Wednesday, February 10, 2010

Lawrence Under Water

Yesterday's Ways and Means hearing failed to produce a consensus on what to do with Governor Patrick's proposed $35 million bailout bill for the City Of Lawrence. But one thing's for certain: when the bill does come up for a vote, it must include stronger safeguards to protect the state's taxpayers, including the immediate assignment of a finance control board with full veto powers to oversee the city's budget.

Under Patrick's proposal, the city would be allowed to borrow up to $35 million, while the newly-elected mayor and city council would work hand in hand with an appointed state overseer to try to close the budget shortfall. If they are unable to correct the problem by January 31, 2011, then a finance control board would step in and assume full control of the budget.

The financial obstacles facing Lawrence are considerable: In addition to a $10 million operating deficit, the city is carrying $1.8 milion in debt, a $5 million capital budget deficit, and a $1.6 million shortfall in its health insurance trust fund. It's also facing $2.5 million in unresolved collective bargaining issues and still has millions of dollars in uncollected taxes oustanding.

Although local officials and Administration and Finance Secretary Jay Gonzalez went to great lengths to reassure the committee that the struggling city can overcome its financial problems on its own by issuing new municipal bonds, legislators were rightfully concerned the state would be left holding the bag if Lawrence defaults on making its payments. With a $24.5 million deficit, the city can't afford to take any chances. The Governor's bill needs some teeth added to it, including provisions to put a finance control board in place immediately.