For Immediate Release - February 03, 2015

Baker-Polito Administration Announces Plan to Close Fiscal Year 2015 Budget Gap

Solution protects local aid, avoids tax hikes and any draw from the Stabilization Fund

BOSTON – Governor Charlie Baker and Lieutenant Governor Karyn Polito today announced a series of proposals to close the Fiscal Year 15 (FY 15) budget gap recently identified by the Administration. The fixes include a combination of the Governor’s 9C authority to adjust Executive Branch spending, as well as legislation for additional spending reductions, non-tax revenue adjustments, and other one-time fixes.

As originally promised, the plan announced today does not raise taxes, cut local aid, or draw down on the state’s Stabilization Fund. The total budget imbalance addressed for FY 15 was adjusted slightly, from $765 million to $768 million due to updated tax data and other factors such as last week’s winter storm. After today’s proposal, spending for FY 15 is still a 7.7% increase over FY 14.

“The substantial deficit we face as a Commonwealth as a result of over-spending requires the cooperation of our partners in the legislature and I look forward to working with lawmakers to enact the changes we identified to balance the budget for the rest of the fiscal year,” said Governor Baker. “These adjustments were considered carefully, understanding that the decisions we make today are crucial to implementing responsible fiscal planning for the future.  Thankfully, our response to the spending problem we inherited protects local aid, taxpayers and critical services for people without drawing from the rainy day fund.  We recognize that some proposals represent one-time fixes and that further structural changes will be needed to correct the spending imbalance for next year and beyond.”

“Fixing this year’s state budget deficit is an opportunity for Massachusetts to rein in what has become a serious spending problem,” said Lieutenant Governor Karyn Polito.  “The Commonwealth’s revenues continue to grow at a consistent pace and now it’s time to correct unprecedented spending to more realistically mirror budgeting realities.  This administration made a commitment to the cities and towns of Massachusetts and I am pleased we protected critical local aid resources for our partners in municipal government.

“Thanks to the leadership of the Governor, Lieutenant Governor, and my fellow Cabinet Secretaries, we developed solutions that balance this year’s budget in a manner consistent with the administration's commitment to taxpayers, municipalities, and critical services ,” said Secretary Lepore, Secretary of the Executive Office for Administration and Finance.  “Our team has worked around the clock for the past three weeks to identify and resolve the current year’s budget.  We can now turn our attention to developing a fiscally sound Fiscal Year 2016 budget that incorporates long term solutions to address the state's spending problem."

The Administration has proposed reaching this solution through administrative reductions, revenue opportunities, and a combination of changes at the MassHealth program.  Nearly half of the solution is derived from reductions in administrative expenses, including 9C reductions and expected reversions.

There were close to 300 9C reductions proposed, almost 60% of which still left their line item with a higher level of funding than in Fiscal Year 2014.

Notable Savings Initiatives:

•          A 10% reduction from the Governor’s Office.

•          $168 million through redeterminations, revenue optimizations, and cash management at MassHealth.

•          $22 million from hiring freeze.

Notable Savings From Programs Not Started ($73 million):

•          $37 million economic development bill.

•          $200K saved from a parking management study.

•          $2.3 million from a clean water planning & technical assistance program.

•          $600K from a water technology innovation program.

Notable Items With No Spending Reductions:

•          Local aid

•          Department of Children and Families

•          Homelessness

Governor Baker, Lieutenant. Governor Polito and Secretary Lepore, Executive Office for Administration & Finance announcing plans to close the Fiscal Year 2015 Budget Gap.