E-Mail This Article to a Friend How you’ll feel the pinch A few years of Bush and Romney budgets have pushed Boston and surrounding cities to the brink BY DAVID S. BERNSTEIN

WHEN YOU THINK about it, it’s a little odd that two business-oriented men like George W. Bush and Mitt Romney share such a pronounced aversion to revenue. But there it is: both want to run their governments on as little income as possible. Bush prescribes federal tax cuts as the tonic for every economic condition, and Romney is an immovable object preventing Massachusetts’s 5.3 percent income-tax rate from creeping upward.

But you know this already, and you probably have a pretty good idea that, as a result, 2005 will see staggering structural deficits at both the federal and state levels. The $388 billion omnibus federal budget just passed by Congress (covering all spending aside from defense and homeland security) is tight, and Bush has already announced his intention to cut domestic spending heavily in the fiscal year (FY) ’06 budget, which will take effect next October. The state’s FY 2005 budget, which went into effect in July, provided modest increases in local aid, but not nearly enough to make up for the past two years of dramatic cuts.

Boston and its neighboring cities receive a disproportionately large share of federal and state money — due to needs arising from their concentrated populations — and thus feel the pain more when those dollars disappear. That’s been true for the past three years, but something new and important is now emerging from conversations with municipal administrators in the Boston area. They have come to realize that temporary measures are no longer working. "In the State House and in city and town halls, there has been an assumption that we will return to normalcy with local aid" as the economy recovers, says Michael Widmer, president of the nonpartisan Massachusetts Taxpayers Foundation (MTF). "But that is not the case. So there’s a lot of soul-searching." The federal budget deficit has reached epic proportions ($413 billion last year), and there are more war costs on the way — not to mention Bush’s potentially budget-crushing proposals on Social Security and taxation. At the state level, structural deficits stretch as far as the eye can see, according to a recent analysis by the MTF. One Boston financial administrator calls the city’s budget planning "really defensive" as a result. "You have to look at them as permanent cuts," says Somerville mayor Joseph Curtatone. "I don’t think you can look at it logically any other way. We’re dealing with a new reality."

The state has been keeping its fiscal house in order — barely — through several temporary-funding sources over the past three years, including the tobacco-company-lawsuit settlement and special federal fiscal relief known as FMAP, which are now running out. In addition, the state has "diverted" a portion of the lottery funds that rightly belong to municipalities.

It would be easy to fix much of this by raising federal taxes, but that remains anathema to the predominantly Republican folks in charge. Noah Berger, executive director of the Massachusetts Budget and Policy Center, points out that the $5 billion a year saved by (mostly the wealthiest) Massachusetts residents under the Bush tax cuts could provide health insurance to every uninsured state resident and restore most of the cuts to local education aid that have been made over the past two years.

As for state revenues, MTF analysis shows that Bay State citizens pay a substantially smaller percentage of their personal income to state and local fees and taxes than do denizens of almost any other state in the country. Meanwhile, the state’s 2005 structural deficit for inadequately funded programs and services will stand at $748 million, according to MTF. And again, the simple solution of raising taxes can’t even get on the table with Mitt Romney in charge.

But things could always be worse — and very well might be soon. Massachusetts is awaiting the fate of "the $600 million question," as Widmer puts it. That’s roughly the amount of Medicaid reimbursement under review by the federal government that could be taken away in next year’s budget. Then there’s the new education spending the state may face as a result of Hancock v. Driscoll, a case now before the state’s Supreme Judicial Court. In that lawsuit, the court has already found that the state’s current fund-allocation system produces inadequate results for low-wealth districts, and may require dramatic changes. The Bay State is also embarking on a billion-dollar early-childhood-education initiative, and is considering health-care-coverage expansion — as well it should.

Meanwhile, the state and federal governments continue, of course, to pile on mandates — particularly in education — and then to renege on the funding necessary to accomplish them. In 2004, local school districts started getting hit hard by the yearly progress requirements of the No Child Left Behind Act (NCLB), especially in terms of student "subgroups" (special needs, racial minorities, children for whom English is a second language, and the poor). And yet Congress continues to provide less funding than NCLB programs require. The federal Title I program for "at-risk" students, for example, was designed to operate at $20.5 billion a year by NCLB, but will receive just $12.7 billion in FY ’05.

Bay State cities and towns have limited options for raising extra money to cover all this — especially with the property-tax limitations imposed by Proposition 2½, passed in 1980. Most are already up against Prop 2½ limits, and have even authorized overrides at least once. There’s not much left in that well. Towns have survived mostly by the good graces of rising property values, which increase property-tax revenue without raising rates — but that has put an enormous burden on homeowners, particularly the elderly and others on fixed incomes. Property taxes have soared while average household income suffered one of the largest drops in any state from 2001 to 2003, according to the US Census Bureau.

All that’s true, you’re thinking, but how does it affect me, a Greater Boston resident? Here are some answers.