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Unexpected state aid would help restore ‘rainy day’ fund

Date: 7/26/2011

July 27, 2011

By G. Michael Dobbs

Managing Editor

HOLYOKE — The windfall of once-cut state aid to cities and towns that was restored in the new state budget may not be a sure thing, according to Mayor Elaine Pluta.

Pluta has reacted cautiously to the news. She said City Auditor Brian Smith has explained Holyoke will only receive the approximately $500,000 in question if the state has $65 million in unexpended funds. The determination as to whether or not state will be releasing the 7 percent it had originally cut in state aid will come later this year.

If Holyoke does get the funding, it will be used to ease the budget gap in the fiscal year 2012 budget, Pluta explained. Her budget had no layoffs or furloughs, but did use $1.7 million in stabilization funds.

“It [the extra state aid] would definitely help because it increases our free cash amount,” Pluta explained.

The problem facing city officials, she noted, is that many of the financial issues affecting the extra state aid are “moving targets,” she said.

Even the $1.7 million of rainy day funds isn’t a final number, Pluta explained. Ultimately, that amount depends upon other factors, including how the city’s schools are funded by the state.

She said that if the state doesn’t fund the schools to the expected level, the city has to make one of two decisions: either make up the difference with more stabilization funds or decrease the school budget.

The city will not know if it will receive the $500,000 until late fall, “just in time to set the tax rate,” Pluta said.

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