Lowell Deeds

A story in today’s Globe reports that the country’s financial crisis is creating numerous challenges for state government. Tax collections are down and the cost of borrowing is up. There is now some question whether the $1.3 billion in local aid payments due to cities and towns next week will be made on time. With municipal and school budgets already strained and reeling from cuts last spring to balance the books for this fiscal year, any cut in the money communities were planning to receive will have devastating consequences. The same holds true for state agencies. Back in 2001, the state budget was not finalized until mid-November. From July till then, most state agencies were operating on 1/12 budgets - meaning that the agency could spend 1/12 of its prior year’s budget each month. But in November, budgets were cut 15 to 20%, but because funds had already been spent at a higher rate for July, August, September and October, when the cuts were finalized, the impact was greatly magnified. If the recent news stories are to be believed, it looks like history might be repeating itself.