State Must Overcome $953M Gap as Fiscal Year Runs Out
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Some $2.5 billion has already been sliced since last fall, forcing cuts in local aid and slashing state jobs, as state officials sought to close a $3 billion gap caused by the global financial crisis.
"The economic downturn we have faced this year has had a significant impact on every area of state government and on the individuals, families and businesses it serves," said Gov. Deval Patrick in a statement Monday. "Every one of our priorities has been affected through each round of cuts we have made to balance the budget. We will continue to make the necessary tough choices to keep our budget in balance and manage the commonwealth through this challenging period responsibly and effectively."
The governor said he would work with the Legislature and file plans to solve this latest shortfall for fiscal 2009, which ends June 30.
April revenue collections fell $456 million below the benchmark, bringing the fiscal 2009 total budget gap to nearly $4 billion. April, traditionally the commonwealth's biggest revenue month, declined nearly $1 billion compared to last April.
The state only has $1.3 billion in its reserve account, but a Patrick administration spokesman told The Boston Globe that further cuts to local aid are not on the table.
"We are not cutting local aid," said Joseph Landolfi. "We're just not. It's not on the table."
House and Senate leaders met this afternoon to discuss the bleak outlook. The House on Friday approved a sales tax increase for next fiscal year of 1.5 percent, from 5 percent to 6.5 percent, which does not include necessities such as food and clothing. That's expected to raise nearly a billion dollars next year.
But the precipitous drop in revenues in what is traditionally the state's strongest month could increase pressure to raise more taxes.
To close budget gaps earlier in the fiscal year, the governor used spending cuts and controls, personnel reductions and furloughs, new revenues and reserves. Since October, more than $1.3 billion has been cut from the budget and $236 million in new revenues has been proposed. With less than two months left in the fiscal year, state agencies have spent more than 80 percent of their budgets, leaving little room for additional cuts.
Patrick announced two weeks ago that he would further reduce state employee positions by 750 and implemented furloughs for all executive branch managers. Additionally, he directed Administration and Finance Secretary Leslie Kirwan to begin negotiations with state collective-bargaining units over a full range of potential cost-cutting initiatives to help address the economic crisis going forward.
