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Massachusetts state budget

Massachusetts Gov. Deval Patrick signed the FY2012 $30.6 billion state budget on July 11, 2011,^[1] after the state operated under a 10-day stopgap budget.^[2] The legislature reached a $30.6 billion budget agreement on June 30, 2011, and voted to approve that plan on July 1.^[3] On October 28, 2011, the governor signed in to law a supplemental budget that spends $169 million and sends $350 million to the rainy day fund.^[4]

Massachusetts has a total state debt of approximately $97,940,986,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the budget gap. ^[5]

See also: The Massachusetts State Budget on State Budget Solutions

[edit] Fiscal Year 2013 State Budget

Sen. Stephen Brewer, chair of the Senate Ways and Means Committee, said in Dec. 2011 that the state faces a $1 billion shortfall in FY2013. Sen. Brewer said that tax revenue growth for FY2013 is unlikely to be enough to compensate for cuts in federal grants and reimbursements or growth in items such as the state's $10.4 billion Medicaid program.^[8]

Projections made by the state Department of Revenue in Dec. 2011 and used by lawmakers when drafting the budget were that tax collections for FY2013, which begins July 1, 2012, are likely to grow by $560 million to $683 million, 3.2 percent more than FY2012.^[8]

Legislative Proposed Budget

The Senate released its $32.275 billion proposed budget on May 16, 2012.^[9] It increases education funding by $180 million.^[9]

The chambers will negotiate any differences before sending a compromise package to Governor Deval Patrick prior to the start of the fiscal year on July 1, 2012.^[10]

House approved its version of the FY2013 state budget with a voted of 150 to 4.^[10] The House budget includes no new taxes or fees but seeks about $790 million in one-time revenues, including a $400 million withdrawal from the state's "Rainy Day" fund.^[11] It takes a very different approach from the governor's proposal to raise new revenue by increasing taxes on cigarettes and soda, among other items.^[12] The budget includes an amendment targeting abuse of Electronic Benefit Transfer (EBT) cards, which work much like debit cards for people who receive welfare assistance from the state.^[11]

Governor's Proposed Budget

Gov. Deval Patrick proposed a $32.3 billion budget in January 2012 that would increase total state spending by just under 3 percent while cutting about 400 jobs in the executive branch.^[13]

The governor discussed part of his proposed budget on Jan. 19, 2012. His plan includes raising $260 million in new revenues, including generating $73 million by raising the cigarette tax $0.50 and doubling the taxes paid on other tobacco products such as cigars and smokeless tobacco. He also proposes lifting the sales tax exemption for candy and soda was expected to generate $61.5 million. The governor also plans to add $5 million by selling advertising on some state government websites, and about $22 million by using technology enhancements to improve tax collectio^[14]

The proposed budget would give an additional $10 million to community colleges.^[15]

The governor also proposed changing the medical payment system, renewing an unsuccessful plea he made last year to end the fee-for-service model with a so-called global payment system that rewards doctors for coordinating care.^[16]

Patrick also requested $101.5 million in the FY2013 budget to pay debt service on special bonds issued for the Big Dig, although officials estimate the state's total annual debt burden related to the project at about $417 million.^[17]

[edit] Fiscal Year 2012 State Budget

• See past state budgets

Supplemental Budget

On Oct. 5, 2011, the House of Representatives voted to approve a supplemental budget^[18] and on October 28, 2011, Gov. Patrick signed the bill into law.^[4] The supplemental budget provides for a deposit of $350 million into the state's "Rainy Day Fund," replenishing the reserve fund that had been tapped several times in recent years. It was $50 million more than what Gov. Deval Patrick had proposed depositing into the reserves. Massachusetts is one of only four states in the country with a Rainy Day Fund in excess of $1 billion^[18] with a balance of $1.4 billion.^[4]

The supplemental budget also provides for $169 million in spending, including giving cities and towns $65 million in promised local aid.^[4] Additional spending includes:

• nearly $20 million in aid for a series of natural disasters
• $39 million on the MassWorks Infrastructure Program
• $9 million for collective bargaining agreements
• $10 million to allowing substance abusers to be committed by the courts to a treatment program for up to 90 days
• $12 million in new assistance and $8 million in retained revenue to the trial court system
• $3 million for adult basic education programs
• $850,000 for adult immunization and vaccines.

FY2012 Budget

Massachusetts Gov. Deval Patrick signed the FY2012 $30.6 billion state budget on July 11, 2012,^[19] after the state operated under a 10-day stopgap budget.^[20] The legislature reached a $30.6 billion budget agreement on June 30, 2012 and voted to approve that plan on July 1.^[21] The legislature then sent it to Governor Deval Patrick, who will have 10 days to review it and issue vetoes.^[22]

The budget does not raise taxes and instead relies primarily on cuts to balance the state's $1.9 billion shortfall. Cuts include:^[22]

• A cut in direct benefits to poor people, which will reduce the clothing allowance given to children on welfare from $150 to $40.^[22][19]
• A $4 million cut in the Department of Developmental Services, cutting services to 1,000 people.:^[22]
• $800 million from MassHealth, the state's Medicaid program that will require the poor and the elderly to pay more for prescription drugs and other medical services^[19]
• $70 million cut to higher education, which has prompted some public colleges and universities to raise tuition and fee rates.^[19]
• The budget only funds services for adult day care for half the year^[19]

The budget also includes cuts to the judiciary branch, and Roderick L. Ireland, the chief justice of the Supreme Judicial Court, and Robert A. Mulligan, the chief justice for administration and management, said the cuts jeopardized the right of every person, guaranteed by the Massachusetts Constitution, to swift justice. The Justices also asked the governor to refrain from appointing additional trial judges and magistrates because there would be insufficient staff to support them.^[23]

The budget save cities and towns at least $100 million annually in health insurance costs.^[22]

The budget increases public school funding by $80 million, bringing funding to $3.99 billion, and offsetting $100 million cuts in previous years. It also includes grants of $2.5 million for higher education that are awarded on merit and just not number of students enrolled.^[24]

The governor's budget officials said that he hoped to achieve savings through stricter pension controls and limits on the rising cost of health care.^[25] Lawmakers are expected to confront the rising Medicare costs in FY2012.^[26]

[edit] Unions and Collective Bargaining

Personnel costs, including salaries and benefits, account for 75% of local Massachusetts budgets. The House passed an amendment to the state budget bill on April 26, 2011, which divestspolicemen, firefighters, teachers and other municipal employees of their ability to collectively bargain for most health-care benefits. It is expected to save cities and towns an estimated $100 million in FY2012 alone. Democrats, including the Speaker of the House, spearheaded passage of the bill. The governor has not said if he will sign the bill. The bill creates a 30-day negotiating window between city and town leaders and unions to work out disagreements. If no agreement is reached, municipalities would be allowed to impose changes in co-payments, deductibles and other aspects of health care plans.^[27]

[edit] Legislative Proposed Budgets

With both the House and Senate budgets complete, a conference committee will try to reconcile them and send them to the governor.

The Senate passed its $30.5 billion state budget on May 26, 2011. The Senate passed amendments adding $11 million in special education funding and also $3 million for summer jobs for at-risk youth while rejecting proposed cuts in the state sales and income taxes. The plan dips into the state's one-time savings accounts for $440 million to help close an estimated $1.9 billion spending gap without additional federal stimulus dollars.^[28]

The Massachusetts House approved a $30.4 billion budget for the FY2012 on April 28, 2011,^[29] which is $94 million less than Gov. Patrick's proposal.^[30] The House's budget uses on $103 million that otherwise would be transferred into the rainy day fund, in addition to the $200 million they propose withdrawing from the fund.^[31] It cuts $800 million from MassHealth, the state's Medicaid program.^[29]

The House budget agrees with the governor's proposal to cut $65 million in local aid.^[29] The House plan includes $337 million in revenue initiatives, such as postponing for one year a tax deduction for certain businesses.^[30]

[edit] Governor's Proposed Budget

Overall the governor's proposed budget relies on cuts and savings to close $1.3 billion of the budget gap, and also relies on $360 million in temporary revenues such as using $200 million from the state stabilization fund, and anticipates $244 million from modest tax reforms and other revenue initiatives.^[32]

Patrick's spending plan for the fiscal year starting July 1 withdraws $200 million from the rainy day fund, leaving $569 million in cash reserves. ^[33] The proposed budget also reduces the state work force by as many as 900 jobs.^[33]

Reductions in Patrick's proposed budget include a $23 million cut to emergency homeless shelters, a $16 million cut to the Department of Mental Health hospital and a $45 million reduction in spending by using salaried lawyers instead of private attorneys to represent the state's indigent criminal defendants.^[33]

To raise revenue, Patrick proposes a surcharge of $2.50 to $2.75 per year on the state's 3.1 million private auto insurance policies to generate funds for training police as well as the expansion of the state's 5 cent bottle deposit law to containers of water, flavored water, coffee-based drinks, juices and sports drinks to generate $20 million per year.^[34] However, House Speaker Robert A. DeLeo has said he opposes any new tax or fees.^[34]

[edit] Budget transparency

See also: Evaluation of Massachusetts state website

see sample transparency legislation at the Sunshine Standard

The Massachusetts Budget and Policy Center, which "provides independent research and analysis of state budget and tax policies,"^[35] tracks actual spending in real and nominal terms using a "Budget Browser," available here.

The state maintains the Massachusetts Transparency website.

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Massachusetts Transparency	Y	N	Y	N	Y	Y

• Vendor contracts are listed in the checkbook.^[36]
• Employee salaries are listed.^[37]
• All line item expenditures are not listed in the checkbook.

[edit] Fiscal Year 2011 State Budget

Massachusetts' original FY2011 budget was $29.4 billion, but the legislature passed a series of supplemental budgets over the course of the fiscal year and state spending ultimately totalled $31.4 billion in FY2011.^[19] Tax collections for FY2011 exceeded projections by $723 million.^[38] Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

The state legislature passed the nearly $29 billion state budget for FY2011 on June 24, 2010, one week before the fiscal year began on July 1, 2010.^[29] The House approved the budget bill 120-28 and it passed 33-7 in the Senate.^[39] Gov. Deval Patrick signed the budget the same day, ensuring that it was in place the day before the start of the new fiscal year.^[19]

The U.S. Securities and Exchange Commission has launched an inquiry into public statements by Illinois officials about the state's underfunded pension fund focused on public statements concerning an overhaul measure passed in 2010 meant to help shore up the retirement system.^[40]

[edit] Supplemental Budget

The FY2011 budget that became law in June 2010 was drafted with the assumption of a 3% increase in Medicaid rolls, but the rolls actually climbed 5 percent, necessitating a supplemental budget.^[29] Health care spending, most of which is for Medicaid, was 37% of the state budget, up from when it was 21% of the budget in 2000.^[26] Lawmakers approved $258 million more in the last week of 2010.^[26] That was in addition to $9.6 billion last July in the original budget that an additional $329 million in October 2010.^[26]

The supplemental budget was passed by the House and also by the Senate passed a supplemental budget bill after Republicans dropped their opposition in exchange for two amendments.^[41] One amendment requires the Department of Corrections report on the reason it needs new funding and to describe the potential future spending needs, in addition to any facility closings or inmate releases.^[29] The second amendment requires Patrick’s budget chief to report the amount of revenue necessary to support the proposed spending, as well as any further spending that might be required as a result.^[29] The supplemental budget bill spends $203 million in one-time federal funds on Medicaid programs as well as $195 million in federal funds to replace planned spending from the state’s rainy day fund. The bill also allocates $5 million for State Police and approximately $25 million for the Department of Correction.^[41] The supplemental budget bill now returns to the House.^[41] The governor's budget chief said that “no additional level of state revenue’’ would be necessary to support the spending in the bill.^[29]

[edit] Original Budget

The state Senate Ways and Means chairman Steven Panagiotakos raised high-end projections for the state's budget deficit for FY2011.^[42] Lawmakers referenced a $600 million shortfall in Medicaid accounts that would not be remedied despite the most recent stimulus funding.^[42] In addition, the revised estimates showed a $20 million gap in homeless shelter emergency assistance accounts and a $5 million shortfall for parks and beaches under the Department of Conservation and Recreation.^[42] Lawmakers declined to estimate, however, the overall deficit for FY2011.^[42] Lawmakers expect a second round of supplemental spending plans to be drafted by the midpoint of the fiscal year.^[42]

The received $655 million from Congress as part of the state stimulus passed in August 2010.^[43] The governor said he plans to introduce legislation to spend the federal money on a range of programs that were slashed in the $27.6 billion state budget for FY2011.^[43]

The FY 2011 budget increases spending by one half of a percent more than the state's FY2010 budget.^[19] The budget cuts state aid to cities and towns by four percent, cuts school spending by three percent^[19], and includes cuts that take into account the possible loss of about $700 million in federal stimulus funds.^[29] While the budget relies on nearly $200 million from the state’s rainy day fund, it introduces no new taxes or fees are included in the budget.^[29] Lawmakers had previously said that they would not tap the rainy day fund, having done so in the prior years, but changed their minds in light of the uncertainty over federal funds.^[44]

Officials anticipated that the cuts included in the spending plan would result in 1,000 state workers being laid off.^[19]

The budget bars illegal immigrants from receiving state services, including federal funds.^[44] That portion of the budget codifies existing state policies.^[45]

Gov. Patrick vetoed $457 million in spending, much of it anticipated federal dollars that Congress has yet to approve and he reduced by $20 million for programs for developmentally disabled children and other cuts to health services.^[19] The day after the budget became law, the legislature passed a $300 million debt-restructuring plan that makes the budget balanced.^[46]

Since FY2009, funding for public higher education has been cut from $1.09 billion to $954.1 million. State and community colleges have been cut 14.4% each, while the University of Massachusetts system has been cut 15.1 percent.^[47] Also since FY 2009, funding has been reduced by an estimated $113 million, close to 18%.^[48]

[edit] Budget Background

Massachusetts' fiscal year runs from July 1 to June 30 of the following year. According to the Massachusetts Constitution, the Governor must propose a budget for the next fiscal year within 3 weeks after the Legislature convenes, which translates into the 4th Wednesday of January. This year, that date fell on Wednesday, January 28, 2009.^[49]

Step 1 : Governor’s Budget

• The budget begins as a bill that the Governor submits in January (or February if at the start of a new term) to the House of Representatives.

Step 2 : House Ways & Means Budget

• The House Ways and Means Committee reviews this budget and then develops its own recommendation.

Step 3 : House Budget

• Once debated, amended and voted on by the full House, it becomes the House budget bill.

Step 4 : Senate Ways & Means Budget

• At this point, the House passes its bill to the Senate. The Senate Ways & Means Committee reviews that bill and develops its own recommendation.

Step 5 : Senate Budget

• Once debated, amended and voted on, it becomes the Senate's budget bill.

Step 6 : Conference Committee Budget

• House and Senate leadership then assign members to a joint "conference committee" to negotiate the differences between the House and Senate bills. Once that work is completed, the conference committee returns its bill to the House for a vote. If the House makes any changes to the bill, it must return the bill to the conference committee to be renegotiated. Once approved by the House, the budget passes to the Senate, which then votes its approval.

Step 7 : Vetoes

• From there, the Senate passes the bill to the Governor who has ten days to review and approve it, or make vetoes or reductions. The Governor may approve or veto the entire budget, or may veto or reduce certain line items or sections, but may not add anything.

Step 8 : Overrides

• The House and Senate may vote to override the Governor's vetoes. Overrides require a two-thirds majority in each chamber.

Step 9 : Final Budget

• The final budget is also known as the General Appropriations Act. The final budget consists of the Conference Committee version, minus any vetoes, plus any overrides.^[50]

[edit] Budget figures

Massachusetts FY2011 state budget summary and comparison^[51]

The following table presents Massachusetts's spending history. The figures used are in millions of dollars:^[52]

Historic General Appropriation Act (GAA) Budget Levels:^[53]

[edit] Accounting Principles

Main article: Massachusetts government accounting principles

Mr. Joseph DeNucci has been the Auditor of the Commonwealth of Massachusetts since 1987. The Office of the Auditor of the Commonwealth publishes their audit reports online and is responsible for:^[54]

• Determining whether the Commonwealth's resources are properly safeguarded;
• Determining whether such resources are properly and prudently used;
• Evaluating internal controls to help insure integrity in financial management systems;
• Determines whether computer systems and technology environment meet control objectives regarding security, integrity, and availability;
• Evaluating management's economy and efficiency in it use of resources;
• Determining and evaluating a program's results, benefits, or accomplishments; and
• Ensuring that all audit results are fully disclosed to the public and the auditees.

The Institute for Truth in Accounting (IFTA) rates Massachusetts “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Massachusetts' CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[55] Massachusetts' CAFRs are published online by the Comptroller of the Commonwealth of Massachusetts Martin J. Benison has been Comptroller of the Commonwealth of Massachusetts since 1999.^[56]

[edit] Stimulus

Massachusetts has received $7 billion in federal funding.^[57]

[edit] Public Employees

Main article: Massachusetts public employee salaries

Main article: Massachusetts public pensions

According to 2008 Census data, the state of Massachusetts and local governments in the state employed a total of 403,808 people.^[58] Of those employees, 305,924 were full-time employees receiving a net pay of $1,408,423,479 per month and 97,884 were part-time employees paid $121,702,932 per month.^[58] More than 54% of those employees, or 221,115 employees, were in education or higher education.^[58]

Recently, Massport chief Thomas Kinton is one of the highest paid public employees in the state. Kinton earned $312,000 in 2010. When he retires in June, he will collect $459,616.01 from the state's sick day buy back program and collect a pension of about $200,000 a year.^[59]

[edit] See Also

• Massachusetts taxpayer-funded lobbying
• Massachusetts public pensions

[edit] External links

[edit] Additional reading

• Gov. Deval L. Patrick,"2010 State of the Commonwealth Address," January 21, 2010
• Governor's budget, Fiscal Year 2009
• Detailed Budget, FY 2009

[edit] References

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