The use of reserve and surplus funds emerged as an issue in both Boston and Pittsfield this month.
Standard & Poor's, one of the three major bond rating agencies, downgraded the state's credit rating from stable to negative largely because the state's stabilization fund declined as the economy improved. The agencies prefer to see the opposite.
The Baker administration blames its predecessor, the Patrick administration, as is customary. However, building up the surplus account while adding proposed new programs and maintaining necessary spending for education and other efforts without raising taxes will provide a real challenge for the governor.
On Tuesday, the Pittsfield City Council voted 7-4 to use $1.5 million from surplus funds to lower the tax rate as opposed to the $2.25 million proposed by Mayor Daniel Bianchi. This will result in a 3.98 percent hike in the residential property tax and a 6.44 increase in the commercial property tax.
Tax hikes are never welcome, especially in a sluggish economy. But the city's long-term economic health is of consequence as well.
Pittsfield hasn't had to concern itself with the Proposition 21/2 limit in some time, and the city had about $8.5 million in excess levy capacity available a year ago. However, as Councilor at large Barry Clairmont observed Tuesday, the 2 1/2 ceiling will come down in part because of stagnant property values. It is difficult to imagine voters passing a 21/2 override, but dipping into surplus funds is not a long-range funding solution. It also leaves the city vulnerable in the case of a financial emergency.
Councilor at large Kathleen Amuso, an advocate of the $1.5 million limit, said the city must look for efficiencies and spending reductions. This should be discussed in June when the budget is approved, not in September, when tax rates are set, as has too often been the case with the City Council. Councilors Kevin Morandi and Anthony Simonelli say they will bring this issue up next June, promising a difficult but much-needed debate.