State Officials Ponder More Cuts as Revenues Slide
 Eugena Ossi/Governor's Office
Gov. Deval Patrick discusses budget troubles Friday morning with Chief of Staff Arthur Bernard, left, Administration and Finance Secretary Leslie Kirwan and Undersecretary Jay Gonzalez. |
The Department of Revenue is reporting that September collections fell $243 million below budget estimates. Year-to-date revenues are $212 million below benchmark. The state's $27 billion 2010 budget already includes drastic cuts, including state aid to cities and towns, and $1 billion in tax increases.
Gov. Deval Patrick said his cabinet has already begun to identify potential emergency cuts and will begin the process of adjusting tax revenue estimates for the remainder of the fiscal year.
"Our cabinet has effectively managed through a $7 billion gap already through a series of spending cuts, layoffs and strict hiring controls, voluntary contributions from constitutional officers and quasi-independent agencies, the use of federal recovery funds and rainy day funds, and new revenues. But today's news means we have more to do," said Patrick. "Secretary [of Administration and Finance Leslie] Kirwan and her team have been working with other cabinet members and their agencies across state government to prepare for further spending cuts and other solutions."
Massachusetts, like other states, is still dealing with the effects of an unprecedented national recession. At least 47 other states are experiencing budget shortfalls – in most cases more severe than than the Bay State's. Additionally, about half the states have already had to revise their revenue projections downward for the current fiscal year, indicating that this has been a very difficult recession to forecast.
Patrick said he has directed Kirwan and finance Undersecretary Jay Gonzalez to work with the Department of Revenue, his Council of Economic Advisers and other financial experts over the next two weeks to update the tax revenue estimates for the rest of this fiscal year.
"Within two weeks after that is announced, we will announce our plan to close the gap," said the governor.
(Kirwan submitted her resignation last week to join Harvard University as dean of administration and finance. Gonzalez will take over as secretary.)
Despite the drop in revenue, the governor said the state's economy is showing early signs of recovery. Recent reports chronicling increases in business investment, growth in the labor force and an uptick in housing starts demonstrate that Massachusetts is poised to emerge from the recession faster than other states, he said.
"State revenue always recovers more slowly than the private-sector economy. As people start to go back to work and some of the stress on families is relieved, as businesses take advantage of new opportunities in the capital markets, and as the housing and commercial real estate markets strengthen, state government's fiscal situation will improve, too," said Patrick. "In the meantime, we have more work to do, and we will get it done as we have in the past: by being tough-minded about the tough choices in front of us, and by being mindful that these are not just numbers on a balance sheet we're dealing with, but people whose vital services and livelihood are at stake."
His team has developed a number of scenarios to address the fiscal 2010 shortfall, he said, and called on state employee unions, vendors, advocates, and members of the Legislature to use the time over the next few weeks to work with the cabinet to refine those plans to achieve the maximum savings and efficiencies with the least impact on people and public services.
