$223 million increase in school aid same as Patrick plan
 As the economy slows, the House budget committee April 16 expects to recommend that the state spend less than what Gov. Deval Patrick recommended for next fiscal year and cut $109 million from state accounts in what House Speaker Salvatore DiMasi called the most “conservative budget that I’ve seen in a number of years.” The $27.985 billion plan contains $180 million less than Patrick’s, with shallow reductions and widespread “level-funding” that DiMasi said Tuesday amounts to spending cuts. Of more than $200 million in targeted investments Patrick proposed in January, the House Ways and Means Committee embraced about $80 million, the speaker said.
“There’s nothing spectacular about any new initiative in here, because we can’t afford to do it at this particular time,” DiMasi said.
Scheduled for House floor debate April 28, the blueprint contains $24 million more in higher-education funding than Patrick’s budget, and matches his $223 million increase in municipal school aid. The speaker declined Tuesday afternoon to detail areas marked for cuts, now pegged at roughly $9 million more than he had suggested in February.
Some line items that see small increases, he said, are effectively level-funded because the additional spending pays for collective bargaining commitments.
Budget officials say they are facing a $1.3 billion budget gap for the year that begins July 1, with health care expansion costs likely to stretch that figure. Cost increases in some of the largest state accounts like Medicaid and human service caseloads are inhibiting growth in other areas.
While Patrick leaned on $300 million in casino licensing fees and $294 million in new corporate tax revenue, the House shunned casinos, and last week approved $217 million in business levies and roughly $175 million in cigarette taxes. Both the governor and DiMasi have embraced $166 million in Department of Revenue enforcements and revoked sales tax exemptions.
The House budget panel recommends funding the popular Shannon Grant program at $11 million, according to an administration source familiar with the plan, $4 million less than Patrick, who ran into political resistance last year when lawmakers and activists felt he overlooked the grants.
While Patrick looked for a $15 million hike to universal pre-kindergarten funding, the preliminary House plan furnishes $3 million, the source said. While the administration wants $1.5 million for the newly created education secretary’s office, House budget authors opted for $500,000, according to the source.
Patrick and DiMasi have found more common ground this budget season than last year, Patrick’s first. Last year, DiMasi dealt crippling blows to many of Patrick’s priorities. This year, while the House again asserts it prerogatives, economic restrictions have narrowed the opportunities for disagreement.
Asked about the House decision to bankroll FY ’09 below Patrick’s recommendations, Senate Ways and Means chair Sen. Steven Panagiotakos (D-Lowell) said, “It tells you that we’ve got some challenges here that we need to deal with.”
In an emailed statement, Administration and Finance Secretary Leslie Kirwan of Arlington said, “We appreciate that at first glance the House budget adopts many important reforms initiated by the Governor including GIC, Medicaid and enhanced tax collection - and includes important investments in public safety, education and homelessness. We will continue to work with the Speaker and Senate President throughout the budget process to ensure the final budget maintains a balance between targeted investments in our long-term growth and an appropriate level of fiscal restraint.”
Fiscal 2008 revenues to date are $772 million over their original benchmark and growth for next year has been officially estimated at 3.8 percent, but budget analysts recently have predicted smaller gains. Patrick administration officials, instructed by the governor to prepare for $150 million in midyear cuts on top of $200 million in restrained spending, decided this week that the revenue picture does not warrant revisiting the current estimate.
House Republicans objected to the swollen tax burden, saying a state collecting record tax revenues should not be turning to taxpayers for additional contributions. Under its entirely Democratic leadership, Beacon Hill has so far resisted imposing broad-based taxes.
To dampen members’ enthusiasm for spending expansions, DiMasi invited Treasurer Timothy Cahill to a rare caucus of both parties Tuesday, where the treasurer delivered what DiMasi described as a “sobering” outline of the state’s fiscal outlook.
“It was a cautionary tone, and I think it was a great tone to give the members before they go into a budget debate,” DiMasi said.
Seated with reporters and aides around a coffee table in his office, DiMasi acknowledged he was unsure how the Senate would treat the tax package that cleared the House late last week. The Senate chair of the Revenue Committee, Sen. Cynthia Creem (D-Newton), said Tuesday the proposal should pull more revenue into state coffers. The House added a last-minute excise rate reduction for banks, softened a separate corporate excise rate cut, and restricted the autonomy of the Department of Revenue in imposing regulations.
Asked about Creem’s comments, Panagioatakos said, “The Commonwealth certainly needs revenue, but we also need to be as efficient as possible with the money we do have.”
DiMasi’s budget diverts about $100 million in interest on reserves and suspends a scheduled $100 million transfer to the $2.2 billion stabilization fund, and withdraws $229 million from the account, he said.
The House budget includes a Patrick plan to require state employees to contribute more to their health insurance plans and full funding for the commitments in Patrick’s $1 billion life sciences initiative, DiMasi said.
After the budget committee votes on the plan at a noon closed session April 16, House Ways and Means chairman Rep. Robert DeLeo has a press conference planned for 2:30 p.m. House Republicans plan a press conference immediately following.
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