Sales tax drop imperils school building aid

By Megan McKee
Globe Correspondent / June 4, 2009
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The state agency that helps communities pay for school repairs and construction said yesterday that plummeting sales tax revenues may dampen the ability to fund future building, warning districts to scale back their expectations.

"We are now in a period where sales tax has grown less than we'd ever thought," Massachusetts School Building Authority executive director Katherine Craven said yesterday at the agency's bimonthly meeting. "This is something that's unprecedented."

A penny of every 5 cents of the sales tax is funneled to the authority, an agency created in 2004. The agency has $2.5 billion available to spend on projects in the pipeline.

Treasurer Timothy P. Cahill, who oversees the authority, said that despite agency's funding issues, he remains optimistic about its future. He and Craven said all projects that have been approved have guaranteed funding, but future projects may need to be scaled back.

"We'll be looking at more repairs and smaller-scope projects," Cahill said. But he stressed that the agency will continue. "We don't want to stop the program," he said.

In 2004, officials projected an annual sales tax revenue growth rate of 4.5 percent per year. But the recession has changed that. The authority's financial team projects a 5 percent decrease in sales tax revenue for fiscal year 2009, followed by stagnant sales tax revenue growth for fiscal years 2010 and 2011. By 2012, they predict 2 percent growth.

"We've been talking about it, but there's been this general sense of disbelief. . . . We have to be very frugal about who gets into the pipeline," Craven said. She added that schools must work with the agency to cut costs, and the agency will be scrutinizing projects for their worthiness.

The agency's officials issued a similar warning in March.

Craven said the agency will continue to promote its model schools program, which allows districts to take an existing high school's plans and modify them to their needs, which the agency says saves time and money.

At its board meeting, the agency discussed adding Hudson High School to the list of schools approved as model schools, though the vote was delayed to allow modifications to the school's plans.

The board also voted to allow Natick into the program.