Norwood is set to receive $4.9 million dollars of "Unrestricted General Government Aid" from the Commonwealth of Massachusetts this year.
These funds are pulled from lottery receipts and designed for cities and towns to offset their general operating costs.
“This money comes from the Commonwealth,” Town Manager, Tony Mazzucco noted. “However, they do receive this money from the lottery receipts. So to be clear, we receive state aid from lottery receipts but towns do not directly receive money from the lottery.”
Norwood, like most towns, budgets their revenue and practices what is known as fund accounting. Meaning, the majority of the town’s revenue (property taxes, state aid, permit and application costs, etc.) are all pooled as one revenue for the Town. This money supports all of the Town's various functions, such as the police, fire, public works, schools, etc.
“It is also important to note that there are charges against this state aid number,” Mazzuco said. “There are various things the Commonwealth has cities and towns pay for out of their state aid (like the cost of supporting Norfolk County), so while the bulk number is $4.9 million, the Town actually receives about $1 million less than this total.”
The Mass Lottery website explains that “all 351 cities and towns in the Commonwealth receive state aid. Lottery funds are not earmarked for specific programs. Examples of how these funds are utilized include public safety staffing and equipment, snow removal, local road improvements, school services, programs for seniors, and parks and recreation projects.”
At the local level, the determination of how money is spent is up to town meeting. However, at no point does the town decide to spend the state aid on anything specific. Instead, it is included within the dozens of revenue sources that make up the towns general fund. So while the state aid is about $5 million, the Town's total operating budget is in excess of $200 million. This means that although it is an important source of revenue to the Town, it is relatively small in comparison to the size of the Norwood.
“If your question is how is it determined how much aid Norwood receives-the Commonwealth determines state aid (UGGA) according to a statutory formula as follows:
Es
___ X $10 X Pm X K
Em
Es=Equalized Valuation per capita of the state
Em= Equalized Valuation per capita of the municipality
Pm= Population of the municipality
K= Pro-ration formula (this is effectively lottery receipts available minus lottery operating costs)
The formula attempts to distribute aid as fairly as possible given a city or town's specific demographics. This is all calculated and determined by the state, but this formula is used by the Commonwealth to reach that $4.9 million number that Norwood receives. This is similar to many similar state aid formulas that attempt to correct for demographic and economic differences among cities and towns.”
Due to this formula, Norwood has received similar amounts of aid in the past few years.
The question remains however- why does Norwood receive this money?
Years ago, when the Commonwealth decided to legalize various forms of gambling, it was decided that all net revenue (profit) from lottery receipts would be divided among cities and towns. It is also known as revenue sharing in many states. The basic concept being that since cities and towns usually cannot create taxes on their own, states should share revenue sources with political subdivisions.
“Norwood does not tie the money from the state to a particular cost or project with these particular state aid funds,” Mazzucco said. “Essentially they are compiled with all other revenues and fund all operations; so we cannot say X dollars from state aid specifically funded an electric bill here or a teaching position there”
However, at the bottom line, the aid helps to fund everything that happens in town, from teachers and police, to paving roads and public health.
Issue Date:
February, 2020
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