Cutback in state local aid means $9m less for city

A hiring freeze and adjustments to debt service and snow removal projections account for $35 million in cost savings in Mayor Martin Walsh’s revised fiscal 2021 budget, which also wipes out any expectation of a local aid increase for the coming fiscal year.

Walsh on Monday submitted a $3.61 billion budget that includes $464 million in local aid – a $9 million cut from the amount of aid Gov. Charlie Baker had proposed for the city when he offered a $44.6 billion state budget proposal in January.

Baker’s plan, which was offered during the strong pre-pandemic economy, is now largely obsolete due to COVID-19’s economic impacts like soaring unemployment forced by the closure of many non-essential businesses.

State House leaders are still working on an annual fiscal 2021 budget, which cities and towns look to as a critical source of local aid for municipal budgets, and the state plans to start the new fiscal year on July 1 with spending allocated on a one-month interim budget.

Walsh’s planned hiring freeze would last for six months and apply to non-essential vacant positions. The reduction in planned snow removal costs, according to the mayor’s office, would bring planned spending in line with updated projections that are based on average actual spending.

Walsh is still proposing an overall $119 million, or 3.4 percent, increase in spending that his team says will result in a “historic” investment levels in areas like public health, which has risen to the forefront, and housing and education. His education budget is slated for a 7 percent increase.

The mayor’s office says public education spending accounts for more than 40 percent of the city budget. Education spending is up over $440 million on an annual basis since fiscal 2014, and per-pupil spending at the Boston Public Schools will approach $22,000.

The revised budget will increase spending on public schools in the city by $80 million, money that the mayor’s office says will help close achievement and opportunity gaps and deliver “intense support” to underperforming schools.

The mayor has committed to spending $500 million over five years to create thousands of affordable homes and his revised budget designates $18 million in new operating and capital funds toward that goal, including money for affordable rentals units and the first city-funded rental voucher program.

“With this budget, we have an opportunity to seize the moment that is before us to make investments that are grounded in equity, inclusion and that are intentional about directing funding to places where we know it will have the greatest impact in benefiting our residents,” Walsh said. “I am proud that thanks to years of careful fiscal stewardship, we are able to continue making smart and strategic investments at a time when many residents need it most.”

In December, Moody’s Investor Service researchers concluded that most of the largest 25 US cities would be able to weather a recession of similar severity as the 2008-09 downturn without a material adverse credit impact. Of those cities, Boston was among six that was labeled as “stronger.”

Baker’s budget was based on the expectation of tax collections rising 2.8 percent, but officials now expect receipts to plummet due to the recession and record unemployment. Some cities and towns are laying off teachers, and state officials have delayed budget deliberations largely due to the volatility of the economic situation.

During an WBZ radio appearance last Thursday night, House Speaker Robert DeLeo said the tax revenue freefall, estimated by many at $2 billion to $6 billion, could hit $7 billion or more.

“We really need more time to get a better handle on exactly how big this hole is going to be,” DeLeo said. “We’re waiting to see what happens in Washington. They’ve been talking somewhat about providing funding for states and municipalities but we haven’t seen that happen as of yet.”