For Immediate Release - June 29, 2009

GOVERNOR PATRICK SIGNS $27 BILLION BUDGET

On-time balanced budget includes $147 million in line-item vetoes to help protect investments in Education, Health Care, Life Sciences

BOSTON - Monday, June 29, 2009 - Amid the worst global economic decline since the Great Depression, Governor Deval Patrick today signed into law a $27.046 billion budget for Fiscal Year 2010 that preserves the Patrick-Murray Administration's commitment to education and health care, and makes targeted investments in workforce training, life sciences and other key areas that will strengthen the Commonwealth's economic foundation as it emerges from the downturn.

In signing a balanced budget that will be in place for the start of the new fiscal year beginning July 1, the Governor vetoed $147 million in line-items he considered unaffordable in this economic climate, and directed some of those funds to other critical areas under funded. Additionally, the Governor vetoed $217 million for county corrections, a necessary technical change until the Administration's county corrections reform legislation is signed into law.

The budget signed by the Governor today, coupled with the supplemental legislation he is filing, is 3 percent lower than budget he signed just one year ago.

"The budget offers an honest assessment of the tough economic circumstances we face without losing sight of the better days we know lie ahead of us," said Governor Patrick. "By making thoughtful, careful decisions, we have protected services for the most vulnerable and made investments for the long-term in education and healthcare so that we're ready when the upswing comes."

Since October 2008, the Governor has worked with the Legislature to address a cumulative budget gap of $9 billion, including a $5.1 billion gap in FY10. When the Governor issued his House 1 proposal in January, the Administration and lawmakers agreed that the FY10 gap was estimated to be roughly $3.5 billion. When state tax revenues sharply and unexpectedly declined further in April, the Governor and

Legislative leaders worked together in an unprecedented fashion to quickly revise the consensus revenue estimate downwards by nearly $1.5 billion. To manage through Fiscal Year 2009, the Governor cut spending by billions of dollars and reduced the state workforce by more than 1,000 positions. Meanwhile, he worked with the Obama Administration to secure more than $8.7 billion in federal recovery funding for Massachusetts that will help bridge the gap until the economy rebounds.
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Maintaining Key Investments
The Governor's FY10 budget includes $4.037 billion for Chapter 70 education funding, an all-time high reflecting the fundamental importance of education to the health of the state's economy and the future of Massachusetts children. Consistent with the Administration's commitment earlier this year, all school districts are funded at foundation levels, with the help of $167 million in federal recovery funds.

The budget also preserves key services critical to the health and well-being of residents.

The budget maintains current eligibility for state-subsidized health insurance programs, including dental coverage in MassHealth and Commonwealth Care. The budget also provides $65.6 million for the Children's Behavioral Health Initiative which serves children with severe emotional disturbances and other behavioral health problems. It also fully funds veterans' annuity payments and benefits and maintains eligibility and benefits for the state's main cash assistance programs for needy families and individuals.

Additionally, the Governor is filing supplemental legislation that includes $70 million to continue state-subsidized health insurance for 30,000 legal immigrants who do not qualify for federal reimbursement. The Administration will work with the Legislature, the Connector and other health reform stakeholders to devise a plan that will allow the state to continue to lead the nation in offering high-quality, affordable health care to all residents.

Recognizing the importance of investing in key growth areas, particularly in challenging economic times, the Governor is also proposing an additional $10 million in guaranteed funding for life sciences research, on top of $10 million provided in the conference committee budget that is contingent upon the availability of a FY09 surplus.

The Governor also proposes an additional $11 million for the Workforce Training Fund to ensure that business contributions to the fund are used to train workers in the skills that will speed the Commonwealth's economic recovery and strengthen its long-term prosperity.

Additionally, the Governor proposes restoring $400,000 to maintain an office in Washington, D.C. to maximize the Commonwealth's ability to secure federal funding.

The Commonwealth's priorities are closely aligned with the Obama Administration's and the partnership has allowed the Commonwealth to receive significant funding for transportation, education, health care and broadband among other key areas. Massachusetts -through both Democrat and Republican-led Administrations-has had a Washington office during both robust and difficult economic times.


Multi-Pronged Solution to Closing Gap, Investing Wisely
To close the current gap and pay for many of these investments, the budget relies on more than $2.4 billion in spending reductions and savings, $214 million from the state's Rainy Day fund, $1.586 billion in increased federal reimbursement for Medicaid and other federal recovery funds, and modest increases in certain revenue sources.

The budget includes reductions in many programs and initiatives. Among them is a $42 million cut to the Quinn bill as proposed by the Legislature and a 5 percent increase in health insurance premiums for all state employees. The change in employee health insurance cost-sharing is estimated to save the Commonwealth $45 million in FY10. Supplemental legislation also includes a proposal to reduce the state share of retiree health insurance to 80 percent for employees who declare retirement after October 1, 2009. For current employees who retire before that date, the Commonwealth would contribute 85 percent to retiree health care.

The budget also includes an unavoidable $377 million reduction in unrestricted general government aid to cities and towns as included in the conference committee budget. To help communities cope with these reductions and manage their budgets even after the Commonwealth cycles out of the downturn, the Governor is giving communities the ability to levy a modest 2 percent increase in the hotel/motel room occupancy tax and a.75 percent increase in the meals tax at local option.

Additionally, the Governor is signing into law an increase in the state sales tax from 5 percent to 6.25 percent, as proposed by the Legislature. Before signing this provision, the Governor insisted that the Legislature enact meaningful reforms to the state's transportation and pension systems as well as pass comprehensive ethics and lobbying reform. The Governor has signed the pension and transportation reform bills and will act on ethics reform later this week.

The Governor is also again filing his proposal to expand the bottle bill to include containers for non-carbonated beverages, coffee-based drinks, and juices and sports drinks of less than one gallon in size. This change will generate an estimated $20 million that would be used to fund recycling programs and water and sewer rate relief.

Additionally, the Governor is supporting a series of management tools that will help the Commonwealth manage state resources more effectively. These include a change in the way the state treats capital gains taxes, a volatile revenue source the Commonwealth has come to rely on disproportionately. Additionally, the Governor is proposing a mechanism for moving employees off the capital budget and onto the operating budget, scaling back the fiscally imprudent practice of funding these employees with debt. The Governor is also proposing limited transferability between line items in the same executive office to allow agencies to better manage within constrained budgets.
 

The full budget can be viewed at http://www.mass.gov/bb/gaa/fy2010.
 

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