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April 27, 2010

Rep. Bradley: Municipal Relief Bill Gives Towns Flexible Budgeting Options

One of the first actions taken by the Massachusetts House of Representatives at the start of the annual state budget debate speaks volumes in demonstrating the commitment of legislators to helping local officials deal with the ongoing fiscal crisis.  By facilitating mutual aid agreements, allowing pension systems to extend their funding schedules and authorizing municipalities to enter into leases of up to 30 years without a home rule petition, legislators have provided cities and towns with new methods for managing their budgets during these difficult economic times.

The members also agreed to leave Proposition 2 ½ alone, and instead focused on giving our municipal officials better tools for managing local budgets and addressing long term financial obligations such as employee pensions.

The legislation establishes a statewide mutual aid agreement allowing mutual aid assistance – such as fire services, law enforcement and emergency medical services – during a public safety incident.  The bill also creates a statewide public works mutual aid agreement for the sharing of public works resources across jurisdictional lines during public works incidents.

The bill allows pension systems, with the exception of the State Employees Retirement System and the Teachers’ Retirement System, to extend their funding schedule to 2040.

Additionally, the bill allows municipalities to enter into leases of up to 30 years without a home rule petition.  Currently, municipalities may only enter into leases of up to 10 years without a home rule petition.

In an effort to control costs, the bill lets school districts reimburse parents of disabled children who drive their children to private day programs outside the municipality in which they live rather than allow only the school district to provide such transportation.

The package also allows any accepting municipality to establish an early retirement program for its employees.  Municipalities would be restricted when filling vacancies created by early retirements and could pay only a fraction of the participants’ total annual salary in upcoming fiscal years.

The bill includes an amendment stripping the legislation of a provision that would have allowed municipalities to raise property taxes to furnish overlay accounts used to fund abatements through the appeal of tax bills and other tax abatement programs.  The House voted to remove the provision out of concern that it would have circumvented Proposition 2 ½ which limits annual increases in property taxes.

The relief package includes a local option tax amnesty program which allows cities and towns to waive portions of interest and penalties due on unpaid taxes as long as the taxpayer pays the principal amount and is not subject to criminal investigation for failure to pay taxes.  The tax amnesty period could extend no later than June 30, 2011.

The bill also gives municipalities the choice of accepting a section that requires school and city officials to meet each year to review the fiscal status of the school district and identify potential cost savings through regionalization initiatives.  Furthermore, the bill empowers school committees to join with one or more other school committees to elect a superintendent to represent the partnering districts.

As the budget debate continues, legislators will be challenged to address the ongoing budget shortfall while ensuring that essential programs and services are maintained.  As the vote for the municipal relief bill shows, however, we have an opportunity to consider adopting more of the best business practice management methods that the private sector has been using for years, which will have the added benefit of saving taxpayers’ hard-earned dollars.

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