MA Coronavirus: Local Budgets In Limbo Until State, Feds Act

BOSTON — Local governments across Massachusetts are in limbo as state lawmakers scramble to rework the budget to account for the massive impact the new coronavirus pandemic has had on state tax revenue.

Until that work is done, local governments can do little more than wait and wonder what next year's municipal and school budgets will look like.

"I realize that in the context of budgeting, what municipalities really would like is support from the state, obviously, and clarity with respect to the timeline," Administration and Finance Undersecretary Catharine Hornby said in a conference call for local officials organized by the Massachusetts Municipal Association. "Unfortunately, we at the state level are very much in the same position – that we need clarity in order to move forward, and I think that we’re not quite there yet."

The state has lost wage tax revenue from the 689,000 jobs that have vanished since the start of the pandemic, as well as lost sales tax revenue from closed, non-essential businesses. That forced the state legislature was to scrap a budget process that began in December. Lawmakers are now facing a deadline of June 30, when the current fiscal year ends. Not only do they have to find ways to fill revenue gaps in the current year, but they have to rework projections for the new year that begins July 1.

That process has been hampered by two wildcards: Whether the federal government will offer aide to local governments and where the Baker administration will extend the closure of nonessential businesses past May 4.

Earlier this week, Lt. Gov. Karyn Polito said the administration would make a decision on the May 4 date by the end of this week. A leading model for coronavirus predictions says Massachusetts is unlikely to be ready to relax social distancing measures until June 8, and even then, the return to normal will be incremental and business reopenings will most likely be staggered.

Hopes Rest On $250 Billion Federal Bill

Local and state lawmakers are turning to the federal government for help. The National Association of Counties, National League of Cities and U.S. Conference of Mayors have jointly called on Congress and the Trump administration to give $250 billion to local governments for coronavirus response and recovery.

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"Local and state governments face a massive fiscal crisis due to the economic freeze caused by the coronavirus pandemic,” said Geoff Beckwith, executive director of the Massachusetts Municipal Association, which supports the effort. "Without direct federal aid, no state or community, including Massachusetts and our 351 cities and towns, will be able to navigate the looming crisis without unprecedented and very painful budget cuts."

The bipartisan Coronavirus Community Relief Act, which has 134 co-sponsors in the House, as well as 12 co-sponsors of a companion bill in the Senate, would give direct aid to local governments that could be used to cover revenue losses and pay for essential services.

Possible Short-Term Fixes

The Massachusetts Division of Local Services said it would issue some guidance to local government officials this week. The division is expected to help local governments write "1/12th budgets" as placeholders until the state budget is finalized, as well as instruction on how to use free cash accounts to plug holes until state funding comes through.

The state is also working on rules that would let local governments spread revenue and expenditure deficits over three years to circumvent state laws requiring them to have balanced budgets each year.

Massachusetts received $2.7 billion under the $150 billion, federal Coronavirus Relief Fund. That money needs to be used for unexpected expenses carried by state and local governments in the COVID-19 response.

"The state is expected to share funds with municipalities as subgrantees," Hornby said. "There’s a pretty express expectation that the state will work jointly with municipalities to understand where the COVID-19 costs are being incurred and to figure out how to allocate those costs."

More Coronavirus Coverage On Massachusetts Patch:

• Coronavirus Case Counts For Every Massachusetts Town
• 80,000 New Unemployment Claims In Latest Report
• 37 Percent Of Tested Inmates In MA Have Coronavirus
• Massachusetts Coronavirus Deaths Eclipse Flu, Diabetes Deaths
• When Will MA Relax Coronavirus Social Distancing Measures?

Dave Copeland writes for Patch and can be reached at dave.copeland@patch.com or by calling 617-433-7851. Follow him on Twitter (@CopeWrites) and Facebook (/copewrites).