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Important, Miscellaneous Changes to Municipal Finance Laws

The legislature has been busy updating some important municipal finance laws and some of these updates may have fallen under the radar. The changes are part of the recent closeout fiscal year 2023 supplemental appropriations act, Chapter 77 of the Acts of 2023. Here are some highlights: 

 

·        Stabilization Funds: Section 8 of the Act amends G.L. c. 40, § 5B to lower the quantum of vote necessary to appropriate funds from a special purpose stabilization fund only from two-thirds to a simple majority vote of the legislative body. Appropriations from general purpose stabilization funds, the establishment of either a special purpose or general purpose stabilization fund, and the alteration of either fund's purpose, still require a two-thirds vote of the legislative body.


·      Non-Recurring Special Actual or Anticipated Receipts: Section 9 of the Act amends G.L. c. 44, § 53 to change how certain municipal receipts are spent or reserved. A municipality may now, with the approval of the Chief Executive Officer (typically the Select Board), spend up to $150,000 received or in anticipation of receipt of insurance proceeds or restitution payments to repair or replace damaged property. Sums recovered from pupils for damage to school books and other learning aids or paid by pupils for industrial arts projects may be spent by the school committee for restoration or replacement of those items without specific appropriation. Two new clauses are added, which allow “non-recurring, unanticipated sums received by multiple cities, towns, or districts, and not otherwise provided for by general or special law,” subject the approval of the Director of Accounts, to: 1) be spent by the Chief Executive Officer without appropriation in the case of the money received for the “singular purpose” for which the funds were received; and 2) be deposited in a separate revenue account and spent with appropriation, but only for the purposes for which the funds were received. These changes streamline and clarify the process for reserving or spending settlement funds.  


·    Exaction and Incentive Payments: Section 10 of the Act establishes a new section 53K of G.L. c. 44, which upon approval of the Chief Executive Officer, authorizes the establishment of a separate revenue account to deposit funds received from: host community agreements or other similar agreements; conditions or obligations imposed by permits, licenses, zoning, subdivision, leases, or imposed by other bylaws or ordinances. Such funds are expended at the direction of the Chief Executive Officer without appropriation for the purposes for which the funds were received.


·     Opioid Settlement Funds: Section 197 of the Act authorizes municipalities to consolidate opioid settlement funds into a new special revenue fund. If prior year settlement funds have not been reserved or certified as free cash, then those funds may be placed in the special revenue fund without appropriation. If the funds have been deposited into a stabilization fund, then the dedication can be revoked by a vote of the legislative body and placed in the special revenue fund without appropriation. If the funds have already been certified as free cash, then the funds may be appropriated to the special revenue fund. 


·     Disaster-Related Deficits: Section 205 of the Act permits municipalities to amortize the amount of its fiscal year 2024 major disaster related deficit, over fiscal years 2025-2027 inclusive pursuant to a schedule adopted by the local appropriating authority before the municipality determines its fiscal year 2025 tax rate. 

 

The Department of Revenue Division of Local Services (DLS) has issued three bulletins that provide more detail on these changes:  

 

BUL-2023-7: G.L. c. 44, § 53 Clause 4: Opioid Settlement Receipts 

BUL-2023-8: RECENT LEGISLATION Chapter 77 of the Acts of 2023 

BUL-2023-10: Recent Legislation Amortization of FY 2024 Major Disaster Related Deficit 


General Opines that the Tax

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