Fiscal Year 2010 Budget Address
State House
January 26, 2011

Good afternoon and thank you for coming.

Today, I am filing our budget proposal for Fiscal Year 2012.  At a total of $30.5 billion, this budget proposes to reduce spending by $570 million from last year, the largest year-over-year spending reduction in 20 years.  It reflects many difficult, in some cases painful, choices.  But we are making those choices to support our priorities -- job creation, health care cost control, better schools and reduced youth violence -- priorities I know will make a stronger Commonwealth for all of us.

I want to give you a few highlights and then invite you to join Secretary Gonzalez and his team afterwards back at ANF for a more detailed briefing on the budget.

Job creation is first and foremost.  While that is mainly the business of business, state government will do its part by maintaining our plan gradually to reduce the corporate tax rate to 8 percent by next year, down from 9.5 percent in 2009.  This helps over 35,000 Massachusetts businesses, most of them small, by saving them $185 million to invest in their own growth.  We have also expanded the types of companies eligible to use the Workforce Training Fund, which provides $21 million annually to private businesses.  And we will continue to invest in the life sciences and other innovation industries that create the jobs of tomorrow.  

We will also continue to review and simplify the interactions between business and government, particularly through efforts to support small businesses doing business with the state, as well as to encourage the banks through the Growth Capital Fund to start lending again to small businesses.  And we will invest over $3.6 billion in capital projects, continuing a record level of investments in the kinds of long-neglected infrastructure projects that enable economic growth and improve quality of life.

Second, this budget includes key elements of our initiative to contain health care costs.  Health care spending under various state programs makes up 39% of the state’s budget.   Between MassHealth, the Commonwealth Connector and the Group Insurance Commission, state government provides health insurance, in whole or in part, to over 20% of the state’s population.  That’s a lot of buying power.  We intend to use it.  Through innovations in the way we pay for and manage health care, we expect to save nearly $1 billion next year alone, and to put an end to years of double digit growth.  Specifically, we will actively re-procure health care services and work with the federal government on smarter strategies to get care to those who are eligible for both Medicaid and Medicare.

We will be filing a payment reform bill very soon.  We will start modeling what can be done throughout the market right here in state government.

Supporting public education remains a top priority for this administration.  So, we will again propose to fund K – 12 education at the highest level in state history.  This year that means $3.9 billion for Chapter 70 state aid, ensuring that all districts are fully funded at foundation levels.  We also propose $213 million for the Special Education Circuit Breaker, an increase of $80 million over fiscal year 2011, as well $500,000 for STEM (science, technology, engineering and mathematics) education, and a $4.8 million increase in funding for programs focused on reducing the Achievement Gap, such as Intervention in Underperforming Schools, MCAS Support, and School Breakfast Programs.  Early Education and Care program funding is maintained at fiscal year 2011 levels, in spite of our other budget pressures.

Because we have a moral obligation to end the cycle of youth violence that plagues too many communities, our budget proposes to preserve and, in certain instances, boost funding for vital prevention programs.  Specifically, between House 1 and the supplement budget we are filing today, we will increase funding for the anti-gang violence Shannon Grants and level fund most other after school and youth violence grant programs.

I want to add here that I view this funding as at best trying to the hold the line.  We lack in our Commonwealth a comprehensive strategy to address youth violence.  That is work I have committed to take on in the second term.  Until that strategy is fully developed, I am not willing to invest beyond what we have proposed in House 1.

There are many things we have not been able to do in this budget.  Some programs will end.  Some facilities will close.  Many services are being combined, and there will be more of that to come.  On top of the 5,900 positions eliminated since 2008, another 900 will have to go in the next fiscal year.  I still see the faces behind these programs and these choices, including those of the dedicated and much-maligned state workers, and I do not take any of these decisions lightly.  I do want to thank the state workforce, who are the ones responsible for delivering this much leaner, more efficient state government, who have helped us in a whole host of ways achieve four budgets already that were responsible and balanced, and who have maintained the highest level of public service possible with the resources available to them.

With the help of that workforce, we continue our work to reform state government.  We have announced further reforms to the pension system, to municipal health care, to public defenders, to the probation department, and to the Judiciary, by proposing a professional administrator to replace the position of administrative judge.  None is easy, but each will help us deliver better service at lower cost, and with greater accountability.  For example, the value of the municipal health care proposals alone are worth twice the value of the $65 million cut we propose in unrestricted local aid.  I hope the legislature and the general public will see these measures as a part of a whole, and act on all of them swiftly and favorably.  

Every budget is a values statement.  It is not about who and what is in or out of favor, or how to do a little for everyone but nothing meaningful for anyone.  This is a proposal to invest in critical areas that will help us strengthen our economy and expand opportunity in the near-term, and position us for the strongest possible recovery in the medium-term.  It challenges us to do differently some of those things government ought to do.  It also eliminates the $2 billion structural deficit that what waiting for me when I took office 4 years ago.  In all these ways, this budget deals with the current challenges we face without passing the buck to future generations.  I look forward to working with the legislature to get it passed.  

Thank you.