The Governor’s New Budget- More Choices

The Governor filed his FY 2014 Budget this week, and I would venture a guess that the Legislature’s collective head is about to explode. His budget builds the tax increases he unveiled earlier in to pay for transportation and education initiatives, and also asks for sales tax increases for soda, candy and a large excise increase for cigarettes.

A few of the additional spending areas that the Governor highlighted.

$269 million extra for the MBTA.
$226 million extra for Chapter 70 (local education aid)
$31 million additional for unrestricted local aid.*

The Governor utilizes one time revenue of $555 million, including a withdrawal of $400 million from the “rainy day fund”. As mentioned in an earlier post the Governor relies on a revenue estimate that is up by over $800 million from last year. There is a lot of new money floating around in the Governor’s budget, including the first allocation of gaming money ($83 million) and the inclusion of $26 million from the extension of the sales tax to internet sales from Amazon.

My posts tend to focus on the issues of local importance, and this one is no different. I have given the small increase in unrestricted local aid an asterisk, as the line item that feeds that appropriation has been level funded, with a new line created that adds that $31 million. The purpose of the new line is to address inequities in the formula governing local aid. From the Governor’s description:

An additional $31 M in local aid will be distributed to all municipalities through the new “Annual Formula Local Aid” program. The existing allocation of local aid among the Commonwealth’s cities and towns (UGGA) is meant to maintain year-to-year consistency regardless of changes in a municipality’s circumstances and is no longer based on a rational funding formula. Annual Formula Local Aid addresses these critical aspects of a rational local aid program:

Provides a simple and transparent formula using a combined measure of property values and income to calculate each municipality’s relative ability to provide essential local services; and
Will consistently provide equitable distributions into the future, as each year the formula components will be updated and the total distribution of aid will be calculated using the updated components.

As best I can read the numbers it appears that all communities will receive the same amounts for unrestricted local aid as they did last year, with all of that extra $31 million placed in that Formula Aid line. Locally I see that Haverhill will receive an additional $343,219, Methuen an additional $245,745, North Andover an additional $86,557, Amesbury $70,443, Lawrence $922,783, and Newburyport an additional $48,524. That is not counting the additional Chapter 70 funding. Before we start counting that money locally let us realize that we are a long way from realizing anything just yet. But you can see that the Legislature will have some difficult choices to make, as the Governor has moved some of that new revenue to accounts that will have vocal constituencies. The Governor’s press availability on the budget is below.

This entry was posted in Methuen, Municipal Finance, State News and tagged , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>