BOSTON — Haverhill is in danger of losing $1.2 million in state money, as an override of Gov. Deval Patrick's veto of Hale Hospital debt relief is suddenly in doubt.
The Legislature appeared certain to restore to $2.4 million the amount Haverhill would receive to offset its Hale Hospital obligation. Patrick vetoed half that total.
But the chairman of the Senate Ways and Means Committee, Sen. Steven Panagiotakos, D-Lowell, said he'll block an override vote in the Senate unless Haverhill Mayor James Fiorentini or Sen. Steven Baddour can justify it.
"I better get new information to justify the (money) or Steve Baddour better pull a rabbit out of his hat," Panagiotakos said Friday. "I need to see on paper where this is going and why it is needed."
Haverhill sold the former city-owned hospital in 2001 after it fell deep into debt, but is obligated to pay about $7 million a year over about a dozen years. The hospital is now the privately owned Merrimack Valley Hospital.
Ironically, the state funding was put in jeopardy by remarks by Fiorentini to convince Beacon Hill leaders he was being fiscally responsible.
In a May 18 Eagle-Tribune story, Fiorentini said he would use $900,000 in Hale debt relief money to shore up the city's cash reserves, after Baddour, D-Methuen, and Rep. Brian Dempsey, D-Haverhill, criticized Fiorentini for crafting a city budget assuming Haverhill would get the full $2.4 million from the state.
Panagiotakos became aware of the statement through a newspaper clip service. With uncertain economic times ahead, Panagiotakos questioned why the state should build up Haverhill's reserves.
"Why are we obligated to take care of a city's reserve fund?" Panagiotakos asked. "We're getting into tough fiscal times."
Panagiotakos' remarks, coming as a July 31 midnight deadline for overriding vetoes fast approaches, sent Fiorentini, Dempsey and Baddour scrambling to preserve the earmark.
Fiorentini explained he misspoke to The Eagle-Tribune, unintentionally confusing the $1.5 million in the city's free cash reserve — surplus from previous years — with the state appropriation, and that he should have corrected the mistake earlier.
Yesterday, he said the $2.4 million in state money is slated to be spent on city services. Separately, of the $1.5 million city surplus, $900,000 will go into the city's emergency stabilization fund — the equivalent of the state's Rainy Day Fund — and the rest will go toward balancing the city budget.
Still, Fiorentini acknowledged that the state money is critical to Haverhill having $900,000 left to buttress its emergency reserve. But if Panagiotakos blocked an override, Fiorentini would not spend down his reserves.
"If I did, I set myself up for a catastrophe next year," Fiorentini said. "Now I face the same Hale debt (next year) with no reserves."
Baddour met with Panagiotakos yesterday to explain Fiorentini's position. Late last night, Panagiotakos would not say he's convinced.
"I'm still looking at it," Panagiotakos said. "It's a little more clear. But I need time."
Overrides begin in the House, where Dempsey has helped secure some $9 million in state aid for Hale debt, including the $2.4 million in danger. He said he'd meet with House leaders this morning to schedule an override vote.
Dempsey said he hopes Panagiotakos does not let Fiorentini's remarks endanger the money. Even if it allows Fiorentini to sock some money away, it might be needed next year, when the $7.5 million annual Hale debt will still need to be repaid but there's no guarantee of state money.
"This is a long-term problem for the city of Haverhill," Dempsey said.
Baddour warned that Haverhill officials should not take Panagiotakos' willingness to listen as a sign the override will sail through. The Legislature is considering giving the governor so-called 9c emergency budget cutting powers.
"Haverhill still might not get this money," Baddour said. "The first thing he'll look at is what we overrode."
