Cities and towns need fiscal freedom

THERE IS NO denying the possibility that the governor and Legislature may be forced to cut local aid to cities and towns in fiscal year 2010. While leaders on Beacon Hill have made attempts to hold local aid harmless, Governor Patrick announced last week that the need for an additional $1 billion in midyear cuts puts local aid firmly on the table. Without reforms at the state and local level, this would prove devastating to cities and towns. With no way to absorb those cuts, municipalities would be limping, if not crawling, to the end of the fiscal year.

Many municipalities have not had their funding restored from cuts made under Governor Romney in 2002. Additional cuts could force local leaders to drastically reduce services, lay off workers, and shutter public buildings.

However, this worst-case scenario is avoidable. Municipalities must be granted the ability to determine their own future by expanding both revenue and management options.

The funding structure for cities and towns is flawed and cannot be sustained. Given the realities of Proposition 2 1/2, and an already overburdened residential tax base, municipalities cannot hope to survive in the current economic climate if they must continue to rely almost exclusively on state aid and local property tax revenue. As the governor and a growing number of state legislators have observed, Massachusetts needs to join the many other states that have given their municipalities a more diverse and flexible set of revenue options.

Fortunately, there are a number of ways to raise revenue at the local level without further straining the state's finances. In his Municipal Partnership Act, Patrick proposes giving cities and towns the power to levy a 1 to 3 percent meals tax at restaurants. Such a tax would mean mere pennies to diners but would ease the pressure of the regressive property tax. Hotel taxes could provide similar relief. Additionally, the governor and Legislature should continue their efforts to close the 1913 telecommunications tax loophole that denies millions of dollars in commercial property taxes to local communities. The governor and Legislature should also consider passing legislation allowing for red light photo enforcement; this measure would generate revenue for cities and towns while allowing our police officers to spend more time on pressing quality-of-life issues - and less time monitoring traffic.

There are also fair and practical ways to slow fixed cost increases. Municipal governments should simply be granted the same flexibility and options currently enjoyed by our state government. Moreover, unilateral adjustments to pension system health insurance payouts and education financing would significantly restrain expenditures. For example, the current formula for school reimbursements leads to surpluses for some charter schools while neighborhood schools cut back.

While new local revenue options and fiscal management tools are necessary for the survival of local communities, local leaders must also take responsibility for the efficiency of municipal governments. We must show flexibility and find ways to implement best practices and innovations in management and service delivery. For example, there would be significant savings gained by pooling resources across jurisdictions, and by regionalizing the delivery of services. That is why Somerville and 10 other municipalities in Greater Boston are entering into a study to determine the feasibility of a regional emergency call center.

What we need now from the state isn't a handout but a freer hand to do what must be done to maintain the fiscal strength and the economic future of our cities and towns. If all cost-cutting options are on the table, we must also consider all revenue-generating options. Speaker Sal DiMasi recently signaled that, given the economic climate, all options for revenue must be reviewed and examined. We hope that his colleagues share in his willingness to explore, and implement, these options.

In the end, the success of cities and towns is essential to the success of the Commonwealth as a whole.

Joseph A. Curtatone is mayor of Somerville and president of the Massachusetts Mayors Association. Bruce Tobey is president of the Gloucester City Council and president of the Massachusetts Municipal Association.