ADDP NEW BANNER 2011
Budget Forecast:  Looks Rainy from Here
Isn't this the purpose of the Rainy Day Fund?

Should We Use the Rainy Day Fund?
Failure to use the Rainy Day Fund means more pressure once again on the Governor and his team to make cuts in programs programs that already suffered during the worst days of the Great Recession.
 
On the chopping block are only limited areas under the Governor's authority.  Cutting those programs could spell societal costs not consistent with the goals of the Governor or the Massachusetts Legislature to provide safety, quality human services, universal health care or repairing deteriorating infrastructure systems throughout the state.   
Mass Budget

Section 9C of Chapter 29 of the Massachusetts General Laws requires that when projected revenue is less than projected spending, the Governor must act to ensure that the budget is brought into balance. The section reads as follows:


Chapter 29: Section 9C. Deficiency of revenue

Section 9C. Whenever, in the opinion of the commissioner of administration, available revenues as determined by him from time to time during any fiscal year under section 5B will be insufficient to meet all of the expenditures authorized to be made from any fund, whether by appropriation or distribution, he shall within 5 days notify in writing the governor and the house and senate committees on ways and means of the amount of such probable deficiency of revenue and the governor shall, within 15 days after such notification, reduce allotments under section 9B, and submit in writing a report stating the reason for and effect of such reductions, or submit to the general court specific proposals to raise additional revenues by a total amount equal to such deficiency. . . .

As an alternative to the submission of such proposals to raise additional revenues and to the extent funds are available, the governor may recommend an appropriation equal to such deficiency from the Commonwealth Stabilization Fund . 



Are there any other options?

Section 9C also gives the Governor authority to request that the Legislature raise additional revenue or transfer additional funds from the Stabilization Fund.
Shor Rules Out Rainy Day Fund; Opts for Budget Cuts Instead
 
Glen Shor
In the Patrick Administration's announcement that the Governor would be seeking to reduce the State's $36.5 billion budget by $325 million, Finance Secretary. Glen Shor, revealed that he would recommend 9C Budget cuts exclusively, rather than using any portion of the Commonwealth's Rainy Day Fund, established to help the state maintain budget solvency during unexpected revenue downturns.  The fund currently stands in excess of $1.23 Billion.

According to Shor's post election press conference last week, reasons for the cut include:
  • increased income tax collections now trigger a tax rate reduction from 5.2% to $5.15% eliminating $70 million in lost revenue
  • $80 million in costs associated with the costs of last year's economic development bill &
  • $175 million decline in non tax revenues, such as fees.

To fix this fiscal problem, Governor Patrick has limited options, but he does have options.

 

Shor's advice is to make only budget cuts, which if pursued by the Governor only extend to areas under his budgetary authority including health and human services and  other agencies under his executive authority including the following departments: Education, Energy & Environmental Affairs, EOHHS, Housiing & Economic Development, Labor and Workforce Development, Public Safety and Security and Transportation.

 

Exempt from the Governor's 9C authority are local aid, the judicial branch and other elected constitutional officers.  

 

As Governor Patrick prepares to leave office, many hope he will leave protecting vital programs from the chopping block, overriding Shor's exclusive budget cutting recommendation.