem until an audit report for the preceding fiscal year has been received and accepted by the director. The audit report shall be prepared by a certified public accountant in accordance with generally accepted auditing standards and shall include accompanying financial statements.

(c) In any year during which bonds, notes or an amortization amount authorized under this act remain outstanding, the city shall submit to the director quarterly reports presenting a budget to actual comparison of revenues and expenditures. The written reports shall be submitted within 30 days after the conclusion of each fiscal quarter and shall be in such form and include such information and detail as the director may prescribe.

(d) In any year during which bonds, notes or an amortization amount authorized by this act remain outstanding, the city shall not issue any bond, note or other form of indebtedness without written notification to, and the approval of, the director.

(e) The director may waive any reporting or filing requirements contained in this section.

SECTION 5. No official of the city of Salem, except in the case of an emergency involving the health and safety of the people or their property, shall knowingly expend or cause to be expended in any fiscal year any sum in excess of that official's departmental or other governmental unit's appropriation duly made in accordance with the law, nor commit the city, nor cause it to be committed, to any obligation for the future payment of money in excess of that appropriation, with the exception of court judgments.

Any official who intentionally violates this section shall be personally liable to the city for any amounts expended in excess of an appropriation to the extent that the city does not recover these amounts from the person or persons to whom the amounts were paid. The superior court or a single justice of the supreme judicial court shall have jurisdiction to adjudicate claims brought by the city under this act and to order relief that the court finds appropriate to prevent further violations of this section. Any violation of this section shall be considered sufficient cause for removal.

SECTION 6. For the purposes of this act, the word "official" shall mean a city department head, permanent, temporary or acting, including the superintendent of schools, and all members of municipal boards, committees, including the school committee, and commissions which recommend, authorize or approve the expenditure of funds, and the word "emergency" shall mean a major disaster, including, but not limited to, flood, drought, fire, hurricane, earthquake, storm or other catastrophe, whether natural or otherwise, which poses an unexpected and immediate threat to the health and safety of persons or property.

SECTION 7. This act shall take effect upon its passage.