National ‘fiscal cliff’ crisis has local implications

LYNN – Lynn Chief Financial Officer Richard Fortucci said the so called “fiscal cliff” showdown looming in Congress can directly affect Lynn if not resolved by the end of the year.Starting Tuesday, Jan. 1, several federal tax breaks are due to expire, and $1.2 trillion in budget cuts spread over nine years will go into effect unless the lame-duck Congress can find common ground on an alternative approach to deficit reduction.This combined with slower economic growth and what State House News called a “dismal month for tax collection” in Massachusetts, could see a reduction in state aid for cities and towns in fiscal year 2014.”It can affect Lynn,” said Fortucci. “If they cut the state aid we’re going to have to make potential adjustments to our budget because that’s a major portion of our revenue that we utilize every year.”State House News reported that Secretary of Administration and Finance Jay Gonzalez met with town and city officials last week at a meeting of the Local Government Advisory Commission, and advised them that hundreds of millions of dollars in grants that flow through the state to municipalities could be at risk, as well as almost $1.5 billion in defense and health spending.Following a dismal month for tax collections in October that saw the state fall to $256 million below revenue projections for the year, Gonzalez said no final decisions have been made but reported a “strong likelihood” that the administration would revise downward its revenue projections and announce mid-year budget cuts soon, according to State House News.Gov. Deval Patrick’s budget chief also told local leaders that a failure by Congress to avert the “fiscal cliff” would cost the state up to $300 million this fiscal year and $1 billion over the next full fiscal year, according State House News.Fortucci said tax collection in Lynn has remained “fairly consistent,” but noted any reduction in highway or school funding could have an impact.According to the city budget, Lynn received $118 million in Chapter 70 school funding in 2011-12 and $126 million in 2012-13. The city also received around $1.4 million in Chapter 90 highway funding in 2011-12 and around $1.5 million in 2012-13.”There is obviously potential this could adversely affect us going into fiscal year 2014,” said Fortucci.Saugus received $4.14 million for education aid for 2012-13, a rare $250,000 increase from last year. However, School Committee Chairman Wendy Reed said Saugus is already behind in state aid and can’t afford any more cuts.”The roller coaster ride there at the state level is just crazy,” said Reed. “This is early in the budgeting ? we were under the impression it would be more than a one-year fix. The town feels they can’t fully fund education right now and they can’t keep picking up the slack either.”Reed said any potential cuts in grants could affect programs like school-wide breakfast and tutoring services.”That really supplements most of what we do,” said Reed. “If we lose that, that could limit how much we do with programs ? With what we’re spending on the war, no one blinks an eye, yet all these services are going to be cut.”When it comes to grants, Fortucci said, there are “too many to elaborate on” in Lynn.”Especially with the schools and obviously our public safety,” said Fortucci. “They’ve had a lot of these grants at their disposal for many years. Certainly that could also pose a problem if, for some reason, this fiscal cliff, if you will, will go through.”Fortucci said he hopes Congress can resolve the issue before the cuts.”Like so many communities, we’re heavily reliant on the federal and state government as well,” said Fortucci. “Unfortunately the state is also relying on the federal government as well. So one way or another, if it doesn’t hit us directly, it certainly can trickle down from the state.”Matt Tempesta can be reached at [email protected].