LENOX -- The bad news-good news message was delivered in person to town government leaders by state Rep. William "Smitty" Pignatelli: State coffers are filling up at a faster rate than last year, but revenues from state tax collections are below projections.
With tax collections falling below projections, it means the state is not meeting its budget benchmarks, which could impact how much local aid goes to cities and towns.
"We’re not where we thought we’d be; we missed the mark by $235 million," said Pignatelli.
A slowdown in business activity in October is blamed for the problem.
The upshot: Gov. Deval Patrick is seeking approval from state lawmakers for a 1 percent cut in so-called unrestricted general aid to cities and towns to help erase a projected state deficit of $540 million for the rest of the 2012-13 fiscal year.
For cities like Pittsfield and North Adams that are more heavily dependent on state aid, the impact will be greater than in smaller municipalities. In a town like Lenox, the cut would be $4,500.
Holding out hope for a "much brighter" picture a month from now, Pignatelli said holiday-season state tax receipts, if they’re strong, and corporate tax filings in January could make a big difference to the state’s revenue picture. The state already has noted an increase in revenues last month.
"I’m not as concerned as some folks are; at this point, I’m hopeful and optimistic," Pignatelli told Lenox Selectmen and Town Manager Gregory Federspiel at a recent meeting. "But I would encourage you to proceed cautiously, conservatively."
For the 2013-14 fiscal year, Pignatelli said state aid to local cities and towns could be level-funded or could be slashed by 5 percent, depending on the outcome of the Beacon Hill budget-planning season that begins with Patrick’s budget proposal in about five weeks.
Federspiel described the projected state aid cut for the next six months as "not a big hit," but voiced greater concern about potential reductions in state funding for special education needs. But he urged a conservative approach as budget planning for 2013-14 accelerates in the town, which currently gets nearly $1.2 million a year in Chapter 70 state aid designated for education.
To contact Clarence Fanto:
email@example.com or (413) 637-2551. On Twitter: @BE_cfanto