The limited federal reimbursement to Massachusetts for winter storm-related deficits is a credit negative for its local governments, according to Moody's Investors Service.
On April 13, the U.S. Federal Emergency Management Agency declared the large snowstorm that hit Massachusetts in late January - one of several to befall the state -- a major disaster, qualifying the state for federal recovery funds.
FEMA, however, will only provide an estimated $90 million of aid to roughly 250 local governments, one quarter of the state's request.
The severe weather, which produced record snowfall and cold temperatures, disrupted the Massachusetts Bay Transportation Authority's operations and prompted new Gov. Charlie Baker to convene a panel that has recommended an overhaul of the authority. Baker is expected within days to call for putting the MBTA under a fiscal control board, one of the panel's main recommendations.
The weather also affected private-sector commerce, causing an estimated $1 billion in lost profits and wages, according to HIS Global Insight, and led to states of emergency across the eastern half of the state.
Baker originally requested that the federal government declare the 28-day stretch of continuous storms as a single disaster, which the state estimates cost it and local governments $400 million in total.
According to a Moody's commentary on April 20, Massachusetts local governments generally appropriate 1% to 2% of their operating budgets for snow and ice-related expenditures. Municipalities have the legal authority to overspend the budget, but must either appropriate from reserves to cover the overage or provide for the deficit in the following year's tax levy.
