Friday, April 10, 2009

Budget Plan Takes Aim at Moving Targets

One day after Mayor Thomas Menino presented his budget plan for the next fiscal year, the Boston schools got slightly more relief than expected from the federal government. But, when all the figures affecting the city budget are known—and that could be months after the June 30 deadline for approval—the mayor’s figure of 565 layoffs could still get larger.

As of Wednesday, the mayor’s budget called for eliminating 212 teachers and teachers’ aides. There could also be layoffs of as many as 67 police officers after October 1, unless the city receives funding from the federal government.

Once again, Menino called on more unions to go along with a one-year wage freeze. So far, there have been agreements from 22 unions. Among the hold-outs are some of the largest unions, including the Boston Police Patrolmen’s Association and the Boston Teachers Union.

“If the Boston Teachers Union accepts,” said Menino, “we can save every teacher and classroom aide in good standing.”

In a statement issued Wednesday by President Richard Stutman, the BTU came close to saying the jobs could be saved without a wage freeze.

“The Boston Teachers Union is actively working with our local, state, and federal officials to identify and generate additional federal stimulus money,” said the statement. “Beyond these efforts, we have been working with the school department to place current teachers into suitable alternate subject areas for the upcoming school year. In the end we believe there will be no need to lay off a single person.”

When the mayor announced his budget, he was counting on another $16 million for the schools from the American Recovery and Reinvestment Act (ARRA).

“We don’t see any additional money coming down from the recovery act,” he said.

A day later, Governor Deval Patrick said Boston’s Title I funding from ARRA would be $20.9 million-- about $4 million more than city officials projected a day earlier. But the chief communications officer for the Boston School Dept., Chris Horan, said there was also less money than expected from the Individuals with Disabilities Education (IDEA) Act. He said the net gain for Boston was only $2.4 million. And, with restrictions on how much of the ARRA money can be used for saving jobs, a spokesperson for the mayor said the difference would protect only about ten more positions.

The three candidates who have announced campaigns for mayor have all called for budget cuts in other areas. In a reaction to the mayor’s budget plan, City Councilor Michael Flaherty calls for more cuts in positions for managers and consultants, but makes no mention of the wage freeze. Councilor Sam Yoon has drawn attention to recommendations by the Boston Finance Commission, such as doing away with fire alarm boxes. And the day of the budget announcement, Kevin McCrea repeated in his campaign blog, “There is enough money in the budget to not layoff a single police officer or teacher.”

This year’s budget figure of $2.4 billion is higher than last year’s by $5 million, but the calculations also include a decrease in local aid by $62.2 million and contractual pay increases adding up to $55 million. While there are cuts in the School Dept. (1.9%), the Police Dept. (2.4%) and Fire Dept. (4.7%), the budget would avoid cutbacks in hours for libraries and community centers. There would even be an expansion of some school options, including early learning centers.

The budget is based on some expectation for new revenue that would have to be approved by the state legislature and the governor. The president of the Boston Municipal Research Bureau, Samuel Tyler, says the expectation for local aid might even prove too optimistic, should the state budget gap approach the worst expectations of about $1 billion. But Tyler notes there could also be more money to protect jobs if the legislature makes it easier for the city to place city employees, along with retirees and their survivors, under less expensive health insurance.

Even if the mayor’s projections prove to be the most correct, the largest city unions holding off on a wage freeze have large majorities with enough seniority to know their jobs are safe. That could make the approval of a wage freeze a hard sell.

“This is probably the worst budget I’ve seen in all the years as mayor and city councilor,” said Menino.

“You don’t see any relief out there,” he said.

In 1981, two years before Menino won his first term as a city councilor, and right after adoption of a cap on property taxes—Proposition 2½—the budget decisions were more difficult and more divisive. Officials decided to lay off hundreds of police and firefighters and close schools. A few years later, as the economy recovered, Boston would get more revenue from its property tax base and local aid from the state.

A quarter of a century later, the local tax base has declining values for residential and commercial property. And, once federal recovery money is exhausted, the dependence on state funding will be more critical. The executive director of the Mass. Budget and Policy Center, Noah Berger, says the mix and volatility of state tax revenue have to be reconsidered, as well as the tax cuts that took place in more prosperous times.

“There are basic structural budget problems that need to be resolved,” he said. “I’m not sure whether the best time to do that is now, or when the economy recovers.”