Across the Commonwealth, cities and towns are scouring budgets in preparation for expected cuts in state aid. But as state revenues decline, government officials in Oak Bluffs are far less concerned than other towns, for reasons that frustrate and confound them annually: the town receives very little state aid in the first place, according to town administrator Bob Whritenour. He contends that, after netting out all the state money apportioned to the town and all the mandatory charges the town must pay to the state, Oak Bluffs taxpayers are sending money back to Boston.
Mr. Whritenour calculates that the state requires payment for services including school choice and charter school tuition education, county operating costs, library costs, and regional transit costs that total $1,283,355. The total state aid the town receives, including transportation funds, charter school tuition reimbursement, unrestricted funds, veterans’ benefits, library funds, and payment in lieu of taxes for state-owned land totals $1,262,755. He says the cost of mandatory assessments and charges the town has to pay is $20,600 more than the money it gets in state aid. Mr. Whritenour’s accounting includes only the items that make up the town’s operating budget, and it excludes direct offsets for school choice tuition reimbursement and school lunch.
The state includes those items in its accounting. By the Massachusetts Department of Revenue (DOR) calculation, Oak Bluffs gets $263,058 when all the total charges and assessments are subtracted from the total state aid.
The relatively small distribution of state tax dollars, and other taxes and fees paid to the state, are determined by a formula used to apportion state aid. It is a complex set of calculations that has changed over the past four decades as political pressures have shifted.
The cherry sheet manual, a publication issued by the DOR to help municipal officials and the public understand the process, runs 53 pages.
The formula favors poor communities over wealthy communities. “The intent was that richer communities would be asked to contribute more from local revenues and would receive less state aid,” according to the manual. “Conversely, poorer communities would contribute less from local sources and receive a greater share of state aid.”
Mr. Whritenour believes the formula does not accurately assess Oak Bluffs in the rankings, because the formula is weighted toward property values. Oak Bluffs, like all Island towns, gets a large proportion of its property tax revenue from wealthy property owners who are not full-time residents. He believes the formula hurts year-round residents, whose property value and income, are well below the town average.
“It’s that way for all the Cape towns, but even more so here on the Island,” Mr. Whritenour said. “It makes us overly dependent on local property taxes.”
State Representative Tim Madden sees some validity in criticism of the formula used to parcel out local aid, but he is not optimistic about any adjustment, given the current political climate. If smaller towns get a bigger piece of the local aid pie, larger cities and towns would have to get less. “If you live in Boston, you’re not going to raise your taxes or cut local aid to your constituents, to provide an equitable formula for the Cape and Islands,” he said.
He also notes that communities that are dependent on state aid deal with the flip side of the formula. When state government cuts local aid, cities and larger towns get hurt the most.
“One percent of nothing, or a small number is a lot better than a one percent cut to a city or town that depends on local aid for 50 percent of its revenue,” Rep. Madden said.
Mr. Whritenour said that the way the state accounts for charter school education costs is inequitable. A strong supporter of charter schools, Mr. Whritenour said the Island’s charter school is a vital part of the education system.
But he said the town must pay for the entire cost of education for an Oak Bluffs student who goes to the Martha’s Vineyard Public Charter School, while it shares the cost of education at its elementary school and regional high school with the state. This year the state charged Oak Bluffs $654,816 for educating 37 Oak Bluffs students at the Charter School, about $17,700 per student.
“I think the state should kick in more,” Mr. Whritenour said. “It takes money out of the classrooms at the Oak Bluffs School. We should pay a portion, and the state should pay a portion.”
An oddity of the state aid distribution on Martha’s Vineyard is the money the state pays in lieu of taxes for state owned lands.
A large part of the 5,100 acre Manuel Correllis State Forest lies in Edgartown, and a smaller part lies in West Tisbury. Because the towns cannot tax that land, the state pays Edgartown $1,132,378 in lieu of taxes. That represents 61 percent of the entire $1,844,081 in state aid distributed to Edgartown.
West Tisbury gets $728,900 in lieu of taxes for state owned land, which represents 80 percent of the state aid that town receives.
Oak Bluffs ranks next in the amount of payments in lieu of taxes for state land, $67,254.
Less and less
While it has grown substantially in raw dollars, state aid to cities and towns in Massachusetts has fallen by $1.7 billion over the last three decades after adjusting for economic growth, according to a State House News report. A Massachusetts Budget and Policy Center report concluded that state aid for education was “essentially flat” over that period, with aid for non-education purposes, such as local police and fire departments, declining. The report measured local aid as a percentage of personal income, with its authors saying that adjusting for inflation factors does not account for economic growth or population growth – consumer costs grew by about three percent per year over from 1982 until 2012, whereas the overall state economy grew by about six percent per year, the report said.
While governors and the state legislature over the years have repeatedly boosted Chapter 70 aid for education, the report found that cities and towns over that time reduced their local revenue contributions to school districts to help pay for other local services. The report’s authors said aid to cities and towns has been limited by the passage of tax cuts at the state level and by the economic effects of the Great Recession, which has been followed by a weak economic recovery.
“Police and fire protection, good schools, and other effective public services are vital to the overall quality of life in our state,” Noah Berger, president of the Massachusetts Budget and Policy Center, said in a statement. “In the decade since we cut income taxes by $2.5 billion dollars, we have seen deep cuts in the investments we make through state government – investments that we need to support our communities and improve the economic prospects of all our residents.”
In actual dollars, total local aid to cities and towns rose from $1.54 billion in fiscal 1982 to $6.1 billion in fiscal 2013, while average annual income in Massachusetts rose from $12,347 in 1982 to $52,454 in 2011.