By Statehouse News Service and Times Staff
BOSTON — Letdowns in consumer spending could hurt residents across Cape Ann and throughout the state next year in two seemingly unrelated areas — school construction projects and public transportation.
A projected steep drop in sales tax revenues this fiscal year is forcing the state to divert tens of millions of dollars to the quasi-public state agencies that rely on that revenue stream for school building and public transportation, sharpening the cuts to other accounts that Gov. Deval Patrick announced 10 days ago.
The Patrick administration's revised revenue forecasts point to a $170 million decline in sales taxes this year, and both the Massachusetts Bay Transportation Authority and School Building Authority receive a share of that 5-cent levy, guaranteed to both agencies by state law. Shortfalls must be made up from the General Fund, which bankrolls a budget that Patrick said last week is roughly $1.4 billion out of balance.
Patrick aides said the projected sales tax slump and the requirement to hold the two state authorities harmless were factored into last week's reductions.
As sales taxes receipts have fallen 3 percent through the first three months of the fiscal year, according to legislative aides, school building officials said the agency, which is ensured $702 million this year from its 90 percent portion of every fifth sales tax penny, has fallen $18 million off its year-to-date pace. Through September 2008, the MBTA's sales tax receipts, tied to a full penny from every nickel and a $767 million floor, were down $11.2 million for the calendar year, officials there said.
The MBTA, struggling to finance billions in service expansions and already over $8 billion in debt, including interest, is permanently guaranteed that its sales-tax proceeds will not dwindle, but officials said that flat funding would be equivalent to a reduction due to rising costs.
"What we're worried about is if there is no increase or actual decrease in year over year in sales tax receipts, there would be no increase to the guarantee for fiscal 2010," said MBTA chief financial officer Jonathan Davis.
The MBTA relies on 3-percent growth, so if the trend holds the agency would miss out on $25 million, Davis said.
"It's about $25 million that we would not have that we're counting on to fund operations," he said. "The question is what would we do if we do not have that, and I don't have that answer in my pocket today."
The situation is tightening as design work goes forward on a planned $10-million upgrade for Rockport's MBTA station. MBTA officials and local state lawmakers earlier this month assured town officials that the Rockport funding is in place, but it has not been essentially not been allocated in the state budget — and officials at a local forum emphasized the need to accelerate the work.
Meanwhile, fiscal 2008 saw the sales-tax funnel to the school building agency come up $47.5 million short of its assured $634 million, a difference the state has been forced to cover.
That authority could face a less lucrative future. Its arrangement for a guaranteed minimum expires after this year, after which revenues will be tied to an escalating percentage of the sales tax until plateauing at 100 percent in fiscal 2011, but with no floor. If sales tax receipts continue to sag, the SBA could be forced to operate with less money next year.
That trend would force the SBA, created in 2004 to cope with a dysfunctional system, to become increasingly selective in awarding grants for new and renovated schools.
That prospect looms as the Gloucester Public Schools are submitting an application for help with badly needed capital improvements to West Parish School; it also comes as Manchester Essex continues moving forward with its construction of its new high school/middle school, with a $10 million grant in hand but more money expected from the SBA.
"We've been living with belt-tightening conditions since we started, because of the sales tax lack of growth and because of the cost overrun" under the prior bureaucratic structure, said SBA executive director Katherine Craven.
"We've been taking measures to be very, very parsimonious over the past few years," Craven added, "and as a result of that we do have a capital building program."
