Thursday, October 29, 2009
Governor's Proposed Budget Cuts
Today Governor Patrick released his anticipated proposal to reduce state expenditures in order to maintain a balanced budget for FY’09.
Importantly, this plan does not reduce the major local aid accounts, although others such as regional school transportation would be reduced according to these provisions. Also significant is the fact that some elements of the plan would require legislative authorization to be implemented.
Please click on "Read more" to read the Governor's summary.
GOVERNOR PATRICK PROVIDES LEADERSHIP BASED ON VALUES; CLOSES BUDGET GAP, MAINTAINS INVESTMENTS IN CORE SERVICES
WORCESTER – October 29, 2009 – Providing leadership based on values, Governor Deval Patrick today appeared before a gathering of business leaders in Worcester to unveil his plan to close a $600 million mid-year budget gap. The Governor announced that he made tough decisions in order to fully protect Local Aid for communities and Chapter 70 education aid for children, preserve vital human service programs, and limit impacts on public safety.
“We should be just as concerned about our commitment to our values as we are about the value of our commitments. Those values – creating good jobs at good wages, offering a world-class education to our kids, delivering quality, affordable health care to our residents, protecting and supporting the most vulnerable – those are the values to which we as a Commonwealth are committed,” said Governor Patrick. “So as I meet my statutory responsibility to bring the budget in line, I do so according to my moral responsibility to those values.”
The Governor today also vetoed $24.5 million included in a final Fiscal Year 2009 supplemental budget, spending he said is unaffordable given the current economic challenges facing the Commonwealth.
Like many states suffering the impact of the current global economic downturn, Massachusetts has experienced a dramatic decline in revenues over the past year, leading to a cumulative budget gap of more than $8 billion over Fiscal Years 2009 and 2010. The Patrick-Murray Administration has aggressively managed the recession’s impact on the Commonwealth, revising revenue estimates four times in the last year, and using a multi-pronged approach to successfully balance the budget.
The plan the Governor filed today is a similarly responsible, balanced approach that includes $352 million in cuts across state government, limited additional revenues, a modest amount of federal recovery funds and a $60 million FY09 surplus resulting from the Governor’s aggressive budget management and personnel controls.
“There were no easy decisions before us in closing this budget gap,” said Administration and Finance Secretary Jay Gonzalez. “The Governor and our team made the tough choices necessary to preserve key investments and commitments in areas like education health care and safety net services. The decisions we have made in this process will allow us to confidently and successfully manage the year ahead and set the Commonwealth on course for a strong recovery.”
Preserving Core Programs and Key Investments
The Governor’s thoughtful and careful approach to making cuts allowed him to preserve programs and services critical to helping the Commonwealth cycle out of the downturn and key to long-term economic growth. Among the items the Governor preserved are:
• $4.037 billion for Chapter 70 Education Aid. The Governor has maintained his commitment to education by protecting his record-level investment in Chapter 70 during each round of budget reductions.
• $970 million to hold state college and universities harmless
• $16 million for Universal Pre-Kindergarten and Head Start programs
• $936 million to hold Local Aid harmless
• Maintained eligibility for MassHealth and Commonwealth Care
• $10 million for Department of Mental Health Club Houses to serve the mentally ill.
• Preserved funding for family shelters, rental vouchers and local housing authorities
• Avoided closing any correctional facilities
To preserve these programs and close the $600 million gap, the Governor used the following solutions:
$352 Million in Cuts Across State Government
The Governor is using his statutory authority to make $277 million in cuts across Executive Branch agencies. Additionally, he is seeking expanded 9C authority to make $75 million in cuts to non-executive branch agencies including the Legislature, Constitutional officers, the Judiciary, Sheriffs and District Attorneys. He asked the Legislature today to act swiftly to grant him this authority in order to achieve immediate savings and ensure shared responsibility throughout all of state government.
A full list of reductions can be viewed at www.mass.gov/bb/gaa/fy2010/.
Personnel Impacts
The Governor has directed agencies to prepare plans for additional personnel reductions to achieve an additional $35 million in savings. The Governor asked unions to agree to contract revisions to reduce the number of layoffs required. Without union compromises, the Governor will direct agencies to begin implementing their layoff plans once approved. In total, the Governor expects a personnel reduction of up to 2,000 positions over FY10.
The Governor is also requiring the approximately 4,000 managers within the executive branch to take up to nine furlough days through the remainder of the fiscal year in order to achieve additional savings.
State employees have contributed significantly to solving the budget deficit. To date, the Governor has eliminated 1,680 positions over FY09 and FY10, and in FY09 required executive branch managers to take up to 5 days of furlough. Additionally, the Governor and the Legislature agreed in FY10 to increase employee health care contributions, saving the Commonwealth $50 million.
$102 Million in Tax Amnesty and Other Departmental Revenues
Included in the Governor’s plan to close the budget gap is a proposal to offer a tax amnesty program, estimated to generate $20 million. The Commissioner of Revenue will promptly develop and administer the program. The Governor’s plan also includes $82 million in anticipated departmental revenues.
Additionally, the Governor is including $24 million from the proceeds of the development of surplus land and a surplus in the Smart Growth Housing Trust Fund.
FY09 Surplus Funds and ARRA
As a result of the Governor’s tight fiscal management and the personnel controls he imposed in FY09, the Commonwealth ended the year with a modest surplus of $60 million. The Governor’s applying the surplus to avoid making deeper cuts to core services and programs. The Governor has protected the Commonwealth’s Rainy Day Fund, not drawing on the current balance to help close the current gap.
Additionally, to avoid reductions to higher education, the Governor is using $62 million in available American Recovery and Reinvestment Funds.
Efficiencies, Reforms and Management Tools
In addition to proposing solutions for immediately closing the budget gap, the Governor filed several proposals that will improve the efficiency of state government and give agencies the ability to better manage their budgets.
In the last year, the Patrick-Murray Administration has achieved significant reforms that will improve the way services are delivered and taxpayer dollars are managed including an historic consolidation of transportation agencies, pension reform and strict new ethics laws.
He has also consolidated Information Technology services, making government more efficient and secure.
Among the efficiencies and management tools proposed by the Governor are:
• Reducing by $5 million the so-called Quinn Bill program. The Governor has simultaneously filed a proposal that establishes a commission to identify a new method for supporting educational advancement of law enforcement officers.
• Elimination of Bunker Hill and Evacuation Days, paid holidays granted only to state employees working in Suffolk County;
• Providing for shared administrative services within Secretariats;
• Allowing limited transferability of funds between accounts
Additionally, he has asked agencies to submit to him by December 15th new consolidation proposals such as combining human resource functions and consolidating economic development agencies to consider as he prepares for Fiscal Year 2011.
In addition to tools for managing the state budget, the Governor is also calling on the Legislature to promptly pass the Municipal Partnership Act II, which contains tools that will save municipalities millions of dollars through changes including health insurance reforms.
The Governor’s full proposal can be viewed at www.mass.gov/anf
###
