NEWBURYPORT — The new year isn't going to be easy for state and local leaders.
They are entering 2009 grappling with reports from Beacon Hill this week that tax collections may fall another $1 billion below projections. Gov. Deval Patrick will ask the Legislature for expanded budget-cutting powers, including the authority to reduce state aid payments to cities and towns.
The new cuts would be on top of $1.4 billion in budget reductions announced in October. Those cuts spared the local aid payments that are the lifeblood of many local school, police and fire departments.
Newburyport Mayor John Moak said that a main concern for city leaders as they prepare the fiscal year 2010 budget, which will take effect July 1, is that they could have no choice but to implement layoffs.
"I am concerned about 2010 definitely," Moak said. "To say anything different would not be truthful to you."
In Amesbury, Mayor Thatcher Kezer said every area of the budget is under scrutiny.
"I think every organization, public or private, is facing one of the most significant economic downturns in our lifetime," Kezer said. "Cost is up and revenue is flat, and that will put much more strain in areas where there already is some."
In a recent survey released by the Massachusetts Executive Office of Labor and Workforce Development Division of Unemployment Assistance, Amesbury has a 5.3 percent unemployment rate — the second highest in Greater Newburyport.
While Kezer said while the statistic is something of concern for everyone in the town, he believes it is something he has limited control over.
Kezer said he is unsure of whether town employees could see impending layoffs.
"I'm not ready to say one way or the other whether layoffs will happen," Kezer said. "Layoffs are going to have a significant impact on our ability to act as a city and deliver services. Those decisions will be made when we have solid information as to where the dollars are going to end up for the budget."
He notes the snow and ice budget as a key problem area. Last year alone, the snow and ice budget went $312,000 over budget, forcing the town to dip into its "free cash," or savings fund — something Kezer is unsure the town will even have in 2009.
"Right now we are hoping to have free cash," Kezer said, "but nothing is guaranteed."
With state cuts looming on the horizon, Kezer said if the town faced another cut, it would be difficult. He said the town is still recovering from cuts put in place four to five years ago, and a best case scenario would be to have the town budget remain the same as last year.
"If we are faced with another cut this year, it's going to be difficult to do because growth revenue is down," Kezer said. "On the flip side, this is a time to make changes that you can't always make."
In Salisbury, Town Manager Neil Harrington will meet with town department heads next week to discuss how to handle possible local aid cuts in light of shrinking state revenues.
"We're going to plan for the cuts; we'd be foolish not to," Harrington said. "If it happens, if the state needs to cut $1 billion, they'll have to look at everything. A billion dollar cut will affect everybody."
Harrington said Salisbury was awarded about $1.2 million in state aid this year. After Town Meeting cut $250,000 from its $17 million budget in October because of shrinking town revenues, a large cut in local aid halfway through the fiscal year could mean layoffs, he said. The town could absorb a small cut, but Harrington said the town would be hard pressed not to cut staff with a cut near the $100,000 range.
He's hoping if the Legislature grants Patrick the ability to cut local aid, it will give communities other options to help alleviate the burden the cuts will produce. For example, Harrington said, if lawmakers pass a law allowing communities to enter the state's health insurance pool without the need of union sign-offs, that would help enormously. The savings the state's large health insurance pool would offer communities would partially compensate for local aid cuts.
"It (the Legislature) is going to cut but not give communities the recourses to mitigate those cuts, there's going to be serious layoffs statewide," Harrington said.
State Rep. Michael Costello, D-Newburyport, said 2009 will be a year of both challenges and opportunities.
If Patrick's estimates ring true, Costello said, he hopes the state will see some help from the federal government. President-elect Barack Obama has signaled that he is considering the idea of federal stimulus packages to give states relief.
"If those numbers hold, I think, while there might be some pain on the local level, I hope we can minimize that," Costello said. "I think, if we can offset some of that deficit with an influx of federal dollars, that will be important."
Local leaders, including mayors Moak and Kezer and Town Manager Harrington, have all governed in tough fiscal times, Costello noted, adding that experience will be beneficial.
"No one's coming into this new," he said.
Material from the Associated Press was used in this report. Staff writers Sabrina Cardin and Angeljean Chiaramida contributed to this report.
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