Governor Deval L. Patrick
FY2010 Budget and Emergency Recovery Plan Filing
State House, Boston, MA
January 28, 2009
On January 28, 2009, amid a deep national recession and unprecedented fiscal crisis, Governor Deval Patrick today submitted his Fiscal Year 2010 budget proposal and an emergency plan for closing a $1.1 billion budget gap in the current fiscal year. Both are key components of the Patrick-Murray Administration's Emergency Recovery Plan that will help stabilize and position the Commonwealth for long-term economic success.
"If we join together and work together and keep moving forward, we will get through these difficult times together, and be in an even better position to capitalize on a new season of growth and prosperity when that day comes," said Governor Patrick.
Learn more about the administration's Emergency Recovery Plan at www.mass.gov/governor/recoveryplan
Read the Governor's budget: www.mass.gov/budget/governor
View a list of additional 9C reductions to FY09's budget
Governor Deval Patrick:
As you know, the national economy is in deep recession, the worst, in some view, in three generations. Economic conditions for families and businesses in Massachusetts have been deteriorating rapidly since September of last year. As a consequence, state revenues have been shrinking. In October of last year we identified and closed a $1.4 billion budget gap. With revenues continuing to weaken, we identified another $1.1 billion gap earlier this month, and forecast further fiscal challenges in FY2010 as well.
Today, I am presenting our Emergency Recovery Plan, a multi-pronged blueprint to help us weather this economic storm and also lay a stronger foundation for the future. The Plan reflects our commitment to preserve funding for core services wherever we can; to make choices that make sense in both the short- and the long-run; and to seize the opportunities this crisis presents to strengthen our position over time.
This Plan has several parts. After this session, back up in their offices, Secretary Kirwan, Assistant Secretary Matt Gorzkowicz and their team will take you through each part in as much detail as you want, but let me give the top line summary here:
First, to address the remaining budget gap in this fiscal year, we will make an immediate cut in non-school related local aid of $128 million as well as some $63 million additional cuts in executive agencies. We have kept these cuts to a minimum by using portions of our Rainy Day Fund, and anticipated federal recovery aid which we have conservatively estimated based on legislation pending in Congress. We have taken this approach because, as the fiscal year progresses, it becomes more difficult to make spending cuts.
In our Emergency Recovery Bill, we have proposed a one penny statewide increase in the meals and hotel tax to be redistributed proportionally to all cities and towns; an additional one penny at local option; and the elimination of the property tax exemption for the phone company. Without these measures, the impact of these cuts in local aid for both this year and next will be far worse.
Additionally, our bill proposes to eliminate the sales tax exemptions on candy, soda and alcohol. Eliminating these exemptions will generate over $120 million on an annual basis, which we will dedicate to a new Commonwealth Wellness Fund to help pay for addiction services and other public health programs.
Second, our Plan includes a Balanced Budget proposal for fiscal year 2010, totaling $27.97 billion. This proposal solves a $3.5 billion gap between the cost of current services after the October cuts and lower anticipated revenues. As I announced last week, we will maintain our record level of investment in Chapter 70 aid to public schools.
Let me be clear about what I mean about this: in other words, each community will receive next year what they received this year in Chapter 70 aid. We continue our support for Summer Jobs programs for at-risk youth and funding for one-stop career centers that will help people get back on their feet and back to work. We also continue to fund health care reform programs, an essential safety net for those without coverage.
But some worthwhile programs have gone without funding. Others have experienced severe reductions. Few priorities have been spared.
To prevent even deeper cuts, and to bridge the gap until our revenues begin to grow, we propose using $586 million in state Rainy Day funds which includes suspending the required deposit, and $711 million in Medicaid matching funds from the federal stimulus package in fiscal year 2010.
I will continue to work closely with the Obama administration and Congress on the federal stimulus package, particularly on education funding, to help us bridge to better times. If the package ultimately provides what we are hoping and working for, I propose to use federal stimulus education funds to bring all Massachusetts cities and towns up to education foundation levels for fiscal year 2010 and 2011.
I am optimistic that these funds will be forthcoming, but we have not accounted for any of them in this budget. I have also proposed some flexibility concerning local contributions to public schools that would allow municipalities to free up local funds for municipal services like fire, police and elder services.
Our budget also proposes to expand the Bottle Bill to non-carbonated beverages, and to dedicate the proceeds to recycling programs and water and sewer rate relief.
Third, we are filing a second Municipal Partnership Act to help cities and towns help themselves by saving money. Starting with health insurance, our legislation enables municipal officials to control their employee health care costs by easing the requirements for entry into the Group Insurance Commission and holding cities and towns accountable for providing cost-efficient health care.
We will also require each community to move their municipal retirees to Medicare coverage and provide them with some pension funding relief within fiscally responsible parameters.
And we have proposed a series of measures to encourage and facilitate regionalization of municipal services and other reforms around procurement and contract advertising that will save time and money without jeopardizing transparency or quality. These and other measures will enable municipalities to extract savings and efficiencies in their operations.
Fourth, we will file an Article 87 bill and other legislative measures that will consolidate and streamline functions of certain state agencies and give the citizens of Massachusetts more efficient and effective services within the resources that we have.
Lastly, we are filing a bill to provide a process to dispose of surplus state land, and another to provide an orderly transition of the remaining county sheriffs to state sheriffs.
Taken together, these measures are right and necessary steps to get us through these difficult times. I anticipate that there will be vigorous debate on this plan - right? - and I welcome it. Now as always I remain open to better ideas. But endless debate is not acceptable. We need action - by the legislature, by municipal officials, and by the citizens of Massachusetts - and we need that action urgently. Because behind every one of those line items or revenue proposals is somebody's best chance or only chance. For their sakes we don't have a moment to waste.
I know that in the Commonwealth today people are worried about tomorrow. I recognize that today's proposals - because they involve doing some new things or doing old things in new ways - will create anxiety in some. But I also know that if we join together and work together and keep moving forward, we will get through these difficult times together, and be in an even better position to capitalize on a new season of growth and prosperity when that day comes. Let's not above all forget that, and let's get to work.