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SIGN OF THE TIMES: WORCESTER, MASS. TO
FEEL BUDGET
CRUNCH WITH LOSS OF VETS' FUNDS -- State will not
be giving
city a 400,000 dollar reimbursement for veterans'
tax exemption.
Buried in little stories like the one below is
the bad news about funding for veterans' programs. This is happening
at an alarming rate all over the country as the economy worsens.
All "Sign of the Times" articles are here...
http://www.vawatchdog.org/signofthetimes.htm
Story here...
http://www.telegram.com
/article/20090203/NEWS/902030559/1101
Story below:
Your comments accepted at bottom of
page.
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-------------------------
Local aid cuts compound city’s fiscal dilemma
Two-prong response outlined
By Nick Kotsopoulos
TELEGRAM & GAZETTE STAFF
WORCESTER — After a detailed analysis and review of Gov. Deval L.
Patrick’s state funding cuts for this fiscal year and next, City Manager
Michael V. O’Brien has revised his budget forecast for the city, and it
isn’t pretty.
Mr. O’Brien said yesterday the combination of local aid and other state
budget cuts, a mounting deficit in the city’s snow removal account and the
need to offset investment income losses in the local retirement system
leaves the city with the prospect of a budget shortfall of $26.9 million
to $31.4 million next fiscal year.
The manager said such a budget reduction amounts to a cut of more than 20
percent of the city’s net operating budget, excluding the public schools,
once all fixed costs are factored in.
As a result, Mr. O’Brien is looking to implement a two-phase action plan
to adapt to the budget shortfall. He said the first phase would deal with
the reduction of $5 million in local aid for the current fiscal year,
while phase two considers a projected budget shortfall of at least $26.9
million for the fiscal year that begins July 1.
The manager added that everything “must be on the table” to address the
necessary budget cuts for fiscal 2010.
“We must work from reality and propose new, sound financial and
operational reductions, reforms, reorganizations and revenues,” Mr.
O’Brien wrote, in a report that will be taken up by the City Council
tonight.
He said the following options are under consideration for phase two:
employee layoffs; the elimination of municipal divisions and services in
their entirety, to a point that is even below the city’s core mission;
further departmental reorganizations; negotiated employee furloughs and
wage concessions; negotiated employee health care cost changes; an early
retirement initiative; the transfer of ownership of Worcester Regional
Airport; the creation of public-private partnerships to assist in
delivering municipal services, and fee increases.
“This will require immediate and short-term actions and cooperation on
multiple fronts,” Mr. O’Brien said. “We must stay on track with real
solutions, within the context of our Five Point Financial Plan, and stay
away from any sizable influx of one-time cash, such as wage freezes, where
the wage liability exists to be paid in some future year. These
unfortunately ignore the long-term negative consequences of living well
outside our means.”
Mr. O’Brien said he expects to publicly brief the City Council on his
plans at its Feb. 10 meeting.
The manager provided the council with the latest budget information after
he and members of his administration spent the past several days analyzing
the governor’s budget cuts for this fiscal year and next, beyond the
announced reductions in local aid.
Even before the governor announced his cuts, the city administration had
been anticipating a $7 million budget shortfall for next fiscal year
because of increasing costs and declining city revenues.
But that deficit swelled after the governor announced that local aid will
be reduced by $14.8 million next fiscal year. Mr. O’Brien said city
officials have discovered the following additional state funding
reductions: Quinn Bill reimbursement (education bonuses paid to police
officers), $1.1 million; community policing cut, $800,000; a reduction in
the reimbursement for tax exemption for veterans, $400,000; and a
reduction in the reimbursement for tax exemption for the elderly,
$300,000.
Those additional state funding reductions, combined with the local aid
cut, total $17.4 million less in state funding for the city and push the
city’s originally projected $7 million budget shortfall to $24.4 million.
In addition, city officials are looking at a deficit in this year’s snow
removal account of at least $2.5 million, further raising the projected
budget shortfall for next year to $26.9 million.
But it doesn’t end there.
The city auditor has estimated that the city might have to come up with
$4.5 million, to be deposited in the pension system to make up for
investment losses caused by the drop in the stock market. When that is
included, the total projected fiscal 2010 for the non-school side of the
city government is $31.4 million, Mr. O’Brien said.
The manager said the scope of the budget shortfall could be offset in part
by revenue-enhancement proposals that the Patrick administration is
including in its Emergency Recovery Bill for municipalities.
The bill would allow for an increase in the local hotel and meals taxes,
and giving municipalities the power to tax telecommunications
infrastructure. Those measures could bring the city nearly $11.3 million
in new revenues, the manager said.
Those additional revenues, if and when realized, would reduce the city’s
budget shortfall from $26.9 million to $15.6 million, the manager said.
Instead of facing a 20 percent reduction in the city’s non-school
operating budget, it would be more along the lines of 12 percent.
But, Mr. O’Brien said, the city may not be able to count on those new
revenues at this time.
“Preliminary discussions with our Statehouse delegation as to the
Legislature’s timeline on these measures found that, though it is their
desire to act expeditiously, they may not meet our deadline for specifics
due to the reality of the continued decline of state revenues and other
issues,” Mr. O’Brien said. “The candid assessment of our delegation may
very well prevent our ability to address these multi-fiscal year budget
reductions because we may not have the required legislative direction
within our timelines.”
-------------------------
posted by Larry Scott
Founder and Editor
VA Watchdog dot Org
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