Medford Faces Up To $229K Local Aid Cut in Governor's Proposal

Medford could lose between $204,000 and $229,000 in aid from state government, Mayor Michael McGlynn said, as part of 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.

"The uncertainty of the fiscal cliff and the resulting slow down in growth, is the direct cause of our budget challenges," Patrick said. "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."

McGlynn told Medford Patch that City Hall is focused on four major accounts where they project, based on Patrick's proposal, cuts to Medford's aid. Those accounts are:

• Unrestricted local aid: $102,597
• Special education circuit breaker: $50,000 to $75,000
• Transportation cost reimbursment for homeless students: $45,000
• Charter school reimbursement: $6,700 

"What we do now is analyze all the finance accounts and see if any revenues are coming in better today than when we did the budget back in June," McGlynn said. "If they aren’t—the tough part is we're already half way through the fiscal year. We’ve already spent half the money."

Those cuts could pale in comparison, however, to cuts Medford could face at the federal level, McGlynn said. Based on a conversation he had with Congressman Ed Markey, the mayor said those cuts could include halving the funding for Title I and the Individuals with Disabilities Education Act (IDEA) program, the latter of which provides about $2 million a year to Medford.

"The fiscal cliff and the potential of the federal cuts, or even if a deal is struck in Washington, they're going to be far worse than anything we're looking at right now," he said. 

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.

Medford's State Delegation Reacts

Rep. Paul Donato, D-Medford, said the Legislature won't tackle the governor's proposal until after the New Year, since the Legislature is currently in informal session.

Asked if spending reductions could be found somewhere other than local aid, or if the Legislature's hands are tied because of the projected revenue shortfall, Donato said, "We'll have to take a strong look at it," pointing out that by that time December's revenue numbers would be in, providing a clearer picture.

"In a general sense, the members of the Legislature hesitate greatly to provide the governor with 9C cuts for local aid, because in past years local aid has been cut dramatically and it had a major impact on the cities and towns throughout the commonwealth," he said. "To make a further cut, even if it’s 1 percent, gives further difficulties to them. We have in the past given the governor 9C cuts, we have in the past denied 9C cuts, so it’s fluid."

Donato said that members of the Legislature are "distressed" about the cuts and were hoping that Patrick might wait until December's revenue figures came in before making any proposals, reiterating McGlynn's comment that mid-year cuts are tough because cities and towns are already half way through their spending for the year.

"When you're talking about a $139 million budget, $100,000 doesn’t sound like a lot, but that’s two teachers, that’s two firefighters, two police officers," he said, adding that he hasn't seen any firm figures yet from the state Administration and Finance Office detailing how the cuts will play out on the local level.  

Rep. Sean Garballey, D-Arlington, noted out that Patrick's proposal would not cut from Chapter 70 education aid, but that Medford receives a large portion of funding through unrestricted government aid. After significant cuts to local aid over the past eight years to Medford, then trying to restore local aid during the last budget cycle, Garballey said the cuts would have a "detrimental impact" on his district.   

"We need to balance the budget—that’s definitely true," he said. "Unfortunately this fiscal cliff in Washington and other situations of what’s going on has led to a decrease in revenue collections that we definitely have to deal with. But hopefully we can deal with it without cutting extremely important services to our cities and towns. I don’t think there’s anything more important than our local aid that goes right to our people in our district."

Could Revenue Outlook Improve?

Is there hope that when the Legislature reconvenes in January that December's revenue figures aren't as low as projected, a fiscal cliff deal has been made in Washington, and the outlook isn't as bleak?

Garballey said that it's his hope, but pointed out revenues from the sales tax and capital gains are "volatile" and not always predictable.

"These past months or so, they have not been coming in at what we’d like to see them coming in," he said. "Hopefully when we reconvene next month after the holiday season, we’ll see a better picture, but certainly the fiscally responsible thing is to do what we can now to deal with the shortfall in revenue collections." 

Rep. Carl Sciortino, D-Medford, likewise said that the state has to act now to address the revenue shortfalls, saying that as more time goes by, the deeper the cuts become because the state, cities and towns are in the middle of the budget cycle and there are fewer months left to make the cuts that will fill the revenue gap.

"It's hard for me to see a scenario where it gets better if we wait," Sciortino said. "In terms of economic growth and forecasts, I’m not seeing any evidence we're going to rebound strong enough to recover from the hole we've gotten in over the last six months. I do think we need to figure this out sooner rather than later, and I hope it’s done in a way that’s protective of local aid."

He added that he hopes to find a way to make cuts without touching local aid, but added the caveat that leaving local aid whole would mean deeper cuts in other programs and services that Bay State residents rely on.  

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.