Overview
Seeking to close a $5 billion budget gap, the legislative Conference Committee crafted a budget that will require sacrifices across the board. The budget includes cuts that will limit access to health care, reduce public employee benefits, and decrease funding for public education, human services, public health, public safety protection, environmental protection, and virtually every other area of state government. To avoid cutting even further into public services that affect the quality of life of people in the Commonwealth, the Conference Committee budget also includes a sales tax increase (to 6.25 percent), an expansion of the sales tax to alcohol purchases, and a modest reduction in the tax subsidies provided to movie producers. While these tax increases restore only a portion of the tax reductions of the past decade,1 they will help to strengthen the state’s long term fiscal stability.
The Conference budget relies heavily on revenue from the American Recovery and Reinvestment Act (ARRA). This federal stimulus law provides significant aid to states to reduce the budget cuts they would be required to make in response to the national recession. The Conference Report uses about $1.5 billion of this money to help close the $5 billion gap. Had those new federal dollars not been available, the state would have had to have cut services even more deeply, or raised taxes more. In addition to the long-term benefits of not cutting more deeply into important investments, such as those in education and preventive healthcare, the ability of states to use the ARRA funds to reduce budget cuts can help to reverse the downward spiral of the national economy. Public spending by state government is important for stimulating economic activity at a time when such stimulus is clearly needed. The reliance on this aid, and on over $200 million from the State’s Stabilization (“Rainy Day”) Fund, also means, however, that the state continues to face serious structural budget problems and will have to make additional hard choices in the years to come.
This Budget Brief describes the Conference Committee budget and compares proposed spending levels to those in the House and Senate budgets. In many areas it also makes comparisons to the FY 2009 General Appropriation Act (GAA) so that readers can see how spending in the coming year compares to the spending that was initially proposed in the current year’s budget.
Staff
