Cities and towns are struggling to put together budgets for next fiscal year amid rising costs and steep declines in tax revenue, as fallout from the coronavirus continues to hammer the state’s economy.
Government-ordered shutdowns to prevent spread of the virus have closed Main Streets and put hundreds of thousands of out work. That has meant a sharp drop in tax receipts on sales, motor-vehicle excise, hotel and meals that are key to many local treasuries.
The financial free fall means local governments don’t know how much money they will have to work with in coming months.
A big unknown for budget writers is state education funding and local aid, with state coffers also taking a big hit.
The uncertainty is already prompting some cities and towns to make tough decisions to cut staff and scale back spending plans.
Geoff Beckwith, executive director of the Massachusetts Municipal Association, said the impact of the coronavirus will be far worse than the economic recession of the mid-2000s that pushed many cities and towns to the brink of bankruptcy.
“Local revenues are dropping like a stone, and there’s no end in sight,” he said. “This is money that cities and towns count on to balance their budgets.”
He said municipalities are faced with the reality that some residents won’t be able to pay their property taxes, but services such as public schools and waste removal still must be provided.
Local leaders will also be reluctant to increase taxes, wary of putting additional burden on residents.
“Communities don’t even know how they’re going to hold local elections, let alone a Proposition 2 1/2 override,” he said. “That’s just not in the cards.”
Cities and towns are expected to be reimbursed by the Federal Emergency Managemen t Agency for some expenses related to the coronavirus, but they can’t use that funding to plug holes in their budgets.
Beckwith said the federal government needs to act, because the state won’t have the resources to shore up local budgets.
“We need a record-breaking response to a record-breaking crisis,” he said.
“Unless we get federal funding, there is going to be a true fiscal crisis next year.”
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at email@example.com