Foreclosure Crisis Makes Massachusetts Put Brakes on Spending
Economists and state legislators are scrambling together as Massachusetts puts brakes on spending. It means bad new for cities and towns. Local aid will decrease. Senator Steve Panagiotakos gave out warnings of future troubles. He said, “It’s not going to be the Great Depression of the 1930’s, but it is going to be the most significant downturn we’ve seen since then. It is dire.”
Unanimously the House as well as the Senate gave Governor Deval Patrick more powers to cut the budget (statue 9c). This meant millions of dollars meant for town, cities and school districts would be halted midway. Pundits opine that it will be years before recovery can be made.
Panagiotakos is also chairperson of Senate Committee on Ways and Means. He said that the state has reached a point of no return as regards slashing local aid. During the first round of cuts in budget, 20% of the total was sliced. The cuts were targeted to make up the gap of $1.4 billion in the budget. At that time it was thought that this parsimony would let the state keep running till the end of 30th June – the close of the fiscal year.
But later it proved to be insufficient. This week in January the shortfall increased by another $1.1 billion. It allowed the governor two weeks time to chalk out another plan to deal with the fall in revenue caused by falling sales and collection from capital gains taxes. Panatiotakos calculated, “That probably translates to $400 million in cuts to local aid for cities and towns.”
The worst affected will be the residents of Massachusetts. There will be more layoffs and cuts in services dealing with public safety and education.
Town manager Paul Cohen of Chelmsford said that the cuts would first hit jobs. He said, “We will begin to see layoffs immediately, as soon as February.” City Manager Bernie Lynch of Lowell said he has been combing through all other alternatives to avoid layoffs but there is little hope by looking at the fresh figures. He bemoaned, “We’re going to be decimated.”
In 2008 America saw the worst job loss figures in 34 years – 584,000 persons. Massachusetts saw an increase in unemployment – the highest in over five years. 19,000 jobs had been lost. But that is not the end of the story. The predictions are that another 125,000 jobs will vanish in the state in the coming two years.
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