TARGETED INVESTMENTS FOR A STRONGER COMMONWEALTH: THE PATRICK-MURRAY FISCAL YEAR 2009 BUDGET
Budget plan identifies targeted savings and efficiencies, makes significant investments in Education, Local Aid, Public Safety
BOSTON-Wednesday, January 23, 2008-Governor Deval Patrick today filed the Administration's $28.165 billion state budget for fiscal year 2009, a fiscally and socially responsible plan that makes critical investments key to promoting economic growth and opportunity across the Commonwealth.
"Our team is proud of the budget we are filing today," said Governor Patrick. "It is responsibly balanced, identifies savings and efficiencies and makes targeted investments that will secure our future as a Commonwealth and allow us to compete and win on the global economic stage.
"We can afford to do what we are proposing. We can't afford not to. We have seen what the cost of inaction looks like-failing schools, broken roads, violence on street corners-and we must not settle for it any longer."
The FY09 budget holds the line on spending, increasing 3.5 percent over FY08 estimated spending, keeping it in line with projected revenue growth and making the tough choices necessary to allow us to make vital investments in key programs.
The budget for FY09 makes a series of long-overdue investments critical to the long-term future of the Commonwealth. Failing to make these investments will result in Massachusetts losing its competitive advantage, exacerbate our structural deficit and fail to keep Massachusetts ahead of the national economic trends.
A top priority of the Patrick-Murray Administration, education receives significant support in this budget, including a record $223 million increase in Chapter 70 aid that will result in an increase for every school district in Massachusetts. The budget also includes a $51 million increase for programs including:
- Universal Pre-Kindergarten ($15 million increase);
- Full-Day Kindergarten ($8 million increase);
- Extended Learning Time ($13 million increase);
- MCAS support ($2 million increase);
- and reinstating dual enrollment to allow high school students to enroll in college courses ($2 million).
Acknowledging the importance of healthy communities to the economic vitality of the entire Commonwealth, Local Aid in the Governor's budget grows by 5.12 percent, including the Chapter 70 increase and a $67 million off-budget increase for school construction through the School Building Authority for a total of $702 million. The Governor's budget also provides $935 million in lottery aid to cities and towns protecting them from an expected $124 million shortfall in Lottery aid by using revenues from casino licensing fees, expected to be $800 million in FY09. If the Governor's casino legislation passes this year, an additional $88 million from those fees would go back to cities and towns for transportation infrastructure improvements. Another $88 million in fees would be used to provide property tax relief worth $200 on average to over 420,000 households. Together these items provide an additional $176 million in much needed aid to cities and towns. The casino proposal has been filed by the Governor and is awaiting action by the Legislature.
Public safetyis a key priority for the Patrick-Murray Administration and vital to the economy and well-being of Massachusetts residents. The Governor includes an increase of more than $100 million in his FY09 budget to keep communities safe by adding more police officers on neighborhood streets, increasing summer work opportunities and enhancing youth violence prevention programs across the Commonwealth. The budget includes:
- $15 million for the Shannon Grant program to combat gun and gang violence ($4 million increase). This is the first time Shannon Grants have been included in a Governor's budget;
- doubled funding to hire and train 100 new community police officers ($8 million total);
- an additional $5 million for Youth Violence Prevention Grants to support services for as many as 7,660 additional young people;
- an additional $2 million for summer jobs programs that will make summer job grants available to more than 20 communities across the state that suffer from high incidences of juvenile delinquency.
- $1.5 million more to improve operations at the Chief Medical Examiner's Office as recommended by the Vance Report; and
- an $8.8 million increase for the Department of Fire Services
In addition to investments in education, local aid and public safety, this budget builds on the foresight of the Legislature by making the Bay State Competitiveness Trust fund permanent and endowing it with resources to help grow the clean energy and life science sectors that bring manufacturing and research jobs to Massachusetts. The fund is capitalized with the first $100 million in year-end budget surpluses, with the first $25 million reserved for Life Sciences.
The remainder of the fund would be dedicated to:
o Alternative and Clean Energy ($20 million);
o the Affordable Housing Trust Fund ($15 million);
o the Workforce Competitiveness Trust Fund ($15 million);
o Low-income heating and energy assistance ($15 million);
o the Cultural Facilities Fund ($7 million); and
o Regional Efficiency Assistance Grant Trust Fund ($3 million)
Tough Choices - Savings, Efficiencies and Reforms
To make these essential investments while confronting a $1.3 billion structural budget shortfall caused by years of inaction and overreliance on one-time revenue sources, the Administration looked first for savings, efficiencies and reforms.
- The budget achieves over $300 million of gross savings in the state Medicaid program (MassHealth), one of the largest areas of spending in the state budget, by paying fair and efficient rates to providers, promoting better care management for people with chronic diseases, and promoting the use of generic drugs. Health care costs consume 45 percent of the budget and are growing at unsustainable rates. The reforms to MassHealth are a first step towards controlling those costs.
- Another $51 million in savings is achieved by reforming the state employee health insurance program, rationally basing employee contributions on salary and affordability rather than date of hire. Under this proposal, employees earning less than $35,000 would contribute 15 percent; those making $35,000 to $50,000 would contribute 20 percent. All others would contribute 25 percent.
- The budget holds 190 line items to zero growth in spending, requiring those programs to find creative ways to deal with increasing costs and demands.
- Another $40 million is saved by elimination of nearly 300 earmarks included in last year's budget that were inconsistent with the mission of the agency through which they were funded.
- Also included in the budget is a plan to incorporate the offices of the remaining seven county sheriffs into the state system, saving communities roughly $10 million next year and improving financial oversight of the departments.
While savings, reforms and efficiencies are at the center of a balanced budget, the Administration also sought to generate additional revenues in a responsible manner to address the shortfall and to make the proposed targeted investments.
The budget generates $166 million by improving enforcement of existing tax laws, including changing the way the Department of Revenue collects existing taxes on tobacco sales to better enable DOR to target their collection and enforcement efforts. The Attorney General will also coordinate a statewide effort with DOR and other state agencies to prevent misclassification of employees that currently results in millions of dollars in lost tax revenue and denies workers health insurance benefits they are entitled to.
Following the recommendations of the Special Commission on Corporate Taxation, the Governor will file companion legislation to the budget that closes corporate tax loopholes and gradually reduces the business tax rate to ensure Massachusetts remains economically competitive. Closing the loopholes is expected to generate $297 million for FY09. In addition, the companion legislation will also propose reducing the state's corporate tax rate by 13 percent to ensure Massachusetts remains competitive.
For more than a decade, the Commonwealth's budgets have been built on an overreliance on one-time revenues. While unable to undo this practice in one fiscal year, the Governor's budget proposes and implements a formula for the responsible and measured use of reserves to protect against harmful cuts in the event of lower-than-average revenue growth. Total one-time sources included in the budget total $370 million, versus $780 million FY2008.
In addition to targeted investments in Education, Local Aid, and Public Safety, the FY09 proposal includes:
- $15 million for MWRA water and sewer rate relief;
- An additional $10 million to reduce homelessness;
- An additional $7.7 million for state parks and beaches
- $1.5 million for small business and expedited permitting grants
- $1 million to establish the Office of Health Equity.
The Administration's budget is transparent and user-friendly, letting the public understand what their tax dollars are funding. The gains made in the Governor's first budget (FY08) were enhanced and expanded upon in this second budget. Some initiatives include limiting the number of outside sections to only those that have a clear relationship to the budget; offering a summary of major actions taken by agency in the budget narrative; and providing considerable detail on economic and fiscal conditions behind budget decisions. The online version includes a "How To" guide for navigating the budget, links to relevant laws within the document and includes main pages that are ADA accessible. Additionally, the administration offers a Budget Tracking Tool to compare funding levels across the stages of budget.
The Governor's entire FY09 budget can be viewed online at www.mass.gov/budget/governor.