Massachusetts, October 11, 2025
News Summary
A new report by the Massachusetts Municipal Association reveals that cities and towns across the state are grappling with a historic fiscal crisis. Titled ‘Perfect Storm,’ the report outlines the struggles stemming from rising operating costs, minimal state aid, and restrictions on property tax increases. As municipal spending growth lags behind state spending, many municipalities are at their financial limits. The report calls for urgent investment in local services and suggests the need for legislative discussions to ensure fiscal stability for communities.
Boston — Massachusetts cities and towns are experiencing a “historic fiscal crisis” according to a new report by the Massachusetts Municipal Association. The report, titled “Perfect Storm,” highlights issues stemming from rising operating costs, minimal state aid, and restrictions on property tax increases. State government spending has increased by an average of 2.8% per year since 2010; however, city and town spending has only risen by 0.6% annually.
Key findings — immediate impact
The report identifies a convergence of forces that is straining municipal finances across the state. Restraints on local revenue sources, including Proposition 2 1/2, are cited as factors limiting municipal financial growth. The report suggests that real spending growth of 0.6% per year indicates the constraints from Proposition 2 1/2 may be excessively restrictive.
The cap on property tax increases does not adjust for inflation, and municipalities are forced to cut real spending when inflation exceeds 3%. Three out of four Massachusetts municipalities are operating at 95-99% of their levy limit before needing to seek tax override campaigns. Nearly 200 out of 351 cities and towns had not pursued any overrides in the last 15 years; most successful overrides have been in suburban areas.
Supporting details — revenue, aid, and costs
Rising costs, including health care, energy, and education, are contributing to increased spending that is outpacing revenue growth. State aid has been crucial for municipalities but is not considered particularly generous compared to other states; Massachusetts receives about 26% of local revenue from state aid, compared to the national average of 31%. Since 2010, unrestricted local aid has fallen by 25% when adjusted for inflation; current funding levels for unrestricted aid are $66 million short of what is needed to match inflation.
Chapter 70 funding has increased, benefiting mainly urban districts while rural towns have experienced declines in education support. Rural towns and gateway cities often lack sufficient local income and wealth to address revenue needs. The Democrat-controlled Legislature has been hesitant to allow for more local option taxes, complicating efforts to address local aid levels adequately.
Municipal capacity and services
Municipal officials emphasized the need for investment in local services such as libraries, senior centers, and emergency response capabilities. Local managers indicated a necessity for serious discussions on adequately supporting municipal services in light of current fiscal pressures. The report was described by its authors as a “perfect storm” due to the confluence of rising costs and stagnant revenue growth, leading to escalating fiscal challenges in municipalities.
Policy and next steps
The report does not include specific policy recommendations but indicates municipal leaders will discuss its findings in upcoming meetings. The Massachusetts Municipal Association plans to issue policy recommendations later this fall to promote long-term financial stability for cities and towns. The report could spark debates about tax burdens and aid levels in Massachusetts’ Legislature.
Background and context
The analysis compares long-term trends in state and local spending and examines how statutory limits on property tax growth interact with inflation and expenditure pressures. The findings show a sustained gap between state government spending growth and municipal spending growth since 2010, and document uneven distribution of state aid across different types of communities.
What this means for residents
For residents, the report signals possible reductions or constrained growth in local services unless revenue options change or state aid increases. Communities already near their levy limits face limited ability to raise additional property tax revenue without voter-approved overrides, and many rural and gateway cities lack the tax base to rely on overrides for essential services.
FAQ
Q: What is the main finding of the report?
A: Massachusetts cities and towns are experiencing a “historic fiscal crisis” according to a new report by the Massachusetts Municipal Association.
Q: What is the report titled and what does it highlight?
A: The report, titled “Perfect Storm,” highlights issues stemming from rising operating costs, minimal state aid, and restrictions on property tax increases.
Q: How have state and municipal spending changed since 2010?
A: State government spending has increased by an average of 2.8% per year since 2010; however, city and town spending has only risen by 0.6% annually.
Q: What role does Proposition 2 1/2 play?
A: Restraints on local revenue sources, including Proposition 2 1/2, are cited as factors limiting municipal financial growth.
Q: How many municipalities are near their levy limit and how many have not pursued overrides?
A: Three out of four Massachusetts municipalities are operating at 95-99% of their levy limit before needing to seek tax override campaigns. Nearly 200 out of 351 cities and towns had not pursued any overrides in the last 15 years; most successful overrides have been in suburban areas.
Q: How much of local revenue comes from state aid?
A: Massachusetts receives about 26% of local revenue from state aid, compared to the national average of 31%.
Q: What has happened to unrestricted local aid since 2010?
A: Since 2010, unrestricted local aid has fallen by 25% when adjusted for inflation; current funding levels for unrestricted aid are $66 million short of what is needed to match inflation.
Q: Does the report include policy recommendations?
A: The report does not include specific policy recommendations but indicates municipal leaders will discuss its findings in upcoming meetings. The Massachusetts Municipal Association plans to issue policy recommendations later this fall to promote long-term financial stability for cities and towns.
At-a-glance table — selected data from the report
| Topic | Data / Finding |
|---|---|
| Report title | “Perfect Storm” |
| Main conclusion | Massachusetts cities and towns are experiencing a “historic fiscal crisis” according to a new report by the Massachusetts Municipal Association. |
| State spending growth since 2010 | 2.8% per year (average) |
| City and town spending growth since 2010 | 0.6% per year (average) |
| Municipalities near levy limit | Three out of four operating at 95-99% of their levy limit |
| Municipalities with no overrides in last 15 years | Nearly 200 out of 351 cities and towns |
| Share of local revenue from state aid | 26% (Massachusetts) vs 31% (national average) |
| Change in unrestricted local aid since 2010 | Fallen by 25% when adjusted for inflation |
| Unrestricted aid shortfall to match inflation | $66 million |
Deeper Dive: News & Info About This Topic
HERE Resources
Massachusetts Municipal Budgets Strained by Rising Costs
Bob Richards Named 2025 Commercial Broker of the Year
Mayor Michelle Wu Leads Josh Kraft in Boston’s Mayoral Race
Massachusetts Officials Face Backlash Over Excessive Spending
Massachusetts Legislature Passes Wage Increase for Bar Advocates
Massachusetts Legislature Targets Rental Market with New Reforms
Boston Health Official Admits Failures in Drug Crisis Response
Boston Faces $1.7 Billion Decline in Commercial Property Tax Revenue
Massachusetts High Schools Rank Among Nation’s Best Amid Funding Concerns
Boston Mayoral Race Intensifies Over Immigration and Infrastructure
Additional Resources
Author: STAFF HERE BOSTON WRITER
BOSTON STAFF WRITER The BOSTON STAFF WRITER represents the experienced team at HEREBoston.com, your go-to source for actionable local news and information in Boston, Suffolk County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Boston Marathon, Head of the Charles Regatta, and Boston Harborfest. Our coverage extends to key organizations like the Greater Boston Chamber of Commerce and Associated Industries of Massachusetts, plus leading businesses in finance, biotech, and insurance that power the local economy such as Fidelity Investments, Biogen, and Liberty Mutual Insurance. As part of the broader HERE network, we provide comprehensive, credible insights into Massachusetts's dynamic landscape.
