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Table of Contents
- Overview
Table of Contents
- Overview
Overview
When the Governor first filed his Fiscal Year 2011 budget proposal in January, the state faced a budget gap estimated at $2.7 billion. The Governor recommended closing that gap with about $700 million in savings from spending reductions, $200 million in tax and other revenue reforms, and a little more than $1.8 billion in temporary revenue sources. The major sources of temporary revenue were state fiscal relief the federal government was providing through the American Recovery and Reinvestment Act (“ARRA”), and additional revenue it was expected to provide by extending the provisions of that law that help states by paying a larger than usual share of Medicaid costs.
During the budget process, the Legislature rejected the Governor’s tax reform proposals. Then, at the end of the budget process, the US Senate failed to provide $700 million in extended state fiscal relief that had been preliminarily approved by both the US House and Senate. Therefore the final budget relies on significantly less revenue than the budget the Governor originally proposed. As a result, the final budget implements over $700 million in additional cuts, for a total of close to $1.5 billion. Specifically, the final budget cuts much more deeply than the Governor’s original budget in funding for education, local aid, and health care.
Because it didn’t become apparent until the very end of the state budget process that the US Senate would likely fail to provide the expected extension of state fiscal relief, the legislative Conference Committee faced an unusual challenge. Both the House and Senate had followed the Governor (and most other states) in relying on the anticipated federal revenue. As the Conference Committee was deliberating, it became clear that this federal revenue might not be provided and that the final budget would have to account for the possibility of a bottom line almost $700 million lower than the two budget bills the Conference Committee was charged with reconciling. To address this uncertainty, the Conference Committee produced two sets of budget recommendations: one that assumed the additional federal revenue would not be provided and one that allocated the federal revenue that might be provided. The lower set of numbers was generally at or below the lower of the House and Senate recommendations.
As it became increasingly likely that the US Senate would not extend state fiscal relief, the Governor vetoed the appropriation levels that assumed that revenue would be available. The spending levels in the post-veto budget, therefore, rely on only the revenue that we know will be available. If additional revenue is provided, the state could enact a supplemental budget to use that revenue to restore services. While it appears unlikely that the US Senate will provide additional state fiscal relief, the substantive case for such relief remains strong: economists consider state fiscal relief to be one of the most effective ways the federal government can stimulate the economy and create jobs in the short run1 and state fiscal relief allows states to protect investments, such as in education, that are crucial to building long-term economic strength.
This Budget Monitor examines each category of the budget, describing the FY 2011 post-veto spending levels, and comparing them to the FY 2010 budget and to recommendations from earlier in the budget process.
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The tables included at the beginning of each section provide an overview of the funding for each category and how it compares to funding in FY 2010. Here is an explanation of each item presented in these tables. FY 2010 GAA: The level of funding that was approved in the original budget for FY 2010. FY 2010 Current: This amount includes any subsequent additions or reductions to the approved funding level in the GAA, including supplemental budgets and any cuts that were made by the Governor in October of 2009 through the 9C process. (For more information on 9C cuts, see here.) FY 2011 Legislature Budget (Adjusted, Without FMAP): This is the funding amount proposed by the Conference Committee and passed by the Legislature, which does not include funding provided by the extension of federal fiscal relief (in the form of enhanced Medicaid reimbursements, or “FMAP”). In addition, in order to allow for accurate comparisons of FY 2011 budget proposals to FY 2010 budget totals, MassBudget “adjusts” budget totals when the FY 2011 proposal recommends departmental reorganizations. These adjustments allow the user to differentiate between changes in funding due to proposed cuts or expansions in funding, rather than due to organizational shifts. FY 2011 Legislature Budget (Adjusted, With FMAP): This is the funding amount proposed by the Conference Committee and passed by the Legislature, including the additional funding that would be provided by the extension of FMAP. Adjustments are also made to these figures in order to provide an accurate comparison to FY 2010 budget totals. FY 2011 Post-Veto Budget (Adjusted): This is the level of funding provided after the Governor’s vetoes. Adjustments:Specifically, in this Budget Monitor, the FY 2011 totals reflect the following adjustments (a detailed explanation is provided at the end of this report): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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1 See “Economic Stimulus: What Can National and State Governments Do To Save and Create Jobs Quickly?,” June 9, 2010.
