Governor Deval Patrick says his state budget proposal will call for a 7 percent reduction in non-school aid to cities and towns, but the municipalities can save more money than that, if they implement changes he's proposing that will affect city and town employees' health care.
Patrick revealed his plans during an address this morning before the Massachusetts Municipal Association.
He announced that he would propose increases in state aid for schools, special education, and road repairs, as well as a grant program to encourage regionalization. But he said he was cutting unrestricted local aid by $65 million, to $833.9 million.
Administration officials said the reduction would be offset by health plan changes to rein in the exorbitant cost of providing health care to municipal employees, retirees, and elected officials. Health care spending has become a major drag on city and town budgets.
The proposal, which would need legislative approval to take effect, would require all cities and towns to either join the state's insurance program, the Group Insurance Commission, or put in place a similar plan of their own by the start of the next fiscal year, which begins July 1. The measure would also require municipalities to move eligible retirees into Medicare, which many still do not do, further driving up costs for taxpayers.
The proposals would save the communities more than $120 million, outweighing the cuts in non-school aid, officials said.
The big question, however, remains how much say labor unions will have in these decisions. Currently, labor has to sign off before communities can join the GIC or design new local health care plans. Patrick has been resistant to calls to take away unions' power to block changes.
Patrick's administration said in a news release that unions would "have the opportunity to collaborate" in overhauling health care plans, but did not detail how that would happen.
“This proposal is a critical step towards delivering material savings in health care costs to cities and towns at a time when they need it most,” Administration and Finance Secretary Jay Gonzalez said in a statement. “In this challenging fiscal environment, taxpayers can no longer be asked to fund overly generous health benefits at the expense of critical local services.”