GOVERNOR PATRICK LAYS OUT PLAN TO CLOSE $600 MILLION BUDGET GAP FOR FY10
Solution includes mid-year spending cuts, government reforms, staff reductions and furloughs
Earlier this month, the Department of Revenue announced a $212 million shortfall for the first quarter of FY10. The Administration today reduced projected revenue for the rest of the year to $18.279 billion, after consulting with DOR and members of his Economic Advisory Council.
"Better times will come and there are signs they are not far off," said Governor Patrick. "We will and must continue to make the investments we can in our long-term economic and community strength. But right now, for those who look to state government for help or support, we face still more challenges, and we will have to stick together and work together - in the spirit of community - to get through it."
Five-Point Fiscal Management Plan for Closing the Gap
Over the next two weeks, the Governor will make the tough choices needed to bring the budget into balance. His five-point plan for closing the gap includes:
- Executive Branch 9C Cuts: The Governor will review suggested reductions in government programs, so-called 9C cuts, submitted by Executive Branch agencies, and make hundreds of millions of dollars in mid-year cuts.
- State Personnel Impacts: The Governor's plan also calls for greater sacrifices from state employees, including:
- the possibility of eliminating up to 2,000 positions as a result of programmatic reductions;
- requiring all Executive Branch Managers to take up to nine furlough days, depending on their salary levels;
- calling on union leaders to work with the Administration to identify ways union employees can share in this sacrifice to mitigate layoffs and continue to provide vital services.
- Consolidation of Agencies: The Governor has directed his Cabinet to provide to him by the time he files his FY11 budget proposal a plan for consolidating as many different agencies and functions as possible in order to achieve savings and provide services in a more efficient manner.
- Pooling State's Energy Purchases: The Governor has directed all state facilities managers to work with the Executive Office for Administration and Finance and Executive Office of Energy and Environmental Affairs on a plan for centralized energy purchasing, which would greatly reduce state energy costs.
- Expanded 9C Powers and Voluntary Cuts from Non-Executive Branch Agencies: The Governor will seek expanded 9C authority which will allow him to make mid-year reductions to accounts outside of the Executive Branch. He has also asked each constitutional officer to submit a plan to voluntarily reduce their own spending in the current fiscal year at levels consistent with what he is asking of Executive Branch agencies.
"We have actively, responsibly, and thoughtfully managed state finances through this unprecedented economic downturn, and we will continue to do so," said Secretary of Administration and Finance Jay Gonzalez. "We must continue to be fiscally responsible, spending only what we can afford and making decisions that will give us a strong foundation as we begin planning for an even more challenging fiscal year ahead."
In addition to closing the budget gap, the Governor is focused on decisions to address what fiscal watchdogs estimate to be a $2 billion to $3 billion shortfall for FY11. In addition to making significant reductions from the FY10 budget, the Administration will continue to push for reforms to make government more efficient and save money, while continuing to make targeted investments to help create new jobs.
In spite of these budget challenges, Massachusetts continues to fare relatively well compared to other states. The FY10 budget was balanced and on-time and the credit rating agencies have affirmed the Commonwealth's AA credit rating. Under Governor Patrick's leadership, the Administration has maintained key investments in education and health care reform.
The Governor will release further details of his plan to close the gap by October 30, as required by law.