January 28, 2010
Tax hikes, job cuts in Patrick budget
State spending would rise 3%; rivals pounce
Governor Deval Patrick unveiled yesterday a $28.2 billion budget proposal for the next fiscal year that would increase taxes on tobacco, candy, and soft drinks, trim tax incentives for the film industry, and eliminate hundreds of state jobs.
The budget, which immediately became fodder in the governor’s race, represents a 3 percent increase over estimated spending for the current fiscal year, based on an expected 3.2 percent increase in revenues.
Still, because of what administration officials say are unavoidable increases in health care spending and other areas and given Patrick’s decision not to cut aid to municipalities and local school districts, the governor proposed a series of cuts to reach a balanced budget.
“Just like at kitchen tables and in back offices all across the state, we in state government have had to stare hard and long at our bottom line and figure out a way to do more with less,’’ Patrick told reporters at a State House press conference.
Patrick’s budget plan provides not just a blueprint for next year, but seeks to underscore a central theme of his reelection campaign: fiscal responsibility. The governor and his aides yesterday portrayed the plan as fiscally sound, touting their stewardship of the budget amid three years of economic volatility.
His rivals in the gubernatorial race immediately pounced, with state Treasurer Timothy P. Cahill, running as an independent, asserting that increasing spending was irresponsible, and Republican Charles D. Baker criticizing Patrick for relying on one-time revenues to help plug the gap.
The governor’s proposed budget for the next fiscal year, which begins July 1, is contingent on several things: one-time federal money; revenues keeping pace with projections; and legislative approval of new tax proposals. Patrick also hopes to restructure some of the state’s debt payments, which he says would save $300 million next year by spreading the payments over a longer period.
Patrick’s budget plan counts on $1.9 billion in one-time revenues, including $800 million in federal stimulus money already approved by Congress and another $600 million the governor expects will be approved in the coming weeks. Jay Gonzalez, the governor’s budget chief, said the administration has received “strong indications from Congress and the White House’’ that the additional stimulus money will be approved.
“If the federal government gives another chunk of money to the states to balance their budgets, then I think this budget will hold together,’’ said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. “If they don’t, then it will open up a major hole, and the Legislature will have to deal with it.’’
Patrick’s proposal would also take $175 million from the state’s reserve account.
For the past few years, the state has been forced to scale back dramatically, several times implementing emergency midyear budget cuts to keep up with falling revenues.
Senate President Therese Murray and House Speaker Robert A. DeLeo, who will now release their own budget plans, declined to comment on the governor’s proposal. DeLeo plans to sketch out his own budget priorities in an address to House members today, his first anniversary as speaker.
While the governor’s budget does not call for a significant tax increase, as this year’s budget did, he again proposed several smaller taxes for which top lawmakers said there is no appetite.
Patrick’s plan would repeal the sales tax exemption on candy and soda, which would generate nearly $52 million, and dedicate the money to health and wellness programs. It would also increase taxes on smokeless tobacco and cigars, generating $15 million for the state. (Administration officials said a $2 cigar that now costs $2.76 would jump to $4.46.)
“They’re taxes, and even small increases like these are, for many members, not going to be palatable,’’ said state Senator Steven C. Panagiotakos, chairman of the Senate Ways and Means Committee.
“There’s a general sense of skepticism’’ about tax increases, said state Representative Charles Murphy, the chief budget writer in the House.
The governor also wants to expand the bottle bill, which will raise $20 million by applying a 5-cent recycling deposit to bottled water, as well as coffee-based and sports drinks.
In addition, Patrick is proposing to pare back two tax incentive programs that have been implemented in recent years, including cutting $25 million available to life sciences companies to $20 million.
Tax credits for film executives, which administration officials expect to be $125 million next year, would also be capped at $50 million. The move was panned by the state’s film community, which said the program has generated $1 billion in economic activity in the last four years. “This industry is woven into the fabric of our economic landscape right now,’’ said Joe Maiella, president of the Massachusetts Production Coalition. “Any cutbacks in it cuts back on any job creation and jobs growth.’’
In all, Patrick is proposing nearly $800 million in spending reductions, including a $56 million cut to adult dental care for low-income adults; a $5 million cut in the Quinn Bill program, which pays police officers who seek higher education; a $3.2 million reduction to state parks; and a $9 million cut to job-training programs.
In terms of job cuts, administration officials said it would be up to individual state agencies to decide how to reduce their workforce, but estimated the total number of positions eliminated to be in the hundreds.
The budget proposal immediately opened a new front in the gubernatorial race, with Patrick and his rivals squabbling throughout the day over what is quickly becoming the campaign’s watchword: reform.
Patrick is using next year’s budget to push further changes in the state’s pension system, a reorganization of the parole and probation departments, and a restructuring of its energy costs. He also revived a proposal to ban state agencies from hiring outside lobbyists to influence the Legislature or other agencies.
“Our fiscal year 2011 budget blueprint reflects the simple notion that we must continue moving forward,’’ he said. “No matter how challenging the economic climate, we cannot afford to retreat from the important progress we have made over the last several years.’’
Cahill argued that the governor should not be calling for increased spending and instead should cut areas such as local aid.
“If we’re paring back in state government, then local governments have to share that, just like they share in the revenue when it’s growing,’’ Cahill told reporters in his State House office.
Baker blasted the governor for proposing new taxes and for relying on one-time revenues.
“It’s the same old, same old,’’ he said in an interview. “I don’t see the hard work of reform, which is the way out of this.’’
http://www.boston.com/news/local/massachusetts/articles/2010/01/28/patricks_282b_budget_plan_has_3_percent_spending_hike/
