Property taxes accounted for 56.5 percent of municipal revenue in fiscal 2011, which ended June 30, and have risen steadily from 49 percent in fiscal 2001. Although a 3.8 percent increase in property-taxes receipts represented the smallest annual rise under Proposition 2 ½, cuts in state aid and a drop in other receipts helped drive the property tax to its higher perch atop the revenue stream.
In addition, municipal budgets have registered negligible growth. In the past two fiscal years, the budgets grew a total of only 1.2 percent.
“These are challenging times,’’ said Michael V. O’Brien, the Worcester city manager. “The global economy, the national economy, and the regional economy have all suffered in the downturn, so the revenues aren’t there for the state to distribute.’’
Worcester has cut about 450 municipal jobs, including approximately 60 police officers, 60 firefighters, and 100 public works employees, since the recession began, O’Brien said. Unrestricted state aid to the city has been cut about 35 percent, from $58 million in fiscal 2008 to $38 million in the current fiscal year, the city manager added.
“We’re continuing to strap in,’’ O’Brien said. “For city government, we’ve got to prioritize. We’ve got to live within our means.’’
The pain has been widespread. According to the Massachusetts Taxpayers Foundation:
■Unrestricted state aid to cities and towns, which does not include school aid, fell 32 percent to $899 million in fiscal 2011, from $1.3 billion in the original budget for fiscal 2009.
■Investment income for municipalities dropped 72 percent in that period, to $33.4 million from $118.9 million.
■Property taxes from new construction rose just $8 million in fiscal 2011, after a $42 million drop the previous year.
■Overall, local pension systems are only 59 percent funded and have an unfunded liability of almost $13 billion.
