Lurching from one budget problem to another, Gov. Charlie Baker acted Tuesday to cut $98 million from the $39.25 billion state budget in an effort to match up sluggish state revenues with likely spending, including accounts he says the legislature underfunded.
Baker slashed funding for health care, the State Police, municipal regionalization, parks and recreation and senior care. He eliminated funding for a postpartum depression pilot program, a Down Syndrome clinic and a suicide prevention account. The largest cuts came from MassHealth fee-for-service payments and the Massachusetts Office of Travel and Tourism budget, while the smallest cut of $10,000 was for elder home care purchased services.
Administration officials for months have warned that spending needed to be scaled back because revenues are tight and some major accounts were underfunded in the budget that the Democrat-controlled legislature sent to the governor in July.
The governor opted against a major pruning of state spending in October when his team took other actions to address a nearly $300 million budget gap, but Baker said Tuesday he was unwilling to wait until January to make spending cuts, as he did last year. House and Senate leaders Tuesday immediately pushed back against Baker’s decision, calling it “premature” and “not necessary.”
“It’s pretty clear that with the deficiencies we need to fund — court-ordered attorneys, snow and ice, emergency assistance, stuff that I think there’s general agreement that we’re going to need to pay for — and the downturn that we’ve all seen in revenue despite the success of our economy that we needed to take action at this time,” Baker told the News Service after a meeting with GOP lawmakers.
In total, 140 programs and accounts in the budget were reduced, including the elimination of a $2 million “Big Data and Innovation Workforce” fund, money for digital health internships, and a computer science education initiative.
While tax revenues are fairly closely tracking benchmarks, the governor exercised his emergency powers to trim $53 million in earmarks, $17 million from administrative accounts, $6 million from MassHealth and $21 million from other areas of the budget to bring spending in line with anticipated revenues.
After what Baker described as “pretty soft” tax collections in November that put the state $22 million below revenue benchmarks five months into the fiscal year, the governor said he moved to trim spending to address “softening revenues, unavoidable spending deficiencies, and the Legislature’s decision to restore spending above the administration’s signed balanced budget.”
The governor’s budget office listed the areas of exposure in the current budget as a $10 million deficiency in pharmacy revenues, $25 million needed for the sheriffs, $20 million for MassHealth, $15 million in human service provider salary costs, $15 million for the Department of Corrections, $8 million in collective bargaining obligations and $5 million for the Department of Mental Health.
House Speaker Robert DeLeo immediately responded to Baker’s cuts by calling it “premature” to make spending cuts only five months into the fiscal year.
“The House is proud of its tradition of fiscal prudence and we remain confident that our work to trim the FY17 budget following passage of both the House and Senate budgets reflects a responsible and economically sound response,” DeLeo said in a statement. “It seems that the Administration is seeking to achieve policy objectives that have previously been rejected by the Legislature through its unilateral use of 9C cuts. Recent revenue numbers indicate a need to be vigilant; they do not however necessitate cuts at this time.”
Baker vetoed $265 million in spending when signed the fiscal 2017 budget in July. The legislature restored $231 million of those reductions by overriding the governor’s cuts in a spasm of votes taken in late July.
House Ways and Means Committee Vice-chairman Rep. Stephen Kulik of Worthington said DeLeo was right.
“I agree with @SpeakerDeLeo these cuts not necessary & threaten important services in our communities #westernMA #mapoli,” Kulik tweeted.
A spokesman for House Ways and Means Committee Chairman Brian Dempsey said only that the Haverhill Democrat’s office was reviewing the information.
Baker suggested that he tried being deferential to the judgment of the legislature last year, and it didn’t work out.
“Last year, in deference to the legislature, we waited until January before we made these decisions and spent a good part of the second half of the fiscal year chasing that revenue debt number down because it came four hundred and fifty million below the estimate at that point in time. That’s not the right way to do this,” Baker said.
Senate Ways and Means Chairwoman Karen Spilka said that despite the November shortfall revenue collections “remain on track.” She lamented the $6 million reduction for homelessness prevention and housing, $1.9 million in cuts for substance abuse prevention programming, $900,000 in cuts to HIV/AIDS prevention and treatment and $400,000 in cuts for services to terminally ill children.
“The governor is shifting important funding away from the priorities of the Legislature in favor of his own. These cuts will have real consequences on all the communities of the Commonwealth struggling with opioid addiction and housing and should not be made at this time,” Spilka said in a statement.
Baker administration and legislative budget writers in January expected fiscal 2017 revenues to climb 4.3 percent to $26.9 billion but actual collections faltered and in the spring officials sharply reduced their estimate to $26.2 billion. In October Administration and Finance Secretary Kristen Lepore dropped the estimate again, to $26.058 billion. The new estimate reflects 3.1 percent growth, or $789 million, above fiscal 2016 collections.
Collections over the first five months of the fiscal year are up 2.2 percent.
Total fiscal 2016 spending, which is also backed by federal revenues and state fees, was $38.4 billion.
This year’s budget called for $39.25 billion in spending, although Lepore in mid-October announced she planned to reduce executive branch spending by 1 percent in part by achieving $25 million in payroll savings by offering cash incentives to get state workers to retire.
In late October, Lepore said Baker would hold off on making unilateral budget cuts to address a budget gap she estimated at $294 million. Her office announced it could close the shortfall with “trust sweeps, settlements, non-tax revenue, smaller transfers (determined via statutory formula) to authorities due to the lower sales tax projection, and payroll savings.”
In recent financial disclosure statements, state officials wrote that trust balances were “unneeded” and available to balance the state budget. According to Administration and Finance spokesman Garrett Quinn, Baker administration officials are sweeping funds from 12 accounts with an aggregate balance of more than $145 million to help balance this year’s budget. Quinn has declined to say if the full balances of all the funds are being swept.
Quinn told the News Service last week that the administration had identified $92 million in increased non-tax revenue available to slot into the revenue column of the budget, but has declined to be more specific about the source and nature of that $92 million in health and human services revenues which appear to have come into play after the budget was signed.