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New state taxes, cuts, reserve funds help House boost budget in hard times |
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Written by Kyle Cheney
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Wednesday, 16 April 2008 |
 Even as revenue continues to pour
in above benchmarks, House leaders say their newly proposed $28 billion
fiscal 2009 budget braces the commonwealth for a drastic drop-off. The House Ways and Means Committee voted April 16 approve a
budget proposal that cuts $109 million out of this year’s line items,
incorporates $396 million from increased corporate tax collections and a
$1-per-pack cigarette tax and draws $229 million from the state’s $2.2
billion stabilization reserve account, while blocking the next scheduled
payment into the reserve.
Overall, spending in the proposed House budget would increase the
budget’s bottom line 4.4 percent, or $1.18 billion from this fiscal
year.
Committee member Rep. Theodore Speliotis (D-Danvers) said the Ways and
Means budget does not contain grandiose new spending commitments but also
asks for minimal sacrifice.
“I think it reflects a cautious optimism that the economic climate is not
great but not at this particular moment are we asking for major
sacrifices by anyone,” he said. “I don’t believe there are really any
radical proposals in here. I don’t want to call it a maintenance budget.
It’s not. But it’s close in that regard.”
To close a $1.3 billion spending gap between estimated future revenues
and expenses the proposal also delays a scheduled transfer of $107
million into the rainy day fund, diverts $91 million of interest from the
fund, relies on $202 million in Medicaid cost controls and asks state
employees to contribute $51 million more for health insurance
benefits.
During an executive session on the bill, Chairman Robert DeLeo praised
the bill, in muted terms, for ensuring that “no particular agency or no
particular line item was decimated.”
DeLeo said the budget laid a solid foundation for future budget
years.
“The day after the Super Bowl or the World Series, when do you start
preparing for the next year?” he asked. “People say the very next
day.”
Asked to clarify how the budget prepares the state for the future, DeLeo
said “It sends a message [to agencies] to try to rein in spending and to
try to be more efficient with the funds that they have.”
“I think this is the beginning of it,” he said. “The warning is already
out there. I think everyone is heeding that warning. And I think that
we’re sending a strong message.”
Members have until Friday to propose amendments to the plan, and several
members of the Ways and Means Committee already described plans to do
so.
The House threw cold water on many of Gov. Deval Patrick’s favored
spending proposals, approving a $3 million increase to universal
pre-kindergarten and a $2.5 million increase for extended learning time,
a combined $23 million less than what the governor had requested.
Earlier in the week, members touted a decision to fund a $10 million
program aimed at ending homelessness that the governor had thrown his
support behind. The House had also previously agreed to increase Chapter
70 education aid to cities and towns $223 million, the same level
proposed by the governor. That increase brings the total local aid budget
to $5.26 billion.
Like the governor, the House provided $869 million for Commonwealth Care,
the state’s subsidized insurance program for low-income residents, and
$453 million for the Health Safety Net Trust Fund, which reimburses
hospitals for uncompensated care to the uninsured. The $175 million for
the cigarette tax anticipated by the House would be directly earmarked
for Commonwealth Care, displacing $175 million that would otherwise have
to come from the General Fund, according to Ways and Means aides.
The fate of the cigarette tax and corporate tax package is unknown as it
awaits action from the Senate, with several senior senators skeptical of
some last-minute business-friendly amendments that the House tacked
on.
Other highlights of the House budget include:
- The House budget provides just shy of $2 billion to finance the state’s
outstanding debt burden;
- Fully funding the first year of a 10-year $1 billion life sciences
initiative still being worked on by the Legislature;
- Increasing higher education spending $37.6 million, including $24.2
million to the University of Massachusetts;
- $23 million for a Purchase of Service salary reserve for human service
workers;
- A new $5 million item to support and monitor improvements at the
Department of Social Services;
- About $2 million to assist cities and towns who wish to regionalize
their delivery of services;
DeLeo said that of the $109 million in cuts proposed by the House,
individual reductions ranged from $74 to more than $10 million. Among
those, the Office of Travel and Tourism budget would be cut $15.8
million, $5.5 million would be saved from the elimination of a Chapter 70
reserve account, $10.4 million would be saved in Big Dig debt service
that the commonwealth is no longer obligated to pay and $8 million would
be saved in sewer rate relief.
House Ways and Means Committee member Rep. Alice Wolf (D-Cambridge) said
she planned to file an amendment expanding the state’s current bottle law
to include water bottles, a change she said would net an additional $10
million for state coffers. Wolf said the speaker had explicitly warned
lawmakers not to attach entire bills to the budget that would be better
suited to be heard and evaluated separately.
Calling the proposal “careful” and “modest,” Wolf said the committee
attempted to increase important line items by small amounts.
“We’re really trying not to slash across the board, or whatever, and
trying to have some investments for the future,” she said. “A little for
universal pre-kindergarten, a little for universal pre-school, a little
bit for expanded day kindergarten.”
Speliotis said he expected to unions to complain loudly about a provision
in the House budget, incorporated from the governor’s proposal, asking
state employees to contribute $51 million more toward their health care
benefits.
Lt. Gov. Timothy Murray told the News Service that many of the
initiatives in Patrick’s budget had been incorporated in the House
budget.
“Obviously, as the speaker and Chairman DeLeo indicated, they had to cut
some of the programs, but we’re encouraged by the fact that many of them
remained intact,” he said.
Gov. Patrick on Tuesday filed a $268 million mini-budget to cover health
care costs and welfare caseloads in the current fiscal year. A
spokeswoman said the additional spending did not appear stretch the $1.3
billion budget deficit further, and said the majority of the accounts
funded in the supplemental spending plan were known to be deficient when
the administration filed its fiscal 2009 budget in January.
“We’re still reviewing it but on first impression we see a lot to like,”
said Patrick’s budget chief, Leslie Kirwan, pointing to the House’s
backing of revenue and investment proposals. Asked about areas where the
House had reduced Patrick’s targeted investments, she replied, “I’m
emphasizing the positive.”
House Republicans today blasted Democrats for sending mixed messages
about the state’s fiscal situation. Pointing to the governor’s newly
filed supplemental budget, coming just weeks after the governor warned
that he was implementing $200 million in spending controls for the
remainder of the current fiscal year, the 19-member minority said state
leaders were spending as though the economy was healthy, not on the brink
of recession.
Looking to FY 2009, GOP lawmakers said members should exercise
restraint.
“It would be prudent for all of us not to be seeking earmarks at this
time,” said Rep. Daniel Webster (R-Hanson).
Rep. Paul Frost (R-Auburn) said House members were warned by Treasurer
Tim Cahill that the Patrick administration had not aggressively pursued
federal reimbursements, which had forced the state into short-term
borrowing agreements that in turn caused about $20 million in interest
payments.
Michael Widmer, president of the Massachusetts Taxpayers Foundation said
the House budget was “an improvement” to the governor’s because of its
slightly narrower bottom line. Still, he said, the budget relies on
speculative revenues from corporate tax collections or increased tax
enforcement that may not materialize in fiscal 2009.
Lewis Finfer, director of the Massachusetts Communities Action Network, a
coalition of faith-based community organizations, said the budget
contained no increases in youth violence prevention funding beyond an
afterschool program, leaving five other line items flatly funded. The
group called those decisions “very disappointing,” and said more money
should have been withdrawn from the Rainy Day Fund.
The Collaborative, an organization representing the state’s 185,000 human
service providers, cheered the Ways and Means budget for its inclusion of
$23 million for a salary reserve for low-earning workers.
“This budget truly understands the needs of our workforce, and it will be
of great help to the thousands of human services workers who give so much
to provide care to others,” said Michael Weekes, president of the
Provider’s Council, a member of the Collaborative.
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Last Updated ( Wednesday, 16 April 2008 )
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POLL: Plowing the bikeway
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Enuma Elish
performs "Metropolis" Thursday, Nov. 20, at 8 p.m. at the Regent
Theater. General admission...
