Lottery money could ease budget crunch
Brandon Butler, Sentinel & Enterprise 03/10/2008

FITCHBURG -- Local politicians are split down party lines on a proposal that could pump more than $8 million into the Twin Cities from the state's so-called rainy-day fund.

Republican-sponsored legislation in October 2007 would have taken $450 million from the state's stabilization fund and distribute it to cities and towns across the state. Fitchburg would have received $5,008,229. Leominster could have received $3,422,473.

Local Democrats, including state Reps. Stephen DiNatale and Jennifer Flanagan, D-Leominster, and Jamie Eldridge, D-Acton, all voted against the legislation saying the money should remain in the state coffers to protect against what could be a looming recession.

"Nearly a half a million dollars is too much to come out of the rainy-day account," DiNatale said.

The state's stabilization fund currently sits at about $2.1 billion, said Bob Bliss, a spokesperson for the state Department of Revenue.

DiNatale said the state's rainy-day fund helps the state take out bond bills that are providing long-term aid to Fitchburg. Pending bonds include one to improve the commuter rail and to build a new science center at Fitchburg State College.

"We're able to do those things because of this stabilization account. It provides us with the ability to borrow at lower rates," DiNatale said.

But local Republicans say the money is needed in cities and towns right now.

"I think it is unconscionable for the state to keep money from the cities and towns when they need this money," said state Rep. Lew Evangelidis, R-Holden.

Last week, Fitchburg Mayor Lisa Wong announced an estimated $5 million deficit for next year's budget.

"The cities and towns are in desperate need of money, so it's about being fair and honest," Evangelidis said.

In 2002, the state capped the amount of Lottery revenue that goes to cities and towns, Evangelidis said. From 2002 to 2006, the state had a surplus and extra money was put in the state's stabilization account.

Republicans say Lottery money used to go to municipalities, but instead, the state's stabilization account grew. Evangelidis said the rainy-day fund grew from about $600 million in 2002 to more than $2 billion today.

"Meanwhile, the stabilization funds of cities and towns across the commonwealth became depleted," he said.

Eldridge, an Acton Democrat who is running for state Senate, said the issue is clearly partisan.

"It is a classic example of Republican fiscal irresponsibility," he said. "There are a lot of important needs in the commonwealth, and among the most important is local aid. But if you're going to increase local aid, you have to find a way to pay for it."

Eldridge said instead of taking a one-time withdrawal from the state's stabilization fund that instead sustainable revenue streams should be developed to provide municipalities long-term help.

Eldridge said he has been one of the lead proponents of closing corporate tax loopholes, which he said Republicans have opposed.

"We need to make sure corporations pay their fair share of taxes," Eldridge said.

DiNatale added that the withdrawal from the stabilization fund would only be a one-time infusion of money to cities and towns, and if municipalities use that money to pay for budget deficits, it would be a Band-Aid resolution to the current year's fiscal problems and exacerbate future deficits.

"The fiscal reality is that most communities would use the money for their current budget cycle. That begs the question: What happens next year if there's not another one-time transfer?" Eldridge said. "We shouldn't have a feast-or-famine approach."

Gardner Mayor Mark Hawke, a Republican, said even a one-time infusion would be beneficial for one-time expenses.

"Our heating system in City Hall is archaic, our Police Department needs new vehicles, our fire station needs a new roof," he said. "This one-time money would provide long-term cost-saving benefits."

Hawke said it's unreasonable for critics to worry about depleting the stabilization fund because even if the $450 million were to be taken out, the account would still be left with about $1.5 billion.

"For Beacon Hill to say 'we can't spend down our stabilization fund,'" Hawke said. "I don't even have a stabilization fund, comparably."

Jonathan Dennehy is a Republican selectman from Ashburnham who said because money was put into the stabilization account after the Lottery money was capped, that money should belong to municipalities.

"This is our money, and the Legislature refuses to give it to us," he said. "...We could all really use this money."

Leominster Mayor Dean Mazzarella said he understands the predicament of local legislators.

"It's a hard issue, because in the stabilization world, it's a rainy-day account for one-time occurrences, and my practice has usually been to leave money in there in case of a huge, devastating problem," he said.

Mazzarella said he would only support the legislation if there was a sure way to make up the money again.

Mazzarella said he isn't aware of any form of alternative revenues to build up the stabilization account if the $450 million is taken out, so he would likely oppose it.

State Rep. Bradley Jones, R-North Reading, is an initial sponsor of the legislation and said he would be willing to work with legislators on a compromise that would take less money from the stabilization fund.

"I firmly believe in stabilization funds, but I don't think you should be preserving the state's (fund) to the sacrifice of other municipalities," he said. "To build up ours while municipalities are depleting theirs, I don't think is appropriate."

Jones said he filed a resolution last month that would level-fund state aid, and take $150 million from the stabilization fund. The legislation is currently being considered in the House and Senate.