Patrick to pull $901 million from state budget
Trying to rescue a budget that’s $1.4 billion out of balance and at risk of developing more red ink, Gov. Deval Patrick said Wednesday he would slice $901 million from fiscal 2009 spending and raid the state’s pension and reserve funds.
Patrick plans to withdraw an added $200 million from the state’s reserves, on top of the $400 million already scheduled, part of a multifaceted strategy to close a deficit the governor said had widened to $1.4 billion. In July Patrick signed a $28.2 billion budget.
The governor will cut $755 million from executive agency spending, with MassHealth, labor and work force, environmental affairs, and higher education targeted. Between layoffs and attrition, aides said, roughly 1,000 of the total 68,000 state work force will be hit.
Patrick also will not fund $146 million in budget deficiencies, many of which affect human service caseloads. Leaders at the Legislature, judiciary, and other constitutional offices at Patrick’s request have volunteered some $52 million in spending reductions, Patrick’s aides said.
The package, announced Wednesday as the Dow lost another 733 points, does not touch direct aid to municipalities or the key Chapter 70 education account, and does not seek revenues from expanded gambling or an increase in the state’s gas tax. Patrick also has not reiterated his request to lawmakers for broader budget-cutting authority.
In making the cuts, Patrick hopes to protect safety-net services and programs that serve the homeless and veterans. He said he avoided across-the-board cuts with the goal of being sensitive to those most in need of services. He predicted slower permitting approvals, longer registry lines and less frequent maintenance of state parks.
Budget challenges are also likely to rein in ambitious economic development proposals that Democrat-dominated Beacon Hill agreed on this year, including a $1 billion, 10-year life sciences industry incentive law and aid to clean energy companies. Patrick’s big-ticket education reform will also likely be curtailed.
One potentially contentious request Patrick made of the Legislature, whose leaders have been briefed on his plans, would allow him to transfer spending among line items. That would strip from lawmakers much of their budget power, which often relies heavily on earmarks within line items.
Aides said the elongated pension funding schedule, pushing the full-funding date back from 2023 to 2025, would net $100 million for the current fiscal year, but said they were uncertain how much it would cost in the long term.
To close the gap, Patrick is also relying on $168 million in new revenues, $100 million of which will come from Department of Revenue tax case settlements that aides said were guaranteed. Additionally, $55 million in unanticipated federal health and human service aid is headed for Massachusetts.
Patrick also intends to reintroduce a proposal to abolish a property tax exemption for telecommunications companies, worth $13 million for fiscal 2009.
“With the economy slowing and state revenue declining, we have to act,” Patrick said in a statement. “These decisions are not easy. I know there is a good idea or a good person behind every one of these cuts. But we are going to share the sacrifice now so that we can all be stronger when the economy recovers.”
In a televised address, Patrick urged Bay State residents in need of assistance during tough economic times to call his office for assistance securing state aid.
Senate Minority Leader Richard Tisei called the budget contretemps a mess of the Democratic leadership’s making.
“With the announcement of today’s 9C cuts, it’s clear that the spending spree is over on Beacon Hill,” Tisei said in a statement. “In the two years he has been in office, Governor Patrick has expanded the state budget by nearly $2.5 billion, or 9 percent, created two new executive agencies, and added close to 2,000 new positions to state government. These expansions were unsustainable when they happened, and are even more so now that we are in the midst of a worsening economy.”
The cuts are the second wave state leaders have undertaken since Wall Street problems pressed the issue of a fiscal 2009 operating budget already precariously balanced. Patrick two weeks ago asked the heads of constitutional offices, the judiciary, and the Legislature – all of which fall outside his budget-cutting authority – to follow his lead in trimming their administrative budgets.
Patrick's own office is in line for a $1.1 million, or 15 percent cut that will affect eight positions and travel.
In fiscal 2008, which ended June 30, the state boosted its tax revenue take by 5.6 percent and blasted past the tax revenue estimate used to build the state’s spending plan. The $20.88 billion in tax revenues the state collected was more than a billion dollars more than the original fiscal 2008 budget estimate and only $99 million shy of the fiscal 2009 budget tax revenue forecast.
But since July, revenues have slipped and forecasters predict further deterioration. If tax revenues fall $800 million to $1.5 billion short of estimates, as Patrick administration officials now predict, that would represent a drop of 3.4 percent to 6.7 percent from fiscal 2008 collections. By contrast, tax revenues fell 15 percent over the year under Acting Gov. Jane Swift during the last fiscal crisis in state government.
With Election Day less than three weeks away, Beacon Hill is also worried by the prospect of Question One, a statewide referendum on the income tax. Anti-tax forces are pushing for a repeal, which would eliminate about 40 percent of the state’s revenues.
Rep. Paul Kujawski (D-Webster) said his colleagues facing re-election challenges would be forced to choose between political expediency and fiscal prudence.
“It’s going to be interesting to see how many of those people who have opponents are going to play the campaign, rather than do what’s responsible,” said Kujawski, who is being tested by Uxbridge Republican Kevin Kuros.
Kujawski said, “We made a commitment to keeping local aid intact, and I think the general consensus is that people want to provide the local services in education. After that, I think everything has to be considered ... Any type of earmarks that you could have, they have to be put on hold. There are some issues that can wait. Others need immediate attention.”