For Immediate Release - May 07, 2009

GOVERNOR PATRICK FILES BUDGET DEFICIT PLAN TO ADDRESS $935 MILLION BUDGET GAP

BOSTON-Thursday, May 7, 2009 - Governor Deval Patrick will file legislation today to close an estimated $953 million shortfall for the remainder of Fiscal Year 2009, using a combination of federal stimulus aid, stabilization funds, and other solutions. The legislation comes on the heels of an historic $1 billion drop in April tax revenues compared to last April revenues, and after previous measures to close an over $3 billion gap for FY 2009.

The legislation maintains Governor Deval Patrick's commitment to education funding and preserving other key programs essential to the Commonwealth's economic recovery. The bill filed today also includes supplemental appropriations to fund accounts experiencing deficiencies due to the economic downturn.

"Throughout this very challenging year we have had to make difficult choices in order to meet our obligation to manage state government in the most fiscally responsible way possible," said Governor Patrick. "We have done our best to implement reforms, cut costs and protect the core services of government that people rely on more than ever in times like these. There are no easy or pleasant options, but we will continue to do the job that is required of us and will make the decisions that will ensure the Commonwealth emerges from the fiscal crisis stronger than before."

With less than two months remaining in the fiscal year, and more than $1.3 billion in spending cuts and controls already proposed by the Governor this year, the administration was forced to rely mainly on federal stimulus and stabilization funds to bridge the budget gap. Most state agencies have spent more than 80 percent of their budgets by May.

To immediately close the FY09 gap, the Governor proposes using $412 million of State Fiscal Stabilization Funds included in the American Recovery and Reinvestment Act of 2009, which will allow the state to maintain its commitment to education. No community will see a reduction in its Chapter 70 aid this fiscal year. The Governor has not included any reduction to Chapter 70 in any round of budget cuts he has made this year.

The Governor's proposal would allow for a draw of up to $461 million from the state's Rainy Day Fund and suspend the $100 million deposit authorized in FY 2008. The bill also calls for a $15 million reduction to the Health Safety Net Trust Fund in order to meet projected deficiencies within the MassHealth program. Even with this reduction, the Trust Fund is expected to end its year with a surplus.

Further, the Governor has secured a commitment from the Massachusetts Convention Center Authority to contribute $50 million from its reserves to help close the deficit.

The legislation includes supplemental funding for programs including the Group Health Insurance Commission ($75.8 million), which is experiencing a shortfall in part because the Legislature did not adopt the Governor's proposal to tier state employee health insurance contributions.

The bill also includes $32 million for the County Sheriffs Reserve, which represents mission critical operating costs for the seven county sheriffs. The Governor has filed legislation to reform the County Sheriffs system, which would allow the state to oversee all spending by each of the sheriffs.

Additionally, the legislation includes $28.4 million for the MassHealth program, which has seen an increase in utilization attributable to the economic downturn.

The legislation includes a proposal to decouple Massachusetts state tax law from certain provisions of the federal recovery law that would otherwise result in a $100 million reduction in revenue in Fiscal Year 2010. It also avoids state taxation of certain federal unemployment benefits.

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