Last week the US Senate passed a bill that would approve extended state fiscal relief from the federal government, and the US House is reconvening today to vote on the extension.
The legislation would provide approximately $655 million to Massachusetts -- $450 million in enhanced Medicaid (FMAP) reimbursements, which is $250 million less than the $700 million originally anticipated, and another $205 million in funding for education through a new Education Jobs Fund.
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.
The Governor today signed the Fiscal Year 2011 budget, used his line-item veto authority to reduce spending in a number of areas (largely to reflect the likelihood that Congress will fail to provide anticipated extended state fiscal relief), proposed several modifications, and recommended reducing cuts in two public safety accounts.
Responding to the danger that Congress will fail to provide state fiscal relief that had been preliminarily approved by both the US House and Senate, the Conference Committee budget implements a new round of cuts to health care, education grants, elder home-care services, child care for working parents, human services, and other areas of the state budget.
During its budget debate, the Senate added about two-tenths of 1 percent to the budget’s bottom line. The Senate did not adopt any new taxes or appropriate money from the stabilization fund. The modest increases approved were paid for by identifying revenues that are expected to be available but were not counted on in the Senate Ways & Means proposal (for example, the final Senate budget, relying on recent trends, assumes that revenue from the lottery will be approximately $21 million higher in FY 2011 than had been anticipated).
The Senate Ways & Means (SWM) budget proposal addresses a budget gap of close to $3 billion by recommending significant budget cuts and relying heavily on assistance from the federal government. It does not include the Governor’s tax reform proposals, or other new taxes. Also unlike the Governor’s proposal, it does not draw on the state “Rainy Day” fund. It does, however, rely on some other temporary state revenue sources and some one-time savings.
The Senate Ways & Means (SWM) budget proposal released today follows the basic structure of the House proposal: a budget gap of close to $3 billion is addressed with deep budget cuts and without the revenue that would have been generated by tax reform proposals suggested by the Governor (because the Constitution requires that tax measures originate in the House and the House did not include such measures in the budget, the Senate does not have the option of including those reforms in its budget).
The most significant theme from the House budget debate is how little happened. Facing a budget gap of approximately $3 billion, it would have been irresponsible for the House to adopt significant spending amendments without offsetting revenue -- and it did not. The House could have reduced the severity of budget cuts by adopting revenue measures, but it chose not to do so.
The House Ways & Means (HWM) budget proposal relies primarily on budget cuts and federal assistance to address a budget gap of approximately $3 billion. The HWM proposal recommends over $1 billion in budget cuts and more than $1.5 billion in temporary revenue from the federal government, primarily stimulus funds from the American Recovery and Reinvestment Act (ARRA).
The House Ways & Means (HWM) budget relies on over $300 million less in revenue than the Governor’s proposal. The HWM budget does not adopt the Governor’s proposals to generate approximately $200 million in revenue with a series of tax reforms, including the repeal of sales tax exemptions for candy, soda, and private jets, and the reduction in spending on tax credits for movie producers.
One of the Massachusetts Budget and Policy Center's goals is to help citizens of the Commonwealth better understand the state budget and how it meets public needs and priorities. With
MassBudget's online, interactive
Budget Browser, citizens can engage in this year's deliberations and keep track of the many programs and services that they may care about.
Following two years in which the state budget was cut deeply and taxes were increased to address substantial budget deficits, the Governor’s FY 2011 budget recommends additional cuts, suggests modest revenue increases, and relies heavily on assistance from the federal government.
The balance in the state’s Stabilization Fund has varied over the past 10 years. The Stabilization Fund – often referred to as the “Rainy Day Fund” – is a cushion for when the economy turns down. It is like a “savings account” for the state to turn to when there is not enough money in the General Fund (the “checking account”) to fund the state’s operations.
The Governor’s budget proposal (House 2) continues budget cuts from the prior two years and recommends further cuts in several areas. It also generates revenue by reducing three business tax breaks and by extending sales taxes to cover soda, candy, cigars and smokeless tobacco. In addition it relies on continued significant federal assistance and on other temporary revenues including a modest withdrawal from the state stabilization fund. This MassBudget Preliminary Analysis describes some of the major cuts and other initiatives used to balance the budget
Governor Patrick today announced his plan to close the $600 million gap caused by declining tax revenue and bring the FY 2010 budget back into balance. The plan relies primarily on budget cuts across state government, but also includes some additional revenues, including the use of federal stimulus funds from the American Recovery and Reinvestment Act (ARRA), as well as a small surplus of funds that remained unspent at the end of FY 2009. (Updated Nov. 2, 2009)
A MassBudget preview of the next (Fiscal Year 2011) state budget projects an initial budget gap of at least $2.24 billion.
This Budget Monitor provides an analysis of the budget enacted by the Legislature, the Governor’s vetoes, and the additional changes he has recommended. Overall, this budget spends more than a billion dollars less than the budget enacted last July. It also represents a reduction of approximately $2.4 billion below the level that would be required to provide the same level of services as the Fiscal Year 2009 budget funded.
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, they will help to strengthen the state’s long-term fiscal stability.
The severe national recession has made the Fiscal Year 2010 budget process unusually challenging, both substantively and procedurally. Because the current baseline tax revenue estimate for FY 2010 is $3.4 billion below the tax revenue estimate on which the FY 2009 budget was built, the state faces extraordinary fiscal pressures.
Staff
