BOSTON — Cities and towns would get more money from the state under a Senate budget plan, which calls for boosting local aid as municipal officials push for tax overrides to fill widening revenue gaps.
The Senate’s budget proposal, set to be released on Tuesday, would carve out more than $1.37 billion for so-called Unrestricted General Government Aid to municipalities, a roughly $53 million increase over the current fiscal year, and change how the money is allocated to cities and towns.
Senate President Karen Spilka called the proposal amounts to a “historic” increase in state aid to local governments, meaning hundreds of thousands of more dollars for the state’s 351 cities and towns that use the money for everything from closing budget gaps to repairing sidewalks.
“We cannot succeed as a commonwealth without giving our municipal leaders the flexibility to tackle rising healthcare costs, infrastructure costs, maintain essential services like police and fire, DPW, and also invest in our communities,” the Ashland Democrat told reporters at a Monday briefing. “This funding will give them the tools so desperately needed to do just that.”
Senate Ways and Means Committee Chairman Michael Rodrigues, whose office crafts the Senate version of the budget, said the proposal calls for altering how the state allocates funding for cities and towns every year, by creating a per capita formula that distributes the aid based on population.
He said under the system of allocating local aid in the budget the funding was based on “historical” allocations with the amount of funding, inching up slightly every budget cycle.
“We thought this is a fair way to distribute the increase in budget funding,” he said Monday. “So whether you are an urban, rural or suburban community, you will all see the new growth in UGGA allotments.”
Municipal leaders say cities and towns are struggling to balance their operating budgets as state aid remains largely flat, federal pandemic aid dried up and Proposition 2 ½ overrides not keeping pace with rising costs. Several communities are weighing tax overrides this year to drum up revenue.
A recent report by Massachusetts Municipal Association warned that a “perfect storm” of sluggish state aid growth and strict limits on local tax increases has left cities and towns with few options to plug gaps in their budgets. It called for giving local governments the ability to increase taxes.
“Nearly every city and town is facing numerous challenges,” MMA’s Executive Director Adam Chapdelaine said in remarks Monday. “It’s a fiscal perfect storm hitting every corner of the state. Even with the most valiant efforts to operate efficiently, city and town leaders simply cannot overcome these trends, which are forcing them to make difficult decisions.”
It’s a refrain that’s been heard on Beacon Hill repeatedly over the past year, where state leaders are raising alarms about the potential fiscal impact of a proposal to cut the state’s income tax to 4% and other changes that could mean even less money for the state’s annual spending package. P
Policymakers say there’s also less money flowing from the federal government to the state and local governments with the Trump administration taking steps to cut government spending.
Last week, the state House of Representatives approved a nearly $63.4 billion budget that included $1.33 billion for local aid, a roughly $10 million increase over the current fiscal year’s budget.
The House’s spending plan doesn’t seek to raise wholesale taxes and wouldn’t draw from the state’s reserve fund. It calls for tapping $2.7 billion from the Fair Share Act, a voter approved law that sets a 4% tax on households with income above $1 million.
Lawmakers still loaded up the budget with requests for money for local projects and programs, driving up the bill’s final price tag by more than $80 million.
House Republicans filed amendments to fiscal 2027 to cut the state income tax rate from 5% to 4% over three years and also to cap state revenue collections, but the Democratic majority rejected the proposals during the first day of debate on the spending plan.
Gov. Maura Healey filed her preliminary $63.4 billion budget in January that also held the line on a wholesale tax increase and called for boosted spending on education, transportation and state aid to cities and towns.
Healey called for a 4.4% increase in local aid, totaling more than $10.3 billion, including increases in Chapter 70 payments for elementary and secondary schools, veterans’ benefits, and unrestricted aid.
The budget also needs to be approved by the state Senate before heading to Healey’s desk for review.
The fiscal year begins July 1, but lawmakers have blown past that deadline for the past several years amid behind-the-scenes wrangling over contentious policy issues included in the spending package.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.