Document Type

Research Report

Publication Date

10-1983

Abstract

The finances of the City of Boston have been variously affected throughout its long history by regional and national economic cycles, by legal constraints and changes in the state-local tax system and by inter-municipal resource and expenditure disparities.

In more recent years, however, a series of tremors converged to propel Boston's seemingly chronic fiscal problem to the crisis stage. As inflation climbed to unprecedented double-digit levels, an overwhelming majority of the state's populace supported specific limits on property taxes, the primary source of municipal revenue. As a result, Boston was forced to reduce property tax levies by $144 million during the two year period, 1982-83. To complicate matters federal assistance has been sharply reduced from an annual peak of $133.5 million in fiscal 1981 to an estimated $71.6 million in fiscal 1983.

These factors followed a State court order in 1979 that disproportionate assessments of commercial properties were unconstitutional, thereby generating a City obligation for tax refunds that was originally calculated at over $140 million. To cover this extraordinary fiscal liability and to cope with the initial cutbacks under the property tax limits, the City went through a period of upheaval in fiscal 1982 until the Funding Loan Act of 1982 (the so-called Tregor Bill) was passed. Passage of this bill provided for the reemployment of many laid-off employees, particularly police officers and fire fighters, and provided calmer waters in fiscal 1983 for the City's ship.

As fiscal 1984 approached, the respite of 1983 was short-lived and new storm clouds appeared on the horizon. Would Boston face lay-offs and budget crises once again in fiscal 1984 and in subsequent years?

The Administration that will take office in January, 1984 must contend with more than the above synopsis of fiscal problems and compensating factors. Fiscal 1984 decisions, those already made and those to be made throughout the remainder of 1984, will to a considerable extent shape the spending and resource requirements of the next two subsequent fiscal years. This report is designed, therefore, to identify the key revenue and expenditure variables for the fiscal years, 1984-86, projecting estimates for each major tax rate component on the basis of clearly delineated assumptions, indicating the revenue shortfalls for each year, and outlining available options for closing the predicted expenditure-revenue gaps.

 
 

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