Outcry threatens Lawrence bailout

Mayor refuses to quit 2d job in Legislature; Critics say state should take over finances now

By Peter Schworm
Globe Staff / February 9, 2010

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State legislators are criticizing a $35 million bailout plan for the cash-strapped city of Lawrence, as Beacon Hill prepares to debate the proposal amid growing public outcry over the new mayor’s refusal to resign his state representative post.

With the city nearing bankruptcy, a key legislative committee will launch discussions today of a measure that would allow Lawrence to take out millions in loans to repair its tattered finances, while appointing an outside overseer to help the city stabilize its budget. Facing a deficit of close to $25 million, the city is in danger of running out of money this spring without a massive influx of cash.

But the simmering anger leveled at Mayor William Lantigua, who has sharply resisted calls to surrender one of his two salaries, which his critics say he must do to focus on the city’s financial woes, has raised fears that the rescue plan comes with too few strings.

“Lawrence is a leaking ship, and we need to make sure we’ve patched the holes before we pour the money in,’’ said Bradley H. Jones Jr., House minority leader. “In the past, the city has not shown itself capable of managing the situation.’’

Critics of the bailout plan, which Governor Deval Patrick and the city’s legislators proposed in late December, say the city’s finances should be subject to strict state oversight, including a state-appointed panel that would have final say over all spending decisions.

“We’re trying to find the best way to help the city get back on its feet, but if the city isn’t able to pay their debt, it will be left to the taxpayers of the Commonwealth,’’ said state Representative Karyn Polito, a Shrewsbury Republican.

Under the current proposal, state officials would have the right to seize control of the city’s finances one year from now if they determine Lawrence has not made enough progress. The state would then appoint a finance control board with sweeping powers, akin to a panel that oversaw Springfield’s finances for several years.

Several legislators pointed to the success of the Springfield board and said Lawrence deserves an immediate takeover for its consistent mismanagement. In 2008, a scathing audit from the state Revenue Department warned of an “inevitable fiscal crisis’’ in Lawrence and said the city’s financial controls were glaringly lacking.

Defending the Patrick administration’s proposal, Secretary of Administration and Finance Jay Gonzalez said the overseer would work closely with local officials on every aspect of the city’s finances and would “be loud and clear about what needs to be done.’’

Gonzalez said he would appoint and work closely with the overseer. “I’m going to be actively involved,’’ he said.

Lawrence receives almost 70 percent of its budget from the state. Last year, the city lost almost $15 million in state aid, and tax revenues declined because of falling property values.

Lantigua, who was elected in November, has blamed the financial woes on his predecessor, and many legislators believe he and a newly elected City Council should be given time to balance the budget on their own.

“It’s a bad precedent for the state to just dive back in without giving the new mayor and City Council a chance to fix it themselves,’’ said state Representative David Torrisi, who urged lawmakers not to let public anger at Lantigua hurt the city, slated to run out of money by April.

Unable to balance its budget, Lawrence has not set a tax rate and missed a Feb. 1 deadline to send out the latest tax bills.

“It will literally go bankrupt,’’ Torrisi said. “If the city is forced to lay off large numbers of firefighters and police officers, we could go back to the Lawrence of the late 1980s, when it was the wild, wild West.’’

Lantigua, the state’s first elected Latino mayor, is riding a wave of popularity in Lawrence, But he has become the target of wrath outside the city, particularly on talk radio, for drawing two public paychecks when jobs are scarce.

Lantigua earns $100,000 as mayor and more than $61,000 as a state representative, and accrues service for two pensions.

Patrick has personally called on him to resign one of his positions, but Lantigua has said he has no plans to do so.

Supporters of Patrick’s proposal say the measure would not simply give the city cash, but allow Lawrence to borrow while in a deficit, which is prohibited by law. In recent years, the state has allowed deficit borrowing in a few small towns, although on a far more modest scale.

“This is not unprecedented,’’ said Representative Charles A. Murphy, chairman of the House Ways and Means Committee, which is slated to debate the plan today. “This is not a Springfield situation.’’

In 2004, Springfield received a $50 million bailout and yielded control of its finances to a state-appointed panel.

Lantigua serves on Ways and Means, and it was unclear whether he will recuse himself from a vote on the rescue plan.

State officials said the legislation allows the city to borrow up to $35 million over the next two years, but requires oversight until the money is repaid. The legislation requires Lawrence to hire the financial overseer at a salary of roughly $120,000.

The state is also slated to send the city $18 million in assistance over the next month by accelerating local aid payments.

In Lawrence, officials appeared roughly split on state control. Dan Rivera, a new city councilor, urged legislators not to seize complete control.

“We’d like a shot at making this better ourselves,’’ he said.