Financial news is worse than expected.

Byline: Jan Gottesman 

LANCASTER - Sen. Jennifer Flanagan met with Lancaster department heads Monday morning, not to share financial news - which is dire - but to see what was on officials' minds.

In general, it was the state of the economy and how local aid looked for the current fiscal year and Fiscal Year 2011, which begins July 1, 2010.

Last week, the governor exercised some of his authority to cut the budget among departments he controls, slashing things like regional school transportation and grants to councils on aging, but holding local aid "harmless," at least for now.

Flanagan said that predictions of how bad the economy would be this year proved wrong.

"It is actually worse," Flanagan said. "We got down to the bone during the budget process. Now, we are chipping away at the bone."

Still, Gov. Deval Patrick said he will not cut local aid at this time.

"A lot of cuts were to the administration and areas that he felt could be consolidated or eliminated," Flanagan said. Some cuts will be made through furloughs, while others will be done through layoffs. "It comes down to the unions. If they are not willing to make concessions, there will be layoffs. People don't think it is as bad as it is."

The problem is falling revenues. While there was a bump in money collected in August, due to the so-called Cash For Clunkers program, spending is still down.

While local aid may be OK for the current fiscal year, Fiscal Year 2011 may be a different story.

"We could be $1.5 billion in the hole for FY'11 from the start because we used one-time money, including federal stimulus funds, to close the gap for (Fiscal Year) 2010," Flanagan said. "I guarantee it could get worse for 2011."

The state Department of Revenue is still working on how cuts to the libraries, councils on aging and the Quinn Bill, which funds educational incentives for police, will affect individual towns; the state uses a formula to determine how much communities receive, so must use a similar formula to see how much they will lose.

While cuts in the Quinn Bill affect communities in the area, including Clinton, Lancaster is not part of the program. Lancaster gives officers its own form of educational initiatives through the police contract.

Lancaster Town Administrator Orlando Pacheco said that negotiations with the Police Union will be the big one for the town this coming year, and that other unions have gone to one-year contracts so the salary issue can be addressed yearly.

"We can't promise there won't be cuts," Pacheco said. "It could come down on contracts to the cost of health care and wage increases."

Flanagan said state government is sharing in the cuts.

"People are taking furloughs and doing with less," she said, adding her campaign fund is helping to keep her district office open. "We're all in this together."

But every cut on the state level hurts on the local level, she said.

"The governor has said that every dollar has a fact with it. Even the small cuts bleed," Flanagan said, "because there are no small cuts anymore."

On nonbudget issues, engineering consultant Scott Miller, of Haley and Ward, asked Flanagan's help with the Department of Capital Asset Management (DCAM).

The town has been searching for a second water source for almost 10 years. The two wells are currently within 50 feet of each other so, Miller told Flanagan, if one fails, the other is likely to also.

A promising well site has been found on state-owned land near the site of the former MCI-Lancaster complex, off Route 110. However, the town needs to get a license from DCAM, as well as some assurance the town will be able to use the land, before committing to a pump test which could cost $110,000.

Miller said the site is a corn field, which was used for crops this year. A trade for other farm land could be arranged if the state allows Lancaster to go forward with water testing.