Reading Could Face $27K, North Reading $15K Local Aid Cuts in Governor's Proposal

While Reading officials believe that the town will not see a significant impact due to the half-billion worth of cuts that Gov. Deval Patrick proposed on Tuesday in anticipation of the "fiscal cliff" combined with projected state tax revenues that are more than $500,000 lower than previously expected, North Reading may see an impact, especially when it comes to the state budget for the school building project.

Reading

Reading Assistant Town Manager Robert W. LeLacheur does not think that Reading will be greatly affected by Patricks proposal, however, officials need to look at the cuts more closely.

"We’ll be discussing this next week with the selectmen on Tuesday and the FINCOM on Wednesday in more detail," Assistant Town Manager Robert W. LeLacheur said. "There is no significant impact to Reading in FY13, unlike the 9C cuts a few years ago when we needed to cut our budgets mid-year."

According to State Representative Jim Dwyer, about one percent or $27,000 of Reading's local aid could be cut. 

According to Patrick, "The uncertainty of the fiscal cliff and the resulting slow down in growth, is the direct cause of our budget challenges. Congress and the President must come to terms on a solution so the private sector will continue to make the kind of investments that create jobs, grow state and federal tax revenue collections and contribute to a lasting economic recovery."

While Patrick can cut executive branch agencies through emergency mid-year '9C' cuts, the Legislature would have to approve expanded '9C' powers for Patrick to cut local aid.

North Reading

North Reading Town Administrator Greg Balukonis has not been provided with the exact amount the town will lose, although a one percent reduction in unrestricted state aid would be equal to $15,000, he said, but that would not affect staffing, programs or services the town provides. 

"The town has not received official word from the Commonwealth on the exact amount attributable to the Governor’s 9C budget reductions. That being said, a one percent reduction in Unrestricted State Aid translates to $15,000.  While every dollar is necessary to run our local government, this amount will not result in cutting of staff, programs or services," Balukonis said.

The town administrator is more concerned about the proposed $20 million reduction on the School Building Assistance program budget.

"The $20 million reduction on the School Building Assistance program (MSBA) is potentially more troubling," he said. "The financial impacts of this cut on North Reading’s school project are unknown. Although the town has a signed project funding agreement with the MSBA it provides the Commonwealth “may reduce” its obligations to fund the High/Middle School project for an number of reasons, including a reduction in funding."

Reading

Dwyer said that about one percent or $27,000 of Reading's local aid could be cut, but he does not support reducing local aid.

"While I understand that slowed economic growth has resulted in a budget gap of $540 million for Fiscal Year 2013, I disagree with Governor Patrick's proposal to address the need for spending reductions. During the course of the recession, we have asked cities and towns to tighten their belts and shoulder more of the burden in meeting the obligations expected by the taxpayers. I will not support any proposals that cut local aid," Dwyer said. "I also disagree with the Governor's proposed cuts to programs that help reimburse cities and towns for the costs of mandates from the state regarding education, including the Special Education Circuit Breaker and Homeless student transportation. While I thank the Governor for leaving Chapter 70 Education funding at its current levels, I disagree with the cuts to important reimbursements for educational programs that were proposed in his spending reduction plan."

North Reading

House Minority Leader Bradley H. Jones, Jr. said that the governor's proposal is misleading and that the plan would remove $35 million from municipal budgets, as opposed to $9 million. 

“The governor’s claim that he is seeking to cut local aid by only one percent is both incorrect and misleading.  In fact, the totality of Governor Patrick’s 9C plan would remove nearly $35 million from municipal budgets, a far cry from the $9 million first reported by his administration. Unfortunately, some of these reductions would be to vital local aid accounts such as Special Education Circuit Breaker, Regional School Transportation, and Homeless Student Transportation," Jones said. "Stagnant economic growth is not limited to national and state governments. Local cities and towns continue to feel the trickle-down effect of a worsening economy. Further paralyzing them through these cuts will only further aggravate the situation. Economic growth will, no doubt, continue to weaken as news of the impending ‘fiscal cliff’ intensifies. Even if a compromise is reached before the end of the year, any mix of spending cuts and tax hikes, however small, will slow the economy even further." 

The Legislature, including Patrick, should find ways to save at the state level before cutting local aid, Jones said. 

The Governor's Proposal

In summary, the governor plans to balance the budget with the following reductions:  

• $225 million in spending reductions through cuts in Executive Branch agencies. Combined with hiring controls the administration imposed in October, the total state workforce will have more than 6,000 fewer positions at the end of fiscal year 2013 than it did before the recession. A number of new investments for projects and programs in FY13 have been also been reduced or eliminated, including limiting new or restored funding for investments across a range of government services.

• $200 million from the Rainy Day Fund, bringing the total draw to $550 million in FY13 – leaving a balance of $1.2 billion, one of the highest in the country. 

• $98 million in additional federal revenues in support of safety net programs operated by the state on behalf low-income residents.

• $25 million from a 1 percent reduction in the budgets of the Judiciary, Constitutional Officers and other non-executive departments.

• $20 million from a total of $113 million in savings in state borrowing and health care reform costs. The remainder of this funding will be used to offset some unavoidable deficiencies which must be funded this fiscal year.

• $20 million from a reduction in the amount of sales tax revenues that will automatically be transferred to the Massachusetts School Building Authority to support local school building costs.

• $11 million from certain reserve fund surpluses.

• $9 million from a 1 percent across-the-board reduction to unrestricted local aid. The governor has filed legislation that ensures if lottery profits exceed the $1.026 billion amount currently budgeted in FY13, all of such excess proceeds be committed to increasing the amount of unrestricted local aid.