2nd Quarter FY09 Budget Cuts

At the October Council meeting, Mayor Kezer proposed $125,000 in budget cuts for the current year: $100,000 from the waste removal/recycling budget and $25,000 from Insurance. The good news is that there is room to cut these amounts from each line item without any change is services to the community. The bad news is that these cuts are a taste of things to come. Local revenues are principally made up of property tax and excise tax collection. Excise tax is variable and depends on the value of property subject to excise tax. As I noted back in January 2008, all of Massachusetts is experiencing a dip in excise tax, as folks put off buying new vehicles, making the taxable base go down. Amesbury is experiencing its share of this, with a decline in excise revenues.

Worse, the Commonwealth is experiencing significant drops in tax revenue collections, due to the downturn in the economy. As economic activity slows down, incomes dip and capital gains decline, the tax revenue from these sources will go down. In mid-October Governor Patrick announced wide-ranging 2nd quarter budget cuts. For the moment, local aid to cities and towns was spared any cuts. But as the downturn continues and the Commonwealth has more revenue drops, it is a real possibly that local aid cuts will be made.

You can read the Mayor's 10/14/08 letter to the Municipal Council about this situation by clicking here.