In the 1990-91 recession, my late father-in-law, looking at the dismal slump in his 401(k), decided to take the classic Wall Street 1929 response and jump out of the window. “Then,” he said, “I realized that I live in a one-story ranch house.”
I offer this tale because it seems our state government is acting like it about to jump out of the window, when, in reality, it can walk out the front door and get to work. The Patrick administration has already made massive spending cuts and the word is out that even more are planned. As Paul Krugman writes on his blog, this may make a bad economic situation worse.
All the talk these days is how the feds can enact stimulus programs. The states can too. Massachusetts must. One reason for strong state action is that Bay State cities and towns have few options in a major downturn. They must create balanced budgets. If the state plans reductions in local aid (directly and indirectly), there’s not much that municipal governments can do. If the leadership here in Smalltown-the Selectmen, the School Committee, the Finance Committee-got together, they might squeak through a $1 million operating override. That would be an increase of about $250 per year in real estate taxes–$21 bucks a month for the typical homeowner. One of our Selectman is already calling this “Unaffordable.” But if state aid is cut, then we might need a $2 million override to keep things on an even keel, and the tax-averse moonbats here will go berserk. $42 bucks a month is beyond the pale, even though we are at among the top median household income levels in the state.
Local spending on capital projects, another way to boost the local economy, is really a two-edged sword. Here in Smalltown we’ve been considering a new school and a public safety building. But projects like these almost always include a state aid component-which may well now be in doubt. And even if we could sell the bonds to get these built, the new facilities would come with higher operating costs-further stressing the Town budget. So these will likely be put on hold. And the race to the bottom continues.
The depth and extent of this economic crisis has surprised everyone. Are we going to let the wonks and the weenies craft our state level collective response? What happened to “Smart Growth?” Does the Patrick administration have anything besides state budget reductions to deal with this major crisis? It would be reassuring to know about this. 351 communities are awaiting an answer. Now.