Closing the FY13 Budget Gap
Tuesday, December 4, 2012 - Governor Patrick and Secretary of Administration and Finance Jay Gonzalez make an announcement relative to the FY13 budget in the Press Briefing Room at the State House. (Photo: Eric Haynes / Governor's Office)

Due to slowing economic growth and lower than anticipated tax revenue collections, Governor Deval Patrick today outlined a plan for closing an estimated $540 million gap in the Fiscal Year 2013 budget.

The Patrick-Murray Administration revised the FY13 tax revenue estimate from $22.01 billion to $21.496 billion, a reduction of $515 million. Because $25 million of the tax revenue already collected this year is from tax settlements that are one-time in nature and already committed to certain one-time costs, the total shortfall in tax revenues available to support the budget is $540 million.

“The uncertainty of the fiscal cliff and the resulting slow down in growth, is the direct cause of our budget challenges,” said Governor Patrick. “Congress and the President must come to terms on a solution so the private sector will continue to make the kind of investments that create jobs, grow state and federal tax revenue collections and contribute to a lasting economic recovery. Until then, just as we have throughout the course of this Administration, we face these challenges together and take a balanced, purposeful approach to dealing with them.”

To close the budget gap, Governor Patrick has outlined a balanced plan that includes budgetary reductions and other fiscally prudent solutions, including the reallocation of savings from the Commonwealth’s borrowing and health care costs, to help address the tax revenue shortfall and ensure the FY13 budget is balanced.

Summary of Budgetary Reductions and Solutions

  • $225 million or about 1% in the aggregate in spending reductions through 9C cuts in Executive Branch agencies. After accounting for reduced federal revenue related to such reductions, the net amount of the budgetary savings from their cuts is $157 million.
    • As a result of the hiring controls the Administration imposed in October, over 700 of the new positions that were originally planned and funded in FY13 are being eliminated and will not be filled, resulting in a savings of approximately $20 million. This will result in the total state workforce having more than 6,000 less positions at the end of FY13 than it did before the recession
    • A number of new investments for projects and programs in FY13 have been reduced or eliminated, including limiting new or restored funding for investments across a range of government services.
  • $200 million from the Rainy Day Fund, bringing the total draw to $550 million in FY13 – leaving a balance of $1.2 billion, one of the highest in the country. 
  • $25 million from a 1% reduction in the budgets of the Judiciary, Constitutional Officers and other non-executive departments.
  • $98 million in additional federal revenues in support of safety net programs operated by the state on behalf low-income residents.
  • $20 million from a total of $113 million in savings in state borrowing and health care reform costs. The remainder of this funding will be used to offset some unavoidable deficiencies which must be funded this fiscal year.
  • $20 million from a reduction in the amount of sales tax revenues that will automatically be transferred to the Massachusetts School Building Authority to support local school building costs.
  • $11 million from certain reserve fund surpluses.
  • $9 million from a 1% across the board reduction to unrestricted local aid. The Governor has filed legislation that ensures if lottery profits exceed the $1.026 billion amount currently budgeted in FY13, all of such excess proceeds be committed to increasing the amount of unrestricted local aid.