For Immediate Release - May 04, 2009

GOVERNOR PATRICK ANNOUNCES REMAINING FY09 BUDGET GAP LIKELY TO REACH $953 MILLION

April revenue decline widens FY09 deficit

BOSTON- Monday, May 4, 2009- Governor Deval Patrick today announced the state is facing an estimated gap of $953 million for the remainder of the fiscal year, the result of a historic national economic downturn. The Governor will work with the Legislature and file plans to solve for this FY09 budget gap this week.

The Patrick-Murray Administration has aggressively managed through the downturn since early last year. Using a series of cost-cutting and savings measures, federal recovery aid, and stabilization funds, the Administration has solved for a $3 billion budget gap, which includes revenue loss and other exposures to date. April revenue collections fell $456 million below the benchmark, bringing the FY09 total budget gap to nearly $4 billion. April revenues, traditionally the Commonwealth's biggest revenue month, declined nearly $1 billion compared to last April.

"The economic downturn we have faced this year has had a significant impact on every area of state government and on the individuals, families and businesses it serves," said Governor Patrick. "Every one of our priorities has been affected through each round of cuts we have made to balance the budget. We will continue to make the necessary tough choices to keep our budget in balance and manage the Commonwealth through this challenging period responsibly and effectively."

To close budget gaps earlier in the fiscal year, the Governor relied on a balanced approach of spending cuts and controls, personnel reductions and furloughs, new revenues, and reserves. Since October, the Governor has cut more than $1.3 billion from the budget and proposed $236 million in new revenues. With less than two months left in the fiscal year, state agencies have spent more than 80 percent of their budgets, leaving little room for additional cuts.

Preparing for further decline in FY10, the Governor announced just two weeks ago that he would further reduce state employee positions by 750 and implemented furloughs for all Executive Branch managers. Additionally, he directed Administration and Finance Secretary Leslie Kirwan to begin negotiations with state collective bargaining units over a full range of potential cost-cutting initiatives to help address the economic crisis going forward.

Proactively Managing an Economic Crisis

One year ago, anticipating the impact of the economic downturn, Governor Patrick began to plan for budget cuts and eventual economic recovery. Since October, when Massachusetts began to feel the impacts of the global and national recession as revenue collections weakened, the Administration has had to solve a budget deficit of approximately $3 billion for FY09. To do so, the Governor has implemented $1.24 billion in budget cuts and spending controls; identified $236 million in new revenues; proposed drawing $527 million from the Rainy Day Fund; and used $806 million in enhanced federal Medicaid funds.

Starting last April, the Patrick-Murray Administration directed agencies to prepare to make mid-year cuts if necessary. When the Governor signed the budget in July, he laid out a five-point management plan that included $122.5 million in vetoes, a request for expanded 9C budget cutting authority, and $140 million in shared responsibility health care solutions. He also implemented cost-savings measures across agencies through spending and hiring controls and the suspension of merit pay raises.

In October, the Governor implemented a Fiscal Action Plan that included more than $1 billion in cuts and spending controls and proposed new revenues. He also worked to secure unprecedented assistance from the Legislature, the Judiciary, constitutional officers, and independent authorities in identifying additional cuts, savings, and reforms.

As the economy continued a rapid decline in January, the Governor announced another round of 9C reductions and identified new revenues to close a $1.1 billion gap, and released a budget blueprint for FY10 that held spending growth to an unprecedented 0.5 percent. Additionally, the Administration worked with collective bargaining units to secure zero percent pay increases for FY09, saving the Commonwealth an estimated $115 million and helping avoid further reductions in key services.

These proactive measures and continued response have allowed the Commonwealth to weather the economic recession, while still providing core services to the state's most vulnerable citizens.

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