Governor Deval L. Patrick
Remarks Relative to Fiscal Year 2010 Revenue Adjustments
General Council Chambers, State House, Boston, MA
Thursday, October 15, 2009
Continuing to responsibly manage the state budget amid an unprecedented global recession, Governor Deval Patrick today outlined a five-point plan for closing an estimated $600 million budget gap for Fiscal Year 2010.
Governor Deval Patrick
Good afternoon and thank you all for coming.
As you know, despite the best forecasts, tax revenues for the first quarter of this fiscal year are off by $212 million. Two weeks ago, I directed the Secretary of Administration and Finance to consult further with the Department of Revenue and independent economists and revise the revenue projection downward for this fiscal year. They have done so, and now project FY10 tax revenue at just under $18.3 billion. This new forecast is down $600 million from the figure on which the Legislature and I based the budget. That means we have to act immediately to bring state spending in line.
Thankfully, the private sector economy is beginning to recover. Despite today's disappointing employment news, housing sales and starts and the capital markets are strengthening, business investment is growing, and there has been an uptick in consumer and business confidence. The IT, life sciences, clean energy, health care and education sectors - the very ones this administration has focused on - are leading us to higher ground. As long as so many people need jobs, we will continue to work every day to expand opportunity throughout the Commonwealth.
At the same time state revenues, which depend on tax receipts, tend to lag. They look back to past economic performance rather than forward to the better times ahead. The choices we are dealing with in state government, just like many of us and our neighbors at home, are unlike anything the Commonwealth has ever had to face. And we have to adjust.
The challenge facing us in the next fiscal year is just as serious. If we simply maintain spending next year at levels necessary to deliver the same level of services we deliver now, budget watchdog groups have estimated that we will face a further shortfall of as much as $2 to 3 billion. Again, painful as it is, we have to adjust.
So, this administration will pursue the following 5-point management plan:
First, I have directed my Cabinet to reduce spending by $600 million in the current fiscal year. Their plans for doing so are due to me before the end of the month, and will be made public by October 30. This may include suspending certain programs or asking outside entities - such as quasi-public agencies, business groups or charitable agencies -- to take on services or programs currently delivered by government. I have directed the Cabinet to work with the various client groups, vendors, state workers and others affected by these changes to develop new spending plans and to collaborate with them on ways to achieve the necessary savings while doing the least harm to essential services.
Second, achieving the necessary savings may require eliminating an additional 2,000 positions. That's on top of the 1,400 positions we have eliminated already. The loss of good people compromises public service, and disrupts the lives of the public servants who give so much to state government. In order to preserve as many positions as possible and continue to provide services, I am directing agencies to begin a second round of furloughs for executive branch managers of up to 9 days, depending on salary level. For the same reasons, I am also calling on state workers and their unions to work with the Secretary of Administration and Finance and the Secretary of Labor and Workforce Development on contract revisions and other ways to share in this sacrifice. If we can reach agreement on a savings plan by October 30th, we can avoid or reduce the number of layoffs. If we cannot, then we will have no choice but to proceed with layoffs.
Third, in preparation for the FY11 budget as well as to cope with current challenges, I am directing the Cabinet to provide me a plan by December 15 to consolidate as many different agencies and functions as we can. The objective here is to achieve savings while continuing to deliver vital services. This should include considering new and more efficient ways to provide those services, and ways in which we can collaborate with business, volunteer organizations, civic groups, local government and others to do so. Examples of consolidation would include Human Resource services; the various agencies that help promote business development and investment, and the like. We have to find cheaper ways to get the job done. This plan might also include such measures as the sale of surplus state property.
Fourth, I am directing all facilities managers in state government to work with the Secretary of Energy and Environmental Affairs and the Secretary of Administration and Finance on a comprehensive plan to save money by making state buildings as energy efficient as possible and by entering into common energy purchase strategies, plans and contract agreements. Today, agencies buy their energy independently and at widely varying rates. By pooling the state's purchasing power, we can maximize savings.
Fifth, I will seek expanded 9C authority from the Legislature so as to be able to spread the pain as broadly as possible and so that no one element of public service bears more than its share. Meanwhile, I have asked each constitutional officer to voluntarily submit a plan to reduce their own spending in the current fiscal year at levels consistent with what I am requiring of Executive branch agencies. Anticipating the pressure on local aid, we have helped municipalities with some tools already. The Legislature has passed measures enabling cities and towns to raise funds independently, and to gain savings through the GIC and the state pension system. But we must do more. So I will work with the Legislature to enact further measures in the pending municipal relief bill, including those to enable cities and towns to more easily meet their employees rising health care costs. These measures should help mitigate the current difficulty of the state to meet local aid expectations.
The Lieutenant Governor and I thank the Cabinet, their staffs and the many others who have helped us manage through a mountain of bad fiscal news. They have done it with consistent professionalism, thoughtfulness and tough-mindedness, and without jeopardizing fiscal prudence, our bond rating or the orderliness of government. For each and every one of us dealing with these challenges this is about more than just line items on a spreadsheet.
We see the students and other young people, the seniors, the people with developmental disabilities, the homeless families, the state workers who give their very best, or just the moms and dads looking to renew their licenses or take the kids to the public beach -- who depend on the shared contribution that we call "government."
There are no quick fixes, no easy choices and no low hanging fruit. But I believe this plan - and the good faith participation of everyone in helping to identify and to understand these choices - will help us all get through.
And get through this we will. I have every confidence in that. Better times will come and there are signs they are not far off. 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. Because without each of us in this Commonwealth caring about and for each other, as members of one community, nothing we do here matters.