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New England News
Tue May 8, 2012
State Help Sought For City's Finances
The city of Springfield Massachusetts is facing serious financial problems, again. The city's mayor and members of his finance team met in Boston Monday with the Speaker of the Massachusetts House and the State Senate President to appeal for help. WAMC's Pioneer Valley Bureau Chief Paul Tuthill reports.
The city's Chief Administrative and Financial Officer Lee Erdmann laid out a grim scenario during the meetings with the legislative leaders. Springfield is facing a $27 million dollar deficit in the half-billion dollar budget for the fiscal year that starts in less than two months. The city could be insolvent in less than three years unless current revenue and spending trends are reversed.
Erdmann said the city's property tax base is eroding and real estate tax collections will be down $7 million. Just over sixty percent of the city's budget is built on state aid. Unrestricted local aid has been cut by over 30 percent from five years ago. Springfield could see a $2 million increase in local aid under the state budget approved last month by the House.
A decade ago, Springfield faced bankruptcy and was rescued by a $60 million state bailout. A state appointed finance control board ran the city for five years.
Erdmann said the city’s proposed rescue package this time is not a cash bail out.
The city is seeking legislation to let it tax in excess of the state’s Proposition 2 and-a-half tax cap, as well as a relaxation of educational spending requirements. The plan calls for transferring the cost of school busing from the municipal budget to the school budget and dipping into an $8 million scholarship trust fund.
The legislative leaders were non-committal.
The city’s finance department has proposed fee increases for dozens of city services including dog licenses, building permits, and most controversially trash collection. Springfield City Counicilor John Lysak has been holding a series of public meetings, and not surprisingly, the trash fee hike is very unpopular.
Lysak, a member of the city council’s finance committee, believes the city can cut spending without directly impacting services.
City officials have warned that layoffs of city workers and cuts in services are unavoidable come July. The only question will be how severe the cuts are. Municipal union officials believe the city can find cost savings in health insurance.
Rachel Thomas is an official with the Springfield patrolman’s union, who is urging the city to solicit bids for health insurance rather than stay in the state run plan known as the G-I-C.
But William Mahoney, the city’s Director of Human Resources and Labor Relations said it could cost the city $80 thousand to publically bid for health insurance quotes, with no guarantee of saving money.
Under a new state that was intended to lower the cost of health insurance for cities and towns, municipalities must provide insurance plans that are no more expensive than the state run G-I-C.