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.
Let the communities raise their own money and remove it from the state coffers to begin with.
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p>And you are right, I disagree with you. Across the board cuts are the fairest in m opinion. Enough with progressive bullshit. Doesn’t anyone understand when “everything” is progressive the results gets compounded continuously?
I think it would be very interesting if, tomorrow, the state said “no more property tax, now all local revenues come from an extra 3 cents added to the sales tax and paid to communities in which they are collected — and we’ll provide local aid to the communities that don’t have any commerce”.
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p>I think that the view of state aid being “welfare” would change very quickly.
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p>Such a proposal would be a lot less perverse than penalizing poor communities for poverty — something they can’t control. Communities that refused commercial development would be penalized for an active action — refusing commercial development.
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p>Again, I think there are a whole slew of revenue-raising options out there — from tolls to sales tax to local income tax — and I don’t see any good reason not to craft a plan by which communities can’t exercise any number of them. If the response is “it wouldn’t be fair” (a complaint of the proposal to raise the meals tax), well, it isn’t very fair right now, so it might be still not fair, just in a different way. And I think there is probably a way to make it work in a more fair way than we have now.
Property tax revenues are much stabler than sales tax revenues, which fall dramatically in a rough economy, depriving local governments of funds, just when their citizens need them the most.
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p>It also leads to a phenomena called “the fiscalization of land use” where development and other land use decisions are made based on what will bring in the most money, rather than what’s best for the community. You’ll see cities and towns promoting things like auto dealerships and other high sales items.
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p>I like the notion of challenging assumptions of who is dependent on the State for aid, but I don’t like the idea of sales tax driving local planning and funding.
Municipalities have not recovered from the local aid cuts of 2003. Our cities and towns will not survive another round of local aid cuts.
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p>Here’s my plan for the future.
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p>In exchange for level-funded local aid in FY2010:
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p>1. A 3% local meals tax that goes directly to the municipality.
2. DeMasi’s GIC reform. It will help in the long run, but won’t result in short-term savings.
3. The school funding formula has a minimum local contribution, which dictates the amout of property tax revenues that must go to the schools. Any increase in the minimum local contribution is added to the town’s levy limit.
4. Commonwealth charter schools will be funded through the school choice program – $5000 garnishment from the local aid account of the sending district, with the remainder funded through a line item in the budget of the state department of elementary and secondary education.
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p>We also need a resolve that any elected official that balances the budget on the backs of local aid will be removed from office in 2010. I love you Deval, but that’s the bottom line. Same for my rep and senator, both good friends who I have supported. Vote to cut schools, police, fire, local services, find a new job in 2011.
Stoneham is joining the GIC for FY10. It’s going to save us $650K next year. The savings would have been $1M but the town administrator had to make $350K in concessions to the unions to get them to agree to sign up. FWIW, $1M is about what a 10% local aid cut will cost us.
Pablo, I think Patrick has done fairly well to avoid cuts to local and school aid so far this year.
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p>It seems pretty clear that there just won’t be enough money to do that next year (if not in the remainder of this fiscal), notwithstanding a federal block grant to states program intending to fill in the revenue gaps. At the very least, it is hard to imagine that years four and five of the Chapter 70 plan currently underway can proceed without some modification. Presumably, some folks on Beacon Hill are scrambling through variations on the spreadsheet’s formulas trying to figure out ways they can square available revenue against the existing plan, approved but not funded by our prior Governor, as was the health care reform also underway.
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p>I wish them well, offer just one tidbit with the intention of following through on the state’s plan to rationalize regional school contributions among different towns in a regional district. Write down the excess minimum contributions for towns that don’t trigger additional chapter 70 funding, so towns like Tisbury don’t get stuck holding the bag in their regional districts. You can hold the line on new chapter 70 revenues without completely abandoning the goal of equitable required minimum contributions in regional school districts. It would be even fairer to continue the formula and then apply whatever reductions are necessary across the board after the calculations, but I suspect that’s a tougher row to hoe.
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p>Also to Pablo; I suspect politically it’s better to leave Prop 2.5 alone, the state’s doing its best I think simply by applying the required minimums, and letting the towns figure out if they need overrides to support other services. In many places, overrides are hard just because people really can’t afford to pay higher property taxes. Getting to a place where there is a flat school tax based on ability to pay, and school aid is distributed based on need, is a reasonable goal in the short to medium term, without waking the angry gods of tax revolt.
First, what’s the status of the tax on telecom companies? That should be taxed.
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p>Second, municipalities should be allowed to add hotel/motel taxes that are capped at whatever the cuts are to local aid. ie: if Weston has to add a 1% meals tax to make up the loss in local aid that’s great and it should be able to do so. If Natick has to add a 2% meals tax it should be allowed to do so, but also should have the option of a 1% meals tax if it deems that number appropriate to reduce the number of major cuts.
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p>Third, stop the upward distribution of lottery aid. Wouldn’t it make sense to cap lottery aid at something like 3x of what a community’s residents put in? This way, communities with the largest economic problems benefit the most from the lottery money they spend.
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p>Fourth, we NEED to have at least a small sales tax on alcohol. Such a tax would generate millions to help in this crisis.
others have brought up sensible measures.
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p>Tax alcohol. Huge taxes on smoking, nothing on liquor?
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p>Local meals/hotel tax. This will help some towns more than others, but it will help just about every city and town out there.
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p>Why Prop 2 1/2? Why not Prop 3? Or 3 1/2? Why not prop “state inflation rate?” How can we continue to justify the fact that communities can’t raise taxes even at the rate of inflation? It’s systemically unsustainable, building in a structural deficit to every city and town just about every year.
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p>Beacon Hill cannot, under any circumstances, cut local aid without giving the cities and towns the means to make up the difference. We’ve cut to the bone already. At some point we have to collective wake up as a state and decide to stop being stupid.
…you cut my police, my library, my firefighters, and you leave us no means to recover the lost revenue, I vote you out of office. Nuff said?
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p>Let’s run these cowards who are afraid to raise taxes to cover the costs of government out of office.
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p>How about
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p>Let’s focus our political energy on providing our political support to the state and local officials who are willing to promote a public discussion that answers the basic question facing local aid and the state operational budget:
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p>More cuts or more taxes?
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p>Question 1 threatened the various public structures that educate our children, keep our water clean, our streets safe, and our roads repaired. We voted overwhelmingly to protect those programs.
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p>Are we ready to pay more taxes to repair and reform these institutions?
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p>I think most folks will say yes, but only if they can see evidence that our government will operate more openly and transparently in its policy-making process, and that our leaders will be held more accountable – exposing and eliminating corruption.
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p>They will answer ‘yes’ if they believe that their taxes will be collected fairly, and if they know where those tax revenues will go.
just because it isn’t rung in separately when you buy that 6 pack or bottle of wine (or for that matter a gallon of gas), these items are taxed by the state; price paid reflects taxes already.
MA has an excise tax of $4.05 per gallon of distilled spirits, $0.55 per gallon of wine, and $0.11 per gallon of beer. The taxes are paid at the wholesale level and built into the price when consumers purchase the items. These taxes are all middle of the road amounts when compared to other states.
Ever notice that you never see a hole-in-the-wall restaurant that serves beer or wine? Or a small grocer that carries these items? Our liquor licenses are among the most expensive in the country, effectively making it impossible for a small operation to sell alcohol.
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p>That’s also the main reason that “two buck chuck” is “three buck chuck” here. Everything is necessarily more expensive to cover the cost of the license.
and it’s not the first time I’ve heard that, but let’s be honest here. That’s not taxing alcohol. How much are cigarettes taxed? We just added $1 to them this year. Why not add $1 to a bottle of wine or a six pack? How many tens of millions (hundreds?) would that raise?
that does not mean that you’re not paying the excise tax on distilled spirits, wine, and beer. Just because the legal incidence of the tax falls on the wholesaler to collect, does not mean that the economic incidence of the tax does not fall on the consumer of the alcohol. As Mike from Norwell points out, the gas tax is imposed in a similar manner. Would you argue that the MA gas tax is not taxing gas?
(I thought it was obvious. Guess not.)
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p>It’s a small tax, comparatively speaking, especially considering the expenses and toll alcohol takes on society. Adding a dollar to a bottle of wine, a six pack and other spirits seems very reasonable and a good way to raise revenue.
Be thankful I don’t take it all
what is the percent we tax cigarettes? Or how about gas? There are many things we tax more than 5%, most of them because they are a very large burden on society. What’s a bigger burden than cars, for example, necessitating the entire system highway system? I don’t know if I could think of anything more subsidized than cars. Smoking, on the other hand, has cost this government billions and will continue to do so – hence the high tax.
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p>Alcohol is directly or indirectly responsible for how many thousands of police calls, visits and actions? How many people are killed every year from alcohol-related accidents? What’s the medical costs to this government because of them? I’m not suggesting prohibition, but we need a high tax on alcohol to help mitigate its costs to society, especially when many of the local cuts being bandied about are going to be felt hardest by local police and fire departments – the first responders and protectors when it comes to alcohol-related problems.
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p>You can come up with all the sophomoric jingles you want, but this is serious stuff, costing us serious money – in a time when we’re having a serious budget meltdown. We have to raise revenue and this is a serious, logical and obvious area to look into.
are inadequate to pay for the government services necessitated by alcohol. I don’t know whether that is correct, do you have any evidence to support your position? The MA excise taxes on distilled spirits, wine, and beer are middle of the road when compared to the other states. (The MA beer rate is actually a little low compared to other states. But overall, all 3 rates vary wildly among states with MA coming somewhere near the middle). Does alcohol impose more costs on government here in MA than elsewhere or are most states not taxing alcohol enough to cover the costs? Or are you just trying to raise another “sin tax” because that’s more politically palatable than raising other taxes?
I’m not saying they’re “inadequate.” I don’t know whether they are or not. Honestly, it’s probably impossible to tell, as I doubt there’s any recent studies that would suggest how frequent alcohol comes into play in police and fire calls, and how expensive they are to the system in that regard. All I am saying is that they are expensive and thus fair game in taxing beyond the typical 5% or so. It’s only logical that alcohol, which is a addictive, legal drug, be taxed similarly to other addictive, legal drugs. The fact that they cause people to be quite stupid, unlike smoking, only increases its burden on the cost of services. Surely, if we’re taxing smoking by several dollars a pack, taxing alcohol by a dollar for a bottle of wine or a six pack, etc. isn’t out of whack.
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p>
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p>For various reasons alcohol isn’t seen in the same light as cigarettes and thus the liquor industry has been able to avoid (as far as I know) the kinds of taxes enforced on cigarettes.
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p>Is it a sin tax? I don’t know, maybe the “sin” makes it easier to pass those taxes, but it’s undeniable that both alcohol and smoking costs our government billions every year, never mind loss of life and other consequences. You could, I guess, try to reduce it to silly slogans, but it doesn’t change the fact that these “sins” cost the government billions. That’s why we need to tax them above and beyond what we’d tax many other things, especially when the services that mitigate the consequences of alcohol are on the chopping block. If you want more drunk drivers going unpunished, more abusive situations spiraling out of control and longer waits for ambulances and fire officers after car crashes due to drunk drivers… then, yeah, screw taxing alcohol by a larger yet reasonable margin.
You
Me
You
You again
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p>So you call for higher taxes on alcohol to mitigate the costs on society, then you admit that you don’t know if the current tax rates are mitigating the costs on society, then you again call for a higher taxes on alcohol to mitigate the costs on society.
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p>Alcohol taxes are not imposed per pack the way cigarette taxes are, and are not imposed at 5% the way the regular MA sales and use tax is. They are not subject to the “typical 5% or so” and they cannot be raised by “a dollar for a bottle of wine or a six pack.” The current tax rates are $4.05 per gallon of distilled spirits, $0.55 per gallon of wine, and $0.11 per gallon of beer. It would help you to have a basic understanding of the framework of the alcohol tax structures before you make your unsupported claims about how the rates aren’t high enough.
if those taxes were higher.
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p>You continue to prove my point.
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p>Thanks for the info.
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p>And we absolutely could put a per-bottle tax on liquor if we wanted. Where’s the law that says we can’t?
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p>
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p>Putting your arrogance aside, let’s have a frank discussion. I don’t need to know all the specifics to know our taxes on liquor are very low. I very readily admitted I am not an expert on liquor taxes; I can’t be an expert on everything and would never claim to be.
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p>But just because I’m not an expert doesn’t mean I can’t make an intelligent argument on the subject – after all, I’ve bought wine and beer before, thank you very much, and know enough to know that it ain’t that expensive. We could easily afford to add a small tax to it that would raise this state hundreds of millions without compromising people’s abilities to have a fun night now.
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p>Furthermore, while I don’t know if our current tax mitigates the expenses we have in tackling people who abuse alcohol or accidents that happen in part because of drinking, if I had to guess, my guess would be no, it’s not anywhere close. For starters, we don’t even do a good-enough job in mitigating those problems to begin with – we don’t need to cut police and fire and programs that tackle drunk driving and spousal abuse, etc. – we need to majorly increase them.
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p>Even if we did a credible job and even if all of that was completely paid for by current taxes on alcohol, though, yes, we could tax liquor’s modest rate higher to pay for those services, because those services must be subsidized to pay for things that we can’t tax that cost police and fire money. It’s still appropriate to place the slightly-higher taxes on alcohol when there’s no other obvious place to do so.
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p>The major point is we’re facing having to cut police and fire because of budget constraints and those cuts will make alcohol-related crimes and accidents that much worse and more dangerous (and, as I said, we’re already not doing enough). People will die because of those cuts and I don’t want that on my conscience… but if you’re perfectly fine with that, I guess that’s your prerogative. If you have a better idea to find funding to go to local communities that would avoid those cuts and wouldn’t contribute to the problem, then I’m all ears.
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p>Until then, you’re advocating for the state to slash funding to towns when those towns need that cash. I’m advocating that no one should lose local funding and, if anything, we need to figure creative ways to improve it. You’re advocating for this state to become a much worse place; I’m advocating for it to become a better place. I know I’ll sleep well tonight.
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p>Ryan is not one to sit around doing nothing when the situation calls for panic.
I haven’t advocated for anything. You have made several factually incorrect statements and several other statements that you are unable to support with any evidence. I’d like to have a frank discussion about municipal finance issues, but we need to get the basic facts down before we can have that discussion. And you seem go be angry and defensive when you are called out on your many errors. I’m not really sure you’re capable of having that frank discussion, but if you’d like to try then I’m in.
what’s your solution? what’s your better idea, that doesn’t result in any cuts? As I think I’ve made clear: I’m interested.
Start with eliminating the two most recently created tax credits, the life science credit and the film credit. They both represent bad tax policy, and choosing to subsidize these two particular industries through tax breaks is akin to discretionary spending that should be eliminated when the budget is tight. Extend the sales tax base to cover all services while lowering the rate to a level that would result in a slight projected revenue increase. Impose the sales tax on all food and on clothing under the current $175 threshold. Exempting food and clothing for all people is a very misguided way to help poor people. Use some of that additional revenue and create a food and clothing circuit breaker program, take some of it to fund food stamps & food shelters, and put the rest in the general fund. Merge the nonprofit division of the AG’s office and the people at the DOR that deal with nonprofits into the same group, and create a liaison between that merged group and the local property taxing authorities (the DOR already has a local services division so the group should probably be located within the DOR). Nonprofits are exempt from entity level income tax and local property taxes, but often nonprofits and for profit entities are only separated by a slight degree. Move oversight over the nonprofits by a single government group and the ability to pull the exemption from the nonprofit if it isn’t actually performing its stated mission will ensure that MA isn’t foregoing the revenues from the nonprofits without getting something in exchange for the tax favored treatment. And if MA isn’t it will place the properties back on the tax rolls and increase the tax base for the localities.
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p>I’m not an expert on the cost side, but having a more qualified individual in the Office of State Auditor would almost certainly help further the goal of searching for and destroying waste, fraud, and abuse in state government.
that’s the wrong way to create revenue. It’s not at all a progressive tax. The potential of stem cell research is worth the funding, even in difficult times. In the future, stem cell research could not only save or vastly improve lives, but maybe even reduce the cost of current, expensive medical procedures. Who knows? That’s why we invest money into its research.
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p>With you on the borderline nonprofits… and I’d go so far as to tax any nonprofit’s profits from stocks or hedges, etc. Getting rid of the film tax credit is also something I think a good idea, though I know people in state gov’t who have bitterly disagreed with me and said that it’s been helpful creating revenue. A new study to see if it’s paying itself off would be worthwhile, IMHO, even though previous studies predicted that it wouldn’t.
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p>I still think increasing taxes on liquor is worthwhile, especially because of the fact that upcoming cuts will be to police and fire… services which are themselves taxed by incidents spawned on by liquor. If you’re for taxing groceries to pay for food stamps… one would think you’d be for increasing taxes on liquor to pay for services that cost us way more because of liquor.
I think you should make this a diary and maybe Charlie will front page it for asking tough and important questions.
Good grief, what is happening to pop culture?
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p>Anyway, I’m not necessarily opposed to s’more tax on booze, though I consume booze. It was just that the tone of these posts– tax this, no tax that, no tax this and that, and maybe the other as well– reminded me of the sophomoric jingle penned by George Harrison and set to music by his band-mates.
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p>FWIW, this might be an argument for taxing booze and cigarettes, but it sure seems like you’re not in it to “cover costs” but to make it a moneymaker for the Commonwealth.
CMD, thought the “Taxman” riff was pretty funny. As an actuary though, have to think through all of these sin taxes, especially when you consider pension/SS costs. Get all of these people healthy, you’re screwed as they live too darn long (when can we get those smiley/wink buttons enabled in the code).
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p>Similarly, get everyone to switch to a high mileage car and you’re screwed on your gas tax receipts (if anything, the SUV driver is paying more than his fair share, it’s those scofflaws in their Priuses who are cheating the system).
Our state’s coffers are imploding and people are bringing up ideas. The blogosphere is about conversations and ideas. You never seem to get that, scoffing at just about anything someone brings up, almost always in some snide, unhelpful fashion.
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p>I called for some potentially palatable revenue-raising ideas. With this budget situation, what do you expect? Calls for tax cuts? You do realize this is BLUE mass group, right? I’m sorry if I’m being a bit tone deaf, but the Taxachusetts label is nothing but wolf’s clothing anymore, no matter what tune you’re singing that music to.
Patrick said that one of his TOP PRIORITIES if he were elected governor would be to cut property taxes by reinvesting in local cities and towns. He vowed to restore local aid to pre-2000 levels.
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p>TOGETHER WE CAN???????????????????????????????
The logical place is to boost the state income tax back to the pre-2000 levels.
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p>I think the ballot initiative to axe the income tax completely establishes that is not an option most legislators can touch – even though voted down by two to one.
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p>Meals tax, telecomm tax; those are drops in the bucket, and not uniformly distributed.
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p>Real federal health care reform could help. I’d finance single-payer health care with a VAT tax, and help solve many of our international balance problems in the same initiative, while also shoring up Medicare/Medicaid, and supporting the legacy pension plans that have unfunded medical costs and shrinking employee bases.
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p>The fastest growing and biggest components of most state budgets is in health care.
As MassParent points out, there has been a discussion of federal aid to the states, via Medicaid, a revenue sharing plan or both. Often when funds go to the states, there is an “anti-replacement” clause that says that you cannot cut a state’s commitment to an existing program by replacing it with federal money. So the question is, if the state receives revenue sharing money, will they be able to legally pass that on to cities and towns while cutting local aid. Just a question.
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p>Another possibility is that the feds provide direct revenue sharing to localities, thus in a way making it easier for the state to cut local monies and creating a zero sum game.
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p>In terms of the meals tax, there have been proposals to allocate the bulk of the proceeds to the originating communities, while taking out a percentage to go to municipalities that don’t have restaurants and thus don’t benefit from a meals tax.
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p>We all know that times are tight, what is needed is a combination of fiscal independence for cities and towns, protection for communities with a disproportionate number of needy families and individuals and some aid from DC, not just on the fiscal assistance side, but also in terms of economic development assistance to move tax producing projects forward.
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p>I’d like to lobby against that tradeoff. Again, if all things were equal, it would make sense, but all things are not yet equal.
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p>The structure of state aid is already somewhat progressive — certainly more progressive for Chapter 70 money than for general government money. In other words, wealthier communities get less than they pay, poorer communities get more.
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p>The key difference between that and a meals tax is that it is very easy to allow a restaurant from locating or operating in a town — so communities will forgo that extra revenue by choice.
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p>It is not quite so easy to increase your property values, particularly if you are a community that was built out before Proposition 2.5 focused everyone’s attention on “high-end” resident segmentation.
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p>Again, while it sounds “fair” to give communities without restaurants some of the meals taxes collected, in reality, for the most part, this would be taking money from poorer communities and giving it to wealthier communities who keep restaurants out to preserve their quality of life. I think a better solution would be to say “if you want to collect meals tax, allow some restaurants to be built”.
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p>Towns who can afford to pay more get less state aid in a progressive fashion – the more they can afford to pay, the less state aid they get.
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p>That’s how it’s supposed to work, not how it actually works. Many well-off towns do comparatively well with Chapter 70, some very middle-class towns get screwed over by it. An example would be Wayland and Swampscott. Wayland gets more per pupil than Swampscott by a fair margin, despite the fact that it’s median family income is about $30,000/year higher.
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p>The Chapter 70 formula is very flawed, impacting towns with many struggling and poor families – towns like Gloucester and I think even Salem gets less than the 17.5% that the state has admitted all towns should receive as a base. I don’t know how anyone could think Chapter 70 is a good system; it sucks, it’s killing some towns and it isn’t fair. Of course urban, poorer towns should get more state aid, but the formula doesn’t account for the many middle class/mixed towns that can’t afford to fund their schools just using property taxes alone.
Have you figured out the flaw in the formula? I know it’s not easy — does anyone understand all the nuances behind it? It really is mind-blowing.
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p>Could the situation you describe have something to do with the population in the school system not matching the demographics of the town? For example, if the wealthier parents in Wayland send their kids to private schools, leaving the public schools with mostly poor kids, I’d expect Wayland to get more aid because their students are more needy even though their residents are wealthier.
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p>I have tried a few times to crack the Chapter 70 formula, but I kept getting lost in it. From what I recall, isn’t the whole thing based on increases to a base amount from 1993? In other words, haven’t they just kept adjusting the numbers instead of recalculating them?
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p>The flaw I see in the Chapter 70 formula is that it assumes that there is a linear relationship between poverty and educational need. I think the relationship is much more exponential than anything.
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p>The Chapter 70 formula calculates “incremental” foundation budget costs based on things like low-income students. If I read the spreadsheet correctly, it assumes that a low-income student costs a district 47% more than a middle-class student. I surmise that in reality, a single low-income student doesn’t cost nearly 47% more than a middle-class student, that maybe 25-50% low-income students in a class might be in the ballpark, but an entire class of 25 low-income students is not only 50% harder to educate.
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p>That is why classrooms in poor communities — some of which are 90% low-income — have so much trouble, because a class of 25 low-income students can’t get by with 1.5 teachers, or put another way, reducing the class size of an entirely low-income school from 25 to 17 doesn’t come close to leveling the playing field.
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p>I think that the amount of resistance to low-income students and the similar performance across districts with similar demographics adds to the proof. In other words, people know that poor kids anywhere are harder to educate, far harder than people give credit (and aid) for. So why bother if you don’t have to?
and a number of factors of why a town like Swampscott suffers from it. For example, one of the Chapter 70 measures is how many students need government help in buying lunch. Many/most of the people eligible in Swampscott to receive that help choose not to take it, perhaps because the town is (inaccurately) viewed as a wealthy community. We’ve also suffered a bit because of a decline in students, but not a large enough decline to warrant making our schools smaller than the one school we already closed – indeed, doing so would necessitate huge improvements to the town’s infrastructure, so it would cost more to reduce the number of schools than it would to maintain the current number, assuming we’d need to pass another override for additions made to the schools in order to keep class sizes below 35 =p.
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p>Probably the biggest reason why Swampscott suffers, though, is the fact that it’s a very mixed community in terms of wealth and ability to be taxed. Parts of Swampscott are middle/working class – filled with landscapers, child care providers, nurses, teachers, retirees, etc. Other parts, on and by the beach, are filled with homes worth millions of dollars. So, those with the means could certainly afford more in property taxes, but the bulk of the town can’t as we already have among the highest taxes in the state, especially for a town of our median income. Moreover, the wealthy homes and families hurt us big time on Chapter 70, exacerbating the fact that we can’t afford to raise property taxes beyond the level we already have done so.
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p>When Chapter 70 measures household income – and towns can’t tax household income – it puts towns like Swampscott and Gloucester in a very tough spot. We get penalized by the government for something that we not only can’t control, but couldn’t tax. If there were a mechanism to tax some of these wealthier families above and beyond property taxes, which disproportionately affect working and middle class families, then we wouldn’t have a problem. But until then, we’re penalized by a formula without the government allowing us to take advantage of the reasons why the formula penalizes us to begin with. It makes no sense and its absolutely killing this town, along with 20-30 other, similar communities.
I didn’t think that taking subsidized lunch is used; I thought it was “eligibility” (I could be wrong though).
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p>The “required contribution” page for both Swampscott and Wayland provides some good information. However, I don’t think what you are describing contributes to the differences between the two towns.
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p>According to the sheets, the Equalized Valuation between the two towns was almost similar — $3.4bn for Wayland, $2.7bn for Swampscott. However, the income difference was huge — $1.3bn for Wayland, just $650m for Swampscott.
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p>But the main problem seems to be that the income/EQV didn’t play into the equation because in both cases, the amount of contribution that should come from both the property value and/or wealth of the community was not flagged as a limiting factor.
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p>Let me give specifics. Using the formula (and I don’t understand where the multiplier parameters come in), the EQV is multiplied by 0.2943%, and the income is multiplied by 1.5779%. The results are added together. In Swampscott, the total is $18,357,850. This is titled “Combined Effort Yield”.
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p>The foundation budget $17.7m) is then multiplied by 82.5%. For Swampscott, this comes to $14,624,797.
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p>The “Target Local Contribution” is the lesser of 82.5% of the foundation budget or the Combined Effort Yield.
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p>Since $14.6m is less than $18.4m, the $14.6m is used. So in other words, the “82.5% of the foundation budget” is the number that moves down the calculation.
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p>The number calculated based on the EQV and the income is a ceiling. For both Swampscott and Wayland, the ceiling is higher than the Maximum Local Contribution of 82.5% of the Foundation budget. For Lawrence, the ceiling kicks into play — by a lot — primarily because their foundation budget is so large. Lawrence’s foundation budget is large because they have a lot more students and their cap is lower because they have poorer residents and low property value.
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p>There is one more step I don’t understand, but I think it is very important. It seems to be some kind of “brake” that prevents communities that were contributing less than the target in prior years from having to cough up the difference immediately. It also seems to prevent communities who are overcontributing from scaling back rapidly.
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p>Springfield is supposedly contributing almost $20m less than the target. In other words, the state is kicking in $20m more to Springfield than it thinks it should.
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p>What is interesting about that number is that Springfield has just $41m in excess override capacity. The general government side of Springfield’s budget isn’t fat either — it is very, very lean. Yet the state thinks that Springfield should be kicking in another $19m to the schools.
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p>That tells me that either the EQV/income contribution target is too high, or that the general government aid to the city is too low — because pushing the city within a few percentage points of the $25/1000 levy ceiling doesn’t seem like sound policy.
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p>I think that it would take months to truly untangle Chapter 70 to understand out what it really does. And it would probably take years to revamp it because there will be winners and losers no matter that.
Nothing that convoluted is going to lead to a fair and equitable redistribution of wealth in the state. However the formula is determined – and I’m not pretending to really understand anything other than the theory behind it – it’s flawed and has really screwed over some communities.
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p>A different system is going to be the eventual solution, but the only way to make that palatable is to make sure there truly are no losers, to make sure we, as a state, invest more in our schools everywhere. Obviously, that means we need more revenue to do it. So, the solution at the end of the day is relatively simple, we just need the political fortitude to get there.
Since I know the numbers very well (as it’s my home town).
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p>We’ve got bad luck with the formula, but it’s as much a product of history as anything else. After all, the author of the original formula is (or at least was) a Gloucester resident.
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p>When Ed Reform came about in 1993, many (if not most) cities and towns were underfunding their schools. The original deal for Chapter 70 was roughly this:
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p>(1) How much does a base-line education cost for your community? (There’s a reason they call it the “foundation” budget not the “ceiling” budget).
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p>(2) How much can your community afford to pay, based on your property tax base, adjusted for average income? In some cases, including Boston, local spending was already over this level and could be replaced by Chapter 70 aid.
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p>(3) The state will make up the difference in Chapter 70 aid.
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p>(4) In a transition period, communities that were spending too little on education would get temporary assistance to pay for part of (2) to avoid the sticker shock of large municipal tax increases (or cuts in non-school services). It was intended that this would be replaced by increased lottery distributions.
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p>(5) Every community would get more aid than before. Initially this was $50 per pupil each year (compounded), although it rose to $150 (I believe was the highest). This was the traditional deal to get all legislators on board even if they represented well-off communities.
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p>Finally, there was a seven-year phase-in until things became fully funded.
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p>What happened was that this project went along very well, reaching the target in FY 2000. Then the governor and legislature had to figure out where to go next. What they did was to put in increases before the hard times hit so that funding reached about 105% of foundation, and then cut back sharply when the previous budget crisis hit.
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p>The poor cities and towns (Lawrence, Springfield) that couldn’t afford much in the way of property tax funding for their schools got a lot of state aid to reach the foundation level. They still get increases every year to maintain this foundation level.
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p>Rich communities (Newton, for example) have gained the minimum aid over the years, and have been more recently aided by the 17.5% floor established for state aid.
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p>Many “blue-collar” communities that had low levels of school funding initially had large amounts of money under (4) which was intended to be taken away with the lottery increases. Despite those increases, these cities and towns have never been asked to pay their “fair share” of educational costs.
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p>Communities like Gloucester were spending close to what they should have been when Ed Reform started (I believe we were over 90%) did not receive a major windfall under (4). In our case, things have been made much worse because our system is losing pupils (as the community ages). This causes our “picture” to look better from year to year because our revenues actually outpace our costs, unlike almost every other community.
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p>The changes made a few years back to shift the community funding level under (2) from mostly property-value based to an even mix of property and income has been helpful for many coastal communities (especially on Cape Code) but in Gloucester’s case has not due to the declining enrollment.
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p>Based on my research into Chapter 70, the only part of the formula I really consider “broken” is in the floors for wealthy communities, but I realize that there’s a level of political expediency here that would prohibit changing that (after all, even Gloucester’s state senator couldn’t vote for that change due to all of the towns in his district that benefit from that provision).
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p>The real story of Chapter 70 is that the “foundation” has probably been kept too low for education today; changing that would require more money in the system and that’s not likely on the table.
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p>Finally, remember that despite all talk of a formula, what actually happens is that specific dollar amounts for each school district are written into the school budget. If the legislature felt that the allocation provided by the formula was unfair, they can simply change the numbers (and have, in the past).
two fold, one is clearly political – get the measure passed, came within a dozen votes in the House a few years back and actually went to Gov Swift once, the other argument is that people from towns w/o a preponderance of restaurants do travel to other cities to dine and some of their dollars should be returned to the originating community. I’d like a “pure” meals tax too, but not every community is going to start building restaurants to a significant level.
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p>on the bigger issue of state aid, there has always been a delicate balance of 3 funding sources – Chapter 70, which has been discussed here, additional assistance which favors older urban communities, and the Lottery, which, by the way, does not allocate its funds on “point of sale” (as proposed for meals) despite some fairly close votes in the Legislature a few years ago. Problem is, you start tinkering with one leg, the whole chair wobbles.
I don’t know the origins of “additional assistance”, but I do know that it was related to the schools and that a few years after Chapter 70 was passed it was cut for more Western MA communities. There are still a few communities that get a lot of it — Boston, Cambridge, Somerville (I think), but there is no rhyme or reason as to why it is what it is.
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p>Springfield gets a lot of Chapter 70 money (due to the extremely poor students in out schools) but this is often used as a reason as why Springfield shouldn’t get any additional assistance or any other help. Again, I’d like to point out that using the legislature’s Chapter 70 formula, the formula says that Springfield should be contributing $20 million less for its schools than it should be (the state is making up the difference). Problem is, we have $40 million until we reach the Proposition 2.5 levy ceiling, so if we paid what the formula says, we would be close to disaster if property values drop.
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p>A Finance Control Board in the city for the past 5 years didn’t find very much wasteful or unnecessary spending, in fact the general consensus was that more could be done if we had more resources. So that tells me that the state aid is too small to compensate for the low property values in this city. Considering that general government state aid is a redistribution of lottery money, and is not based on any formulas, that seems likely.
It’s for water pollution control facilities, not schools. Half of the money goes to Boston. Other cities inside 128 also get a lot along with Worcester.
Instead of looking to redistribute at every turn, how about we put in place incentives for communities to spend their local aid well?
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p>If your community doesn’t continuously improve its financial and spending practices, then no new aid or even reductions. Communities which improve their financial and spending practices receive no cuts or even increases in aid.
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p>”Hold harmless” provisions provide little or no incentive for communities to improve their financial or spending practices.
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p>It’s time that communities are held accountable for their spending practices and financial discipline.
towns are spending their money poorly? None of us can help the fact that health care costs are exploding, and the cities and towns can’t force unions to go GIC… and even that’s just a band aid.
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p>Money goes where it’s needed. The fat is long gone. The marrow’s being shaved slowly each year. The bones are cracked and in pieces… and you think all of these problems are due to towns not spending local aid well? Prop 2 1/2 means that towns are effectively dealing with a structural deficit year in and year out, even when times are good. When times are bad, forget about it. If you want to talk about accountability, it’s time the state be held accountable for handcuffing towns, forcing them to deal with problems without giving them the necessary tools to find solutions – even with the best of planning.
So, I’ll be a more clear:
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p>On the margin, changes to local aid should be based largely on financial performance metrics. Every town can do better, and we should have solid economic incentives for the towns to do so.
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p>Is there waste in town spending and failures in financial dicipline? To varying degrees, of course there is. I don’t buy the argument for one second that the “fat is long gone” and that no further improvement is possible nor desirable.
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p>P.S. Putting words in my mouth (i.e. “what makes you think towns are spending their money poorly?” and “…and you think all of these problems are due to towns not spending local aid well?”) is not a very effective debate technique.
I disagree.
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p>Not every town can do better. Towns are bleeding money and continually cutting, slashing and praying overrides pass. There’s nothing left to cut that’s “extra.” Where’s the room for improvement?
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p>The amount of waste in local spending is so minuscule that I’d be shocked if I don’t waste more money choosing to get a latte at Starbucks instead of Dunks.
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p>Well, then, show me the freaking money. Where’s all the waste? Look up even two town budgets and show me enough waste to save two teachers from being laid off next year.
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p>I’m an elected member of town meeting where I live and studied our budget long enough to write a freaking thesis on it and couldn’t tell you where to save even a single job by cutting “waste.”
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p>The only ways there’s any waste is if you think plowing is wasteful, if you think having cops patrol your neighborhood is a waste – or if your town providing education for your town’s kids is a complete and utter waste. Towns, by and large, are spending their money as best as they possibly can, especially given their resources. They’re all looking into regionalizing services, cutting entire schools and programs, pleading with unions that they join the GIC and raising fees on sports and activities to the point where many simply can’t afford to partake in the fun anymore. But that’s all waste, I guess.
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p>
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p>No, no, no. You said there’s waste in town budgets. You said the solution is to tie government aid to how well towns spend that money. That means you think towns are “wasting” money. That means you think they’re spending money poorly. My “debate technique” was fine; your point is divorced from reality.
Disagree all you want with my opinion on merits. I object to anyone inaccurately framing or implying things I never stated (which you did again BTW).
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p>Facts:
I never stated there was “waste in town budgets” (methinks thou doth protest too much).
I never said anything was “a solution”.
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p>About your own town’s experience:
I find it very difficult to believe that for any town improvement isn’t possible. My own philosophy: if the money isn’t there, do the fiscally responsible thing and cut back on services. Perhaps you should concentrate less on “saving jobs” and focus more on right-sizing employment and services to the level of revenues your town receives. Learn to do more with less, be austere. After I got divorced, I know I sure did.