June 29, 2009

To the Honorable Senate and House of Representatives:

Pursuant to Section 5 of Article 63 of the Amendments to the Constitution, I am today signing House 4129, "An Act Making Appropriations for the Fiscal Year 2010 for the Maintenance of the Departments, Boards, Commissions, Institutions and Certain Activities of the Commonwealth, for Interest, Sinking Fund and Serial Bond Requirements and for Certain Permanent Improvements," and returning certain portions to you for reconsideration.

We are in the midst of a fiscal crisis. Since last Fall, when an unprecedented global economic decline began to cause state tax revenues to plummet, my Administration and the Legislature have worked together to close a cumulative $3.9 billion gap in the fiscal year 2009 budget and a projected $5.1 billion gap in the fiscal year 2010 budget. To maintain a balanced budget in fiscal year 2009, we have taken a blended approach, imposing a series of emergency spending reductions as well as using federal recovery funds and state reserves. We have taken a similar approach to the budget proposal for fiscal year 2010, even as revenue continued to deteriorate throughout the Spring. Spending reductions and savings comprise about half of our solutions to close the fiscal year 2010 budget gap.

A portion of the solutions to our fiscal crisis requires new taxes. Because I do not believe we can in good conscience and especially in times like these ask people to give more simply to maintain the status quo, I have insisted on fundamental changes in how government serves its people before I would accept a broad-based tax increase. Specifically, I have insisted on the enactment of reforms to our ethics, transportation and pension systems as a prerequisite for my support of the Legislature's proposed increase in the sales tax. In the last ten days, the Legislature has taken major steps forward on all of these fronts. I have signed into law a far-reaching transportation reform bill that radically simplifies our transportation system and will save millions of dollars, as well as the most comprehensive pension reform bill in decades. Later this week, I will sign sweeping ethics and lobbying reforms that close loopholes which have for too long undermined public confidence in government. With these actions taken, I will sign an increase in the state sales tax from 5 percent to 6.25 percent, as proposed by the Legislature.

Today, I am signing most of the proposed conference committee budget into law. The conference committee budget totals $27.41 billion. I am signing $27.046 billion of that amount into law. I am vetoing $364 million, of which $217 million is a technical change until our county corrections reform legislation is signed into law. The remaining $147 million in vetoes constitutes line-item spending reductions. A portion of these vetoes is being used to pay for supplemental appropriations that I am proposing in order to fund pressing Commonwealth priorities that were not adequately addressed in the conference committee report.

This is without question an austere budget, containing deep spending cuts that will have painful impacts and require shared sacrifice. After several years of budgets with positive growth in spending - and despite growing demands on state government - the budget that I am signing today will spend less than amounts in the previous fiscal year.

With significantly less revenue available, we have focused on prioritizing core functions of state government. In particular, I am pleased that the budget funds Chapter 70 education aid at its highest level in history at $4.037 billion - reflecting the fundamental importance of education to the health of our economy and the future of our children. Consistent with my commitment earlier this year, all school districts are funded at foundation levels, with the help of federal recovery funds.

For cities and towns, the budget contains both unavoidable reductions in unrestricted general government aid and greater flexibility to raise revenue through modest increases in meals and room occupancy taxes, at local option, and through elimination of an unjustified property tax exemption on telephone poles and wires. Together, these tools will at least partially mitigate the reduction in Local Aid for cities and towns and strengthen municipal finances over the long-term.

The budget also preserves important aspects of our state's social safety net, in large part because of additional resources provided by the federal government through enhanced federal Medicaid matching funds. With one exception that I am proposing to address through amendment and supplemental funding, the budget maintains current eligibility for state-subsidized health insurance programs, including dental coverage. The budget also provides $65.6 million for the Children's Behavioral Health Initiative which will serve children with severe emotional disturbances and other behavioral health problems. Moreover, it fully funds veterans' annuity payments and benefits under Section 9 of Chapter 115 and maintains eligibility and benefits for the state's main cash assistance programs for needy families and individuals.

We are able to fund these essential functions of state government by foregoing other investments that may have merit but are unaffordable in difficult fiscal times, asking state agencies to re-examine their core missions to live within more limited means, using federal recovery aid and state reserves to build a bridge to better times and - after having taken all of those steps - relying on modest increases in tax revenues to ensure that state government can meet its most essential obligations.

Along with signing most of the conference committee budget into law, I am taking additional action to address important Commonwealth priorities that were not adequately addressed by the conference committee budget. For example, the conference committee budget terminated Commonwealth Care health insurance coverage for approximately 30,000 legal immigrants, a successful feature of our health care reform experiment. This would be a major step backwards from our progress at a time when the eyes of the nation are focused on this groundbreaking initiative. I am accordingly proposing an additional $70 million in funding to continue state-subsidized health insurance for these residents - and ensure that our state continues to lead the nation in offering high-quality, affordable health care to all.

I am also proposing additional funding for initiatives that are essential to our state's short- and long-term economic progress. For example, I am proposing an additional $10 million in guaranteed funding for life sciences research, on top of $10 million provided in the conference committee budget that is contingent upon the availability of fiscal year 2009 surpluses. Investments in life sciences are critically important to job growth, by retaining our status as a world leader in one of the most exciting economic growth opportunities of the 21 st century. Our ability to capitalize on this opportunity for innovation and economic leadership cannot depend solely on the availability of surpluses that are unlikely to materialize in this difficult fiscal climate.

I am also proposing an additional $11 million for the Workforce Training Fund to ensure that business contributions to the fund are used for their intended purpose - to train workers in the skills that will speed our economic recovery and strengthen our long-term prosperity. And I am proposing to restore $400,000 in funding to maintain a state office in Washington, D.C., as two-thirds of the states do. This staff has assisted us in securing billions of dollars of federal support in the last two years, proving their effectiveness repeatedly and winning the unanimous respect and support of our entire congressional delegation. With extensive opportunities for partnership with the Obama Administration on our state's priorities and an ongoing need for federal assistance during difficult economic and fiscal times, we should not shortchange having as strong as possible a presence in Washington.

To help pay for these and other priorities and address revenue exposures included in the conference committee budget, I am vetoing $147 million in other line-item spending in the conference report. I am also proposing that the Legislature enact a series of fiscal management tools that will help keep us on track towards ensuring a balanced budget for fiscal year 2010. These tools include renewal of line-item transferability authority that would let us allocate surpluses arising in some programs towards shortfalls in other programs, and expanded 9C authority that would let us fairly and sensibly distribute any needed emergency spending reductions without disproportionate impacts on certain state functions.

Therefore:

  • I am reducing appropriation amounts in items of section 2 of House 4129 enumerated in Attachment A of this message by the amount and for the reasons set forth in that Attachment;
  • I am disapproving, or striking wording in, items of section 2 and 2B of House 4129 also set forth in Attachment A, for the reasons set forth in that Attachment;
  • I am disapproving those sections of House 4129 itemized in Attachment B of this message for the reasons set forth in that Attachment; and
  • Pursuant to Article LVI, as amended by Article XC, Section 3 of the Amendments to the Constitution of the Commonwealth, I am returning sections 5, 21, 22, 31, 40, 66, 76, 87, 105, 112, 121, 130, 132, 133, 144 and 146 with recommendations for amendment. My reasons for doing so and the recommended amendments are set forth in separate letters dated today which are included with this message as Attachments C to Q, inclusive.

I approve the remainder of this Act.

This budget serves the public's interest. As much as possible, it maintains those services that are essential to the public and the Commonwealth's long-term economic interests, mindful that in times like these, people often demand more, not less, from state government. At the same time, many worthy programs and services have of necessity been cut. I recognize that it is difficult to ask people to contribute more in taxes of any kind when many are already struggling to deal with the personal effects of the economic downturn. But I am satisfied that the Legislature has made a significant commitment - through the reform legislation enacted in recent weeks - to change the way the public's business is done. We owe it to the public to continue on the path of reform.

Respectfully submitted,

Deval Patrick