GOVERNOR PATRICK SIGNS LAW TO HELP LAWRENCE REGAIN FINANCIAL STABILITY
Law allows City to borrow $35 million from the market; establishes a fiscal overseer
The City is facing a current fiscal year budget deficit of approximately $24.5 million. Lawrence is also confronting a significant projected budget gap in fiscal year 2011. Thanks to the new law, the City will be able to borrow up to $35 million to balance its fiscal year 2010 and 2011 budgets. This borrowing will allow the City to generate a steady cash flow to meet payroll and other commitments while it takes the steps necessary to get its fiscal house in order.
"This legislation is good for the City of Lawrence and good for the Commonwealth as a whole," said Governor Patrick. "The success of our Commonwealth is directly related to the success of each and every one of our communities. I thank the residents and leaders of Lawrence and the legislative delegation for working together to find a solution to help restore this vital community."
"By partnering with the City of Lawrence and the legislative delegation, we have developed legislation that will transition the City on a path to financial recovery," said Lieutenant Governor Timothy Murray.
"This legislation strikes the right balance allowing Lawrence to go out and borrow what it needs to regain financial solvency while requiring strict oversight to control its progress and repayment," said Senate President Therese Murray.
"This legislation provides the city of Lawrence and its residents a pathway to economic stability while implementing strict fiscal controls to protect the state and its taxpayers," House Speaker Robert A. DeLeo said. "The bill gives the city a chance to rectify its economic situation in collaboration with a fiscal overseer and puts appropriate safeguards in place to guide Lawrence to a stronger economic future."
"It is clear that Lawrence needs a firm guiding hand from the state to stabilize the City budget. This bill ensures the taxpayers and private investors that any and all cost saving provisions will be put in place. A true partnership between the state and the city is the only solution to closing the deficit in Lawrence," said Senator Susan C. Tucker.
"I am forever thankful with Governor Patrick's endorsement and final signature of this very important piece of legislation which is a tool for the Great City of Lawrence to get its fiscal house in order. Governor Patrick, Secretary Gonzalez and Deputy Commissioner Robert Nunes along with the rest of the administration have been a tremendous help to me in my first few months in office as Mayor. I look forward to a closer partnership with state government as we all move forward together as a team," said Mayor William Lantigua.
In addition to authorizing the City to deficit borrow, the new law, which takes effect immediately, increases state oversight of the City's finances by providing for a state designated fiscal overseer working cooperatively with the Mayor and City Council. The overseer will report directly to the Secretary of Administration and Finance.
Secretary of Administration and Finance Jay Gonzalez will appoint an overseer with broad oversight within 30 days. The overseer will be required to assess the ability of the City to manage its fiscal challenges and develop a three-year financial plan. He or she will have the authority to approve the annual or supplemental budgets of the city and the school committee.
"It is essential that Lawrence have a combination of support and oversight to get back on a path to responsible budgeting and long-term fiscal sustainability," said Secretary Gonzalez. "I look forward to selecting an overseer who will work collaboratively with city officials to achieve that goal."
The new law provides for the Secretary to appoint a control board if the overseer determines that the City is unable to manage its finances and achieve fiscal stability.
The new law also requires the City to move municipal employees into the state Group Insurance Commission (GIC) or a regional health purchasing group if it will save the City money. Additionally, the City is required to consolidate municipal and school business functions as a way of achieving further savings.