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FY2010 House 1 Budget Recommendation:
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
In light of the challenges faced by state agencies during these difficult economic times, Governor Patrick’s House 1 (H.1) recommendation proposes significant line item consolidations that change the presentation of the budget. This structure is not meant to disguise the significant reductions in agency budgets, a reality we readily acknowledge. Rather, it is meant to provide maximum flexibility for Secretariat and Agency heads to manage within limited resources.
Traditional Structure has Built-in Delays
The fiscal year 2009 General Appropriation Act (GAA) funded 849 separate line items within 127 departments. This traditional structure restricts spending from an item to only those programs that are funded from it – funding cannot be shifted to other programs. If a program’s needs are projected to exceed the funding available (called a “deficiency”), a supplemental budget request is filed by the Governor and approved by the Legislature. The deficiency request effectively transfers extra (“surplus”) funding from other accounts to the deficient account. However, it takes time for the Governor to prepare a supplemental budget request and then for the Legislature to review and approve it. This makes it extremely difficult for department heads to know whether they should take action to reduce expenditures – through layoffs or reduced services – or whether the current level of service will be supported by a supplemental budget.
A Consolidated Line-Item Approach Helps during Financial Difficulty
In good times, deficient areas are limited in number, and surpluses may exist to address them. During challenging years like fiscal year 2010, there will likely be hundreds of deficiencies, requiring hard decisions by agency managers. Also, revenue is declining rather than increasing, so a supplemental budget may not be an appropriate remedy. Uncertainty compounds the problem: it is simply impossible to accurately predict the exact needs of individual programs as the economic condition continues to evolve. The reductions to agency budgets included in the H.1 recommendations will continue to be evaluated over the coming months and final plans will be developed for individual programs, services and employee levels. In developing their plans to live within these budget constraints, managers will be tasked with evaluating programs and services based on need and priority. The flexibility of a consolidated line-item structure to move funds from one program or service to another will be essential to this effort. Continued adherence to the traditional line-item structure restricts agencies’ ability to respond to changing economic circumstances and risks creating an over-reaction due to the inevitable delay in reviewing supplemental budget requests.
849 Line Items
480 Line Items
369 Fewer Line Items
A Step Closer to a Larger Change in How the Commonwealth Develops a Budget
Over the past 2 years, Governor Patrick has worked with his Cabinet to explore opportunities for a more efficient way to develop the annual budget. Those discussions have focused on developing budgets based on programs rather than individual line items, which are inconsistent in that they fund partial or multiple programs. The line-item approach, although comfortable since it is familiar, does not allow for agencies to develop their budgets based on programs and priorities. These consolidations are a step in that direction.
Prepared by the Executive Office for Administration and Finance · Rooms 373 & 272 · State House
For more information contact:
LeeAnn Pasquini (firstname.lastname@example.org)
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