LAWRENCE — Some legislative leaders are questioning whether a $35 million state bailout for Lawrence is the answer to the city's fiscal woes or whether a state takeover is the better solution.
"A lot of people up here are wondering, should we just go right to an oversight board?" said state Rep. Brad Jones, N-Reading. "We have a very serious situation here. Should we use aspirin first or use something stronger right out of the gate?"
Gov. Deval Patrick filed legislation last month allowing the city to borrow up to $35 million to help bridge its ballooning $24.5 million deficit. The bill gives Lawrence until Jan. 31, 2011, to balance its books or risk having a state control board take over the city's finances.
The bill is now before the House Ways and Means Committee. Committee Vice Chairwoman Barbara L'Italien, D-Andover, and Chairman Charles Murphy, D-Burlington, are meeting today with Mayor William Lantigua and state Reps. Barry Finegold and David Torrisi, to discuss the proposed bill and the timeline for its passage and implementation.
"We think this is a very serious issue," said L'Italien. "We understand it (the city's deficit) needs to be rectified, but we want to make sure we are building in the appropriate checks and balances in this legislation. We need to be very cautious and make sure this makes sense — for the state and for the city."
Some legislators are saying that Lantigua's involvement, both as mayor of the city and a member of the Ways and Means Committee and the state Legislature, is creating its own set of problems.
"The mayor's decision to accept both salaries is a concern of mine," Jones said. "He's getting $70,000 to $80,000 a year as a state representative, when you add in all the benefits, and over $100,000 as mayor, and we're going to do this extraordinary bill to borrow $35 million, part of which pays his salary as mayor of Lawrence?"
Others wonder if Lantigua, as a member of Ways and Means and as a member of the Legislature, should be voting on the measure.
"He should be checking with House counsel and the Ethics Commission to see if he can vote on the bill or not," L'Italien said.
Rep. Brad Hill, a Republican from Ipswich and a member of the House Ethics Committee, said in his opinion, Lantigua would be violating ethics rules by voting on it.
"From our end, and as a colleague, I'd urge him to look into any ethics violations regarding this vote," Hill said. "Clearly, and unequivocally, he'd be in a conflict of interest by voting on this."
Lantigua could not be reached for comment yesterday, so it is unclear if he has sought a ruling from House counsel, who works in the office of the Speaker of the House. Phone calls to that office were not returned.
Further muddying the waters are a host of political changes Lantigua has been making in the city, particularly a number of layoffs and firings that have roiled City Hall, but which the mayor said are necessary to help cut the budget. Critics have said the changes are payback against political enemies.
"The dimes being dropped about who's doing what to whom, the hiring and firing — is incredible," Jones said. "It makes people look and say, 'As much as we'd like Lawrence to be controlled by Lawrencians, it's gotten so screwed up, it's raised people's concerns, that you guys can't handle it.'"
But other lawmakers, the governor, and Department of Revenue officials said the city, with a newly elected mayor and City Council, should be given the chance to fix the budget before being taken over by a control board.
"The governor wants to give the new mayor and the new council an opportunity to deal with this locally," said Bob Bliss, spokesman for the Department of Revenue. "Once you go to a control board, local control is gone."
Torrisi said a control board carries a "stigma" that could damage the city's reputation.
"We all factor that into our decision-making," Torrisi said. "The business community wants to see Lawrence survive and do well. But at the end of the day, it might be necessary."
L'Italien said that, while she thinks the legislation will ultimately pass, some interim steps need to be taken and possible changes made to the bill before the committee moves it to the full House for a vote.
"We have to do our job," L'Italien said. "We need to make sure we are going through this step by step and that all parties are fully aware of the ramifications of this."
First and foremost, she said, is that the city needs to hire a budget director. "Those are the kinds of steps that need to begin to be laid out," she said.
Since Lantigua was sworn in more than three weeks ago, the city has not had a budget director, although the city has advertised for one.
L'Italien said other matters need to be discussed as well. For example, in a story in Sunday's editions of The Eagle-Tribune, Lantigua's chief administrative aide, Lenny Degnan, said he didn't expect the borrowing bill to be approved until March or April.
"We need to get a sense of when it needs to happen and we'll proceed from there," she said.
In particular, without the authorization to borrow, the city can't balance the budget. If it can't balance the budget, it can't send out tax bills. If it can't send out tax bills, it can't get the revenue needed to pay back the loan to balance the budget.
"It's a Catch-22," Torrisi said.
As a result, the city has asked for, and will likely receive, approval from the state for an $18 million advance on its next local aid request, which would enable the city to meet payroll, among other expenses, according to City Councilor Dan Rivera, who is chairman of the Budget and Finance Committee.
Bliss, spokesman for the DOR, confirmed the city made the request, adding, "It's not a long-term solution, but it meets cash flow issues until the tax bills go out."
The advance would be made to the city early next month, he said.
