The Governor's Budget Presentation

The Governor unveiled his budget yesterday, looking to balance the books in the most difficult of times. The Governor’s budget is the starting point in the process, with the House and Senate both getting ready to produce their own versions. Traditionally that has meant major changes to the submissions of the Governor, and this year is likely to be more of the same.

The Governor’s budget cuts local aid by 7%, bringing total local aid cuts since 2008 to $481 million, or 37%. The Governor has proposed offsetting that cut to unrestricted local aid by giving municipal health care reform to municipalities, which he believes will save over $100 million statewide. Let us take a look at some of the key numbers underlying the budget.

1) Another supplemental, this one worth $400 million from some additional federal education money, will drive spending this year over $31 billion, up $1.7 billion over the budgeted amount of $29.4 billion.

2) His proposed budget is $30.5 billion, over the budgeted amount from last year, but $500 million below actual spending in this fiscal cycle.

3) The Governor’s proposal assumes revenue increases of over $600 million dollars, and draws $200 million from the state’s reserve account.

4) Municipal aid to education would increase under the Governor’s proposal, but the Massachusetts Taxpayers Foundation estimates a statewide cut of over $80 million when the loss of federal funds are factored in.

5) Health Care. The State budget has been staggered by health care costs, with over 40% of the budget going to cover health care. The Governor’s budget, in spite of recent history, proposes to hold total health care spending at this years levels. The Governor is unveiling aggressive health care cost containment measures, but with at least a 5% increase in enrollment in state health care programs the Governor appears to be banking on a savings of at least $1 billion here. From Michael Widmer:

“The number one question, far and away in this budget in terms of whether it holds together or not is essentially holding Medicaid spending flat while having a 5 percent growth in enrollment,” Widmer said. “It would be an historic achievement if the administration could pull that off.”

That is a big roll of the budgetary dice, and will be scrutinized closely by the Legislature. There will likely be adjustments made in this assumption, which could result in additional cuts to the budget, including local aid. Widmer is being diplomatic. It does not appear that he believes that the Governor’s assumptions on health care are correct. This story is just beginning.

This entry was posted in Municipal Finance, State News and tagged , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s