Publications: Municipal

The cities and towns of Massachusetts are facing a relentless fiscal squeeze in which year after year costs are growing faster than revenues for almost all communities.

Cities and towns across the Commonwealth can save as much as $750 million in 2013 and $2.5 billion in 2018 by taking advantage of a new law that allows them to join the Group Insurance Commission (GIC), the state agency which administers health insurance for state employees, according to a joint report by the Foundation and the Boston Municipal Research Bureau.

The overall municipal financial picture stabilized in 2006. Nevertheless, most communities continue to face a fiscal squeeze as underlying costs grow faster than revenues, according to the Foundation's 36th annual analysis of local revenues and spending.

In order to help address the "relentless squeeze" on municipal finances in Massachusetts, the state should dedicate 40 percent of tax revenues to local aid and develop a new system for benchmarking local costs, according to the Foundation's 35th annual analysis of local revenues and spending.

Health insurance costs for municipal employees in Massachusetts have skyrocketed by 63 percent between 2001 and 2005, according to a new Foundation report. This growth is more than four times greater than the rate of growth in local budgets and almost double the rate of annual increase in the state's cost of providing health benefits to its employees.

Cities and towns are facing a combination of higher property taxes and employee layoffs as a result of cuts in state aid, according to the Foundation's 34th annual analysis of local revenues and spending. Although the 2005 state budget provides modest relief from the recent deep cuts in aid, total assistance to municipalities remains below pre-crisis levels in most Massachusetts communities.

In the 33rd edition of its annual summary of trends in local revenue and spending, the Foundation concludes that deep cuts in state aid to cities and towns have produced significant increases in property taxes across the Commonwealth, including rising burdens for the state's poorer cities and towns.

In the 32nd edition of its annual summary of trends in local revenue, spending and property taxes, the Foundation concludes that municipal finances have entered a new and much more difficult phase.