Gov. Deval Patrick last week signed into law a bill that will allow Salem to sell up to $1 million of debt to help fill a school budget gap or allow the city to spread the deficit over seven years.
Current Massachusetts laws prohibit local governments from borrowing to help fill budgetary shortfalls.
Salem officials discovered a $4.7 million deficit in October after the departure of the city’s school business manager. Since then, the coastal town has found $3.5 million through spending cuts, layoffs, and new revenues.
Patrick filed the legislation on Monday, with lawmakers approving and returning the measure to the governor’s desk by Thursday.
“I am proud to sign this legislation today, and I thank the legislature for its swift action,” Patrick said in a press release. “The officials and residents of the city of Salem have done a fantastic job in the face of a very difficult challenge. They are a model for other communities grappling with tough fiscal circumstances, proving that through engagement, creative thinking, and partnership, municipalities can overcome these kinds of obstacles.”
In a grassroots effort, city residents have banned together in a fundraising campaign, collecting $300,000 so far, an initiative that will retain 14 school teachers. The authorization to borrow $1 million will help Salem keep other education employees on the payroll as well.
“The budget shortfall brought this community together in a manner that I never imagined possible,” Mayor Kim Driscoll said in a news release. “We still have checks coming in on a daily basis and just about everyone is thinking of ways they can help, from raffling off Patriot game tickets to band concerts and T-shirt sales. The local dollars generated, combined with the funding made possible by the state, will certainly aid in retaining jobs.”
Salem is located 15 miles north of Boston and has a population of 41,343. The city has $70 million of outstanding debt. Moody’s Investors Service rates the credit A2 with a negative outlook. Standard & Poor’s rates the city A-minus with a stable outlook.
