Gov. Healey Unveils Municipal Reform Package To Generate Revenue In Cities, Towns

At the Massachusetts Municipal Association (MMA)’s Annual Meeting today (Friday), Governor Maura Healey and Lieutenant Governor Kim Driscoll announced that they will be filing a package of municipal reforms to help cities and towns generate the resources they need to maintain and deliver vital services, streamline operations and attract talented workers to local government.

The Municipal Empowerment Act will expand on tools available to municipal leaders to generate revenue by allowing them to increase local option taxes on meals and lodging. The bill would also create a new local Motor Vehicle Excise surcharge option – a provision that could benefit every city and town in the state. The bill would also give municipalities more local control over the number of liquor licenses issued in their communities and make permanent a number of popular COVID-era allowances for hybrid public meetings, outdoor dining permits and to-go cocktail sales.

“Massachusetts is home to 351 cities and towns that are the bedrock of our state. From day one, our administration has been committed to giving them the support and resources they need to build strong communities and grow their economies,” saidGovernor Healey. “The Municipal Empowerment Act proposes multiple reforms that municipal leaders have asked for to improve the services they can provide to their communities and make operations more efficient. We are also proud to be increasing funding for roads, bridges, schools, and municipal services to improve quality of life in all of our communities.”

Governor Healey also detailed some of the Local Aid support cities and towns can expect to see when she files her annual budget proposal for Fiscal Year 2025 next week. The administration’s Fiscal Year 2025 budget will recommend increasing Unrestricted General Government Aid by 3 percent to $1.31 billion. Consistent with Governor Healey’s State of the Commonwealth address on Wednesday night, the budget will also propose to fully fund the fourth year of the Student Opportunity Act, boosting Chapter 70 aid to local public schools to $6.86 billion, a $263 million or 4 percent increase over Fiscal Year 2024. Overall, Local Aid in the budget will total $8.7 billion, a 3 percent increase over the current fiscal year.

The administration also plans to file a two-year, $400 million Chapter 90 bill alongside the Municipal Empowerment Act, proposing a multi-year authorization to help build in predictability for municipalities looking to plan longer-term projects. The annual Chapter 90 authorization would be supplemented by another $100 million for local road and bridge repairs through Fair Share surtax spending proposed in the Fiscal Year 2025 budget, and an additional $24 million dedicated to rural communities. Additionally, Lt. Governor Driscoll has directed MassDOT and the Executive Office for Administration and Finance to assemble a working group of state and local officials to review Chapter 90 administration and recommend ways to reduce the complexity and burdens of applying for and receiving these vital transportation funds.

The Municipal Empowerment Act is designed to arm local governments with greater tools and supports to chart their own course and make local management more efficient and effective.

Like state government, businesses and households across the state, municipalities have budgetary challenges that impact their ability to deliver services that residents depend on and expect. To empower communities to generate more local revenue, the bill includes several local options:

  • Increasing the maximum local option lodging tax on hotel, motel and other rentals from 6 percent to 7 percent of the price of a room (6.5 percent to 7.5 percent for Boston)
  • Increasing the maximum local option meals tax from .75 percent to 1 percent of the sales price of a meal at a restaurant or local store
  • Adding a new 5 percent local option Motor Vehicle Excise surcharge, a fee charged by every city and town on vehicles registered in their communities based on the vehicle’s value

Other highlights focused on fiscal and staffing stability include:

  • Creating new property tax exemptions for seniors to allow cities and towns to adopt a Senior Means Tested Property Tax Exemption for qualifying seniors and to increase existing senior property tax exemptions.
  • Addressing long-term benefit funding pressures by establishing a new OPEB Commission to take a fresh look at opportunities to address unfunded liabilities from non-pension employee benefits.
  • Allowing the creation of Regional Boards of Assessors to allow municipalities to create streamline duties and reduce significant staffing challenges.
  • Creating additional flexibilities in post-retirement employment by expanding the process for seeking exemptions to post-retirement employment rules.

The Municipal Empowerment Act also proposes to unlock new opportunities for small and minority- and women-owned by empowering local governments to set their own liquor license quotas and bypass the existing home rule petition process. The flexibility for municipalities that began during the COVID-19 public health emergency to permit outdoor dining and takeaway liquor sales, as well as hosting hybrid public meetings to encourage remote participation, would also be made permanent by this legislation.

Additional reforms proposed in the Municipal Empowerment Act include:

  • Procurement law reform:
    • Clarifying that groups of cities and towns can award multiple contracts through an RFP process under Chapter 30B and purchase both supplies and services from collectively bid contracts;
    • Equalizing 30B thresholds for advertised procurements to $100 k for all municipal purchasing – not just schools;
    • Eliminating the requirement to publish notice of invitations for competitive bids on COMMBUYS;
    • Streamlining procurement for electric school buses and charging infrastructure by allowing single procurements for both under Chapter 30B.
  • Enforcement of double pole removal after 90 days by giving municipalities enforcement authority, with penalties for utilities that fail to comply.
  • Establishing central valuation of telecom and utility property through the Department of Revenue’s Division of Local Services (DLS) to relieve cities and towns of the cost of individually hiring experts and consultants.
  • Updating borrowing rules for school projects to increase from 30 years to 40 years the bond term to more closely reflects the life expectancy of the project.

The Governor intends to file the Municipal Empower Act and Ch. 90 bill on Monday. The full bill texts will be available at that time. More details on the provisions of the Municipal Empowerment Act can be found in the policy briefs on Fiscal & Staffing Stability, Local Flexibility and Operational Efficiency, Rural Supports and FY25 Local Aid.

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