BOSTON (AP) — The Massachusetts Senate approved a bill today allowing the city of Lawrence to float up to $35 million in municipal bonds to balance its budget after rejecting a GOP amendment to immediately place the city under a state-appointed finance control board.
Republican lawmakers pushed for the amendment, saying taxpayer dollars were at risk if Lawrence is unable to repay the loan.
But the Democratic-led Senate voted 28-7 against the measure, opting instead to support naming a state-appointed overseer to monitor Lawrence. The overseer would have the power to call for a control board at any time if Lawrence fails to make fiscal progress.
Democrats said they wanted to give the city the chance to solve its own problems. That wasn't good enough for Republicans, who said the Senate's first responsibility was to protect state coffers.
"The taxpayers of the state are going to be the ones on the hook for this one way or another," said Republican leader Sen. Richard Tisei, R-Wakefield. "The problems in Lawrence are not budgetary, they are structural, and throwing money at the problem isn't going to solve the problems."
Senate Ways and Means Chairman Steven Panagiotakos of Lowell said the $35 million is not a direct loan. The bill would simply allow the city to borrow money on the bond market. It would be up to Lawrence to repay the bonds.
He also said the bill was tougher than the version passed by the House last week.
He said the Senate bill not only allows the overseer to call for a finance control board if needed, but allows the control board to put the city into state receivership if it cannot solve its problems.
State receivership would abolish the office of the mayor and give the receiver complete control over the city's finances.
Panagiotakos said the bill balances the state's concerns while still giving the city the chance to fix its problems.
"You do have to balance the situation of municipal autonomy and state autonomy," said the Lowell Democrat. "We have the hammer in our hand if they are unable to make the decisions needed to get their fiscal house in order."
When pressed by Tisei about what would happen if Lawrence is unable to repay the $35 million, Panagiotakos conceded that there's nothing in the bill that legally requires the state to bailout Lawrence. But a future Legislature probably would feel "morally" compelled to do so, he said.
Lawrence isn't the first community to ask the state to let it float bonds to close a budget gap.
In the past decade four communities — Medway, Salem, Southbridge and Swansea — were given permission by the Legislature to do just what Lawrence is asking, but without the requirement of a control board.
In each case the communities were seeking much smaller bonds, between $1 million and $5 million each.
Republicans say the situation in Lawrence is closer to Springfield's problems in 2004, when the Legislature approved a $52 million no-interest loan for Springfield after the city had seen its bond rating downgraded to junk status and was teetering on the brink of bankruptcy.
Under the Springfield deal, the state imposed a control board which spent the next five years trying to get the city's finances under control.
Democrats say the comparison is unfair. They say Springfield was in far more dire fiscal straits and, unlike Lawrence, had asked for a direct loan.
The question of whether to give Lawrence the ability to issue additional bonds got statewide attention after newly elected Lawrence Mayor William Lantigua first refused to resign from his post as a state representative.
Lantigua's refusal irked his fellow lawmakers who felt they were being pressured to come to the rescue of his city while he was collecting two state salaries. Lantigua ultimately resigned his Statehouse seat.
The differences in the House and Senate bills must be reconciled before the legislation heads to Gov. Deval Patrick.