Patrick Seeks to Close Latest Budget Gap
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After nearly a $1 billion drop in revenues in April, the state has to come up with $953 million for the remainder of fiscal 2009, which ends June 30.
Patrick plans to use a combination of federal stimulus aid, stabilization funds and other solutions. The legislation comes after previous measures to close a more than $3 billion gap that appeared since last fall, when the economy took a precipitous trip south.
The governor's office said legislation maintains his commitment to education funding and preserving other key programs essential to economic recovery. The bill filed today also includes supplemental appropriations to fund accounts experiencing deficiencies due to the economic downturn.
"Throughout this very challenging year, we have had to make difficult choices in order to meet our obligation to manage state government in the most fiscally responsible way possible," said Patrick. "We have done our best to implement reforms, cut costs and protect the core services of government that people rely on more than ever in times like these. There are no easy or pleasant options, but we will continue to do the job that is required of us and will make the decisions that will ensure the commonwealth emerges from the fiscal crisis stronger than before."
With less than two months remaining in the fiscal year, and more than $1.3 billion in spending cuts and controls already proposed by the governor this year, the administration was forced to rely mainly on federal stimulus and stabilization funds to bridge the budget gap. Most state agencies have spent more than 80 percent of their budgets by May.
Patrick proposes using $412 million of state fiscal stabilization funds included in the American Recovery and Reinvestment Act of 2009, which will allow the state to maintain its commitment to education. No community will see a reduction in its Chapter 70 aid this fiscal year. The governor has not included any reduction to Chapter 70 in any round of budget cuts he has made this year.
The proposal would allow for a draw of up to $461 million from the state's "Rainy Day Fund" and suspend the $100 million deposit authorized in fiscal 2008. The bill also calls for a $15 million reduction to the Health Safety Net Trust Fund in order to meet projected deficiencies within the MassHealth program. Even with this reduction, the Trust Fund is expected to end its year with a surplus.
Further, the Governor has secured a commitment from the Massachusetts Convention Center Authority to contribute $50 million from its reserves to help close the deficit.
The legislation includes supplemental funding for programs including the Group Health Insurance Commission ($75.8 million), which is experiencing a shortfall in part because the Legislature did not adopt the governor's proposal to tier state employee health insurance contributions.
The bill also includes $32 million for the County Sheriffs Reserve, which represents mission critical operating costs for the seven county sheriffs. The governor has filed legislation to reform the sheriff system, which would allow the state to oversee all spending by each of the sheriffs.
Additionally, the legislation includes $28.4 million for the MassHealth program, which has seen an increase in utilization attributable to the economic downturn.
The legislation includes a proposal to decouple Massachusetts state tax law from certain provisions of the federal recovery law that would otherwise result in a $100 million reduction in revenue in Fiscal Year 2010. It also avoids state taxation of certain federal unemployment benefits.
