Local aid delays leave cities, towns in a budget limbo

The Senate, House, and Governor Deval Patrick have all released state budget proposals, setting aside different amounts of money in local nonschool aid for municipalities. But even though the fiscal year ends at the end of this month, it's still unclear when the final budget will pass, as state leaders have been tied up in an unusually rancorous battle over taxes and pension and ethics reform.

The Senate released its version last, in mid-May. The proposal was the most draconian of the three, cutting nonschool local aid by about $356 million, or roughly one-third of what communities received last year.

The House's proposed cuts were roughly half that. And Patrick, responding to even weaker economic numbers than anticipated between January and April, released an updated budget proposal Thursday that would slash noneducation local aid by $80 million more, bringing his total proposed cut to about $300 million off last year's figure.

The delay on Beacon Hill is awkward for communities, since most town meetings or city councils have passed, or are close to passing, budgets for next year. Votes are being cast without towns knowing how much state aid will get dropped in their coffers. The recession has made it even more difficult for communities, as revenues from local taxes and fees have dropped, leading to layoffs and cuts in services.

Stoughton passed its budget the day after Memorial Day, using House numbers as a guideline but not knowing if they would stand up, said Town Manager Mark Stankiewicz. It's confusing for everyone, he acknowledged.

"How do you adequately explain [at Town Meeting] that you are standing on shifting sands?" he said, noting that it's not practical to stand before local voters to explain the nuances of legislative budget conference committees. State leaders "make it very difficult to put together a rational budget. We did the best we could."

In the Senate version of the budget, cuts would range from 28 percent less than a year ago for Plymouth, from $6.6 million to $4.8 million, to 37 percent less for Marion, from about $380,000 to about $240,000. Overall, the Senate budget funded local aid at about $830 million, compared with the House version of about $1.1 billion.

The budget cuts fall unevenly, however, because some communities are more dependent on local aid than others. For example, local aid in towns such as Duxbury, Cohasset, and Marion accounts for less than 10 percent of the budget, while in Brockton it is about 50 percent. Municipalities also get revenue from property taxes, fees, excise taxes, and other sources.

"It's brutal," Mayor James Harrington of Brockton said of the Senate proposal, a sentiment echoed by others. Aid to the city would be cut from $27.4 million last year to $18 million under the Senate plan. Even after cutting another $20 million from the $320 million budget, the city could lay off 15 firefighters when they are already down 28 positions, Harrington said.

Now towns are playing a waiting game to see whether the state will give more or less money than predicted. The House and Senate are working on a compromise budget in a conference committee. It's unclear when they will finish, or when that budget will be sent to Patrick, who has the power to veto different line items, or the entire budget.

If local predictions are too high - and almost all town officials think the aid figures will shrink because of the state's deteriorating finances - then more cuts will have to be made. That will mean layoffs and cuts in services in many communities, said officials.

Communities need to have budgets in place before the new fiscal year begins July 1, with local government votes common in April or May, before they know how much the state will give them. That means municipal officials have to present budget numbers to local voters that are in some ways a leap of faith. It's a situation that they greet with some resignation, after enduring similar problems in past years. Many have learned to adapt.

They read the financial tea leaves as best they can. Some base local aid estimates on the House numbers, which several town managers say tend to be closest to the final tally. Others adopt the governor's numbers, which some feel are a little more conservative and give the municipalities less. But that way, if the final numbers are closer to the House version, they may end up with a little bit more budget leeway.

In addition to cuts in aid, most communities also face declining revenue. For example, fewer new cars are being sold, so the take from excise taxes is down. Even proceeds from investments have fallen as the market slumped. In Wareham, interest on investment income has dropped from about $500,000 to $250,000, according to John Sanguinet, interim town administrator.

The budget fight at the State House has been more heated than in recent years as tensions between the Legislature and the governor have escalated as the budget crisis ballooned and the economy sputtered.

Fighting has erupted over ethics and pension reforms, tax proposals, and the ailing transportation infrastructure. Senate President Therese Murray took a shot at Patrick during a recent interview, calling the governor irrelevant.

Patrick, meanwhile, has threatened to veto a sales tax increase from 5 percent to 6.25 percent, passed by House and Senate lawmakers, unless the Legislature first deals with reforms.

Meanwhile, city and town officials continue to fret over how much local aid the state will give them.

Paul Dawson, town administrator in Marion, decided to use the House numbers for the local budget after talking to legislators. Now after taking a look at the Senate numbers, he said, "It looks like we'll be off."

"This budget is filled with pain," he said, noting that the town has left a police sergeant's position unfilled, eliminated the equivalent of 1.2 full-time jobs in Town Hall, and lost two teacher jobs through attrition.

Matt Carroll can be reached at mcarroll@globe.com.