Sal Dimasi came out and predicted a 5-10% cut in local aid next year, which we all saw coming. I would like to plead with the Legislature and the Governor to reduce this local aid smartly, and with compassion, and I would like to point out the problems with a solution that, on face, seems “fair” when in reality is not quite so.
In 2003, Mitt Romney reduced local aid to cities and towns. He did so mid-year, and then mocked the communities that struggled with his cuts, ignoring that a cut made after 3/4 of the fiscal year has passed has triple the impact than if it was made at the start of the fiscal year.
However, it goes deeper than this. A 10% cut to a wealthy community does not have the same effect as a 10% to a poor community. Why? Because of the percentage of the community’s budget filled by local aid.
Let me give a concrete example. A town like Bolton gets 5% of its revenue from the state — $882k. Cutting 10% of that aid results in $88k cut, and that represents 0.5% of the community’s total revenues.
A city like Lawrence gets 68% of its revenue from the state — $163m. Cutting 10% of that aid results in $16.3 million cut, but that represents nearly 7% of their total revenues.
So in other words, what sounds fair — 10% cut — winds up impacting poor communities reliant on state aid more than wealthy communities independent from state aid because it will result in deeper service cuts in poorer communities.
I know that many will say “hey, that still sounds fair, those communities get a ton of aid from the state, they should have to give it back in a downturn”. That’s a great emotional response, but it ignores why those communities get so much aid to begin with: they need it.
Poor communities have always been disadvantaged by laws making property tax the primary revenue tool; these laws encourage other communities to build housing that is not affordable to the average resident of the state, and this has caused the poorer residents to pool into communities which did not have the ability to transform themselves into wealthy bedroom communities.
Poor communities are also already bearing the brunt of economic downturns — the state concentrates things like homeless shelters and social services for the poor in poorer communities, thereby solidifying the image of “the wealthy go over here, the poor go over there” in this state.
I will say it again: poverty is expensive to a community. It requires more policing. It requires more educational spending. It requires more code enforcement on absentee landlords. It requires more fire department responses due to people trying to eke a few extra degrees out of a space heater.
Look at the list of communities receiving the most state aid: Lawrence. Lynn. Springfield (disclosure: I live in Springfield). Holyoke. Lowell. Fall River. Chelsea. These communities are not ultra-desirable communities. They do not have fountains with champagne in them. They are often communities which are chosen by people out of economic necessity rather than by free will.
These communities are also largely unsustainable without state aid due to Proposition 2.5. Springfield receives $329m in state aid, but has just $41m in excess capacity. In other words, if state aid was completely eliminated Springfield would be required to cut $288m in spending — 51% of its budget. I defy someone to find a way to cut Springfield’s expenses in half without gutting most services.
I would prefer to see a revenue plan that minimized state aid to every community. If you don’t live in a poor city you are not familiar with the scorn of being viewed as a welfare recipient. Even Springfield was recently targeted by another legislator — by painful cutbacks, Springfield has built up a bit of a reserve cushion; this legislator suggested that it wasn’t fair for Springfield to have this cushion when other communities did not have one, since some of the cushion was unspent money from a state loan traded for living under a Finance Control Board for the past 5 years. Another state legislator suggested that it “wasn’t fair” that Springfield had 2 municipal golf courses even though it get so much aid (his community has zero).
In other words, even state legislators believe that “the welfare queen doesn’t deserve to eat brand-name foods”.
I believe that we can get to less reliance on state aid by creating a wide variety of revenue-raising options available to each community, allowing communities to raise revenues based on their strengths instead of one-size-fits-all.
I would also prefer to see state policies that don’t encourage the segregation of poverty (which is a large part of Springfield’s expenses), perhaps by the state recognizing that demand is in a dangerous feedback loop right now (exclusivity is attractive) and by equalizing demand by making it more attractive to live in poorer communities (which would have the added benefit of reducing development pressures in our suburban and rural communities).
However, those ideas are a long way off, so until we get there, I ask that people recognize that what sounds like a fair deal is really unfair to those communities that currently rely on state aid for the bulk of their revenue due to the singular approach used to determine local revenue ability.