Recently, Governor Patrick warned cities and towns that the economic downturn was having a dramatic effect on State tax revenues. The Governor, who cut $1 billion from his budget in October, announced that he would be forced to cut another $1 billion in January or February.
The Governor has asked the legislature for permission to cut local aid in January. Midyear cuts are devastating to cities and towns, since half of our budget is already spent.
Meanwhile, House Speaker Salvatore Dimasi said that cities and towns should brace themselves for an additional 10% cut in local aid this coming June.
In light of these pronouncement, I am meeting with department heads and asking for impact statements if the budget were cut. We are looking at every budget, giving them target numbers, and asking what the impact of cutting to those target numbers would be.
With the cuts, the legislature is also considering giving the cities and towns the power to raise some additional revenues. One item being proposed is a local meals tax. A local meals tax would mean that 1 or 2% of the cost of a local restaurant meal would go to the local city or town. A meals tax could raise us as much as $1-2 million.
New fees and taxes are never popular, particularly in a recession. However, in light of the devastating budget cuts being proposed, it is an option we have to consider.
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