Monday, February 8, 2010

No Lawrence Bailout Without Oversight

Governor Patrick has filed a bailout bill for the City of Lawrence to help the financially-strapped community as it struggles to close a multi-million dollar budget deficit. But lawmakers – who are holding a joint House and Senate Ways and Means hearing on the matter tomorrow – should proceed with caution before writing local officials a blank check.

Under the Governor’s proposal, Lawrence would be authorized to borrow up to $35 million to balance its budget, with a state-appointed overseer assigned to work with local officials to get their financial house in order. If the city fails to achieve fiscal stability by January 31, 2011 then a financial control board would be set up to take over the city’s finances and assume responsibility for all budgetary decisions, which is what happened in Chelsea during the 1990s and in Springfield in 2004.

Here’s a better idea: Why not set up a financial control board immediately, rather than waiting almost another year to see if Lawrence can get back on its feet without sinking deeper in debt? All cities and towns are feeling the pressure from rising costs and reductions in state assistance, but Lawrence’s financial straits rise to a whole new level (an estimated $24.5 million shortfall this year and $15 million in Fiscal Year 2011). A deficit of this magnitude is too much for one city to handle on its own.

If legislators are so inclined to support the Governor’s bailout bill, they should insist on having the proper safeguards in place to protect the taxpayers’ investment. That means creating a financial control board that can get to work on day one and make the tough decisions needed to pull Lawrence back from the brink of bankruptcy.