Yesterday Governor Patrick announced a series of actions to bring the current year budget into balance. The need for mid-year budget solutions highlights two realities that have shaped Massachusetts budget debates for years: our national economy is still recovering from the worst recession since the Depression and we continue to have substantially reduced revenues because the state adopted over $3 billion of income tax cuts during an economic bubble in the late 1990s (described HERE). Those tax cuts led to deep cuts in funding for local aid, education, public health, and other investments that can strengthen our economy, expand opportunity and improve the quality of life in our communities. In addition to forcing painful cuts, the loss of $3 billion in revenue has caused ongoing fiscal instability.
These long-term challenges are now compounded by a few short-term ones: a coming automatic reduction in the personal income tax rate, non-tax revenue collections that are below projections, and additional economic development spending commitments that were made when revenue projections were above what actually occurred. The administration estimates that combined these have created a $329 million gap for the rest of FY 2015. To close this gap, the Governor yesterday announced $198 million in cuts to executive branch agencies as authorized by Chapter 9C of the General Laws (explained in What are 9C Cuts?). The Governor also proposed additional solutions in areas beyond executive branch agencies -- including to local aid -- that can only be implemented with legislative approval.
Specifically, the $198 million in 9C cuts to programs within the executive branch include:
- $45.4 million by delaying the implementation of rate increases for providers in MassHealth. Net savings to the state, however, will only be about half this amount, since these cuts will lead to reduced federal reimbursements (for more detail please click HERE).
- $18.7 million to Regional School Transportation, bringing funding down to FY 2014 levels.
- $10.0 million to Pathways to Self Sufficiency, bringing funding down to $1.0 million for FY 2015. This job training program was newly created as part of last year's welfare law.
- $7.1 million to the Municipal Regionalization and Efficiencies grant program.
- $5 million from mental health services for children and adolescents, likely resulting in the delayed implementation of the Caring Together initiative for children in residential care.
- $3.1 million to State Parks and Recreation.
- $2.4 million in cuts to elderly support programs, decreasing the number of people able to receive in-home care, which keeps them out of nursing homes. This cut may result in wait lists for these services.
- $1.0 million to Extended Learning Time Grants.
Additional proposed cuts to non-executive branch agencies, which the Governor cannot implement on his own, include:
- $25.5 million in cuts to Unrestricted General Government Aid, which would bring general local aid down to FY 2014 levels.
- $21.8 million in cuts to most other non-executive agencies (e.g. the attorney general's office), mostly the result of across-the-board 1.5 percent cuts.
- $10.0 million in cuts and savings within the Department of Transportation.
- $73.6 million in other solutions, including commitments from some quasi-public agencies to return a portion of funding received from a recent economic development bill. This total also includes some additional federal and departmental revenues beyond what was projected in the FY 2015 budget.