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Governor Charlie Baker's first formal opportunity to express his Administration's priorities in the official budget of the Commonwealth is quickly approaching.
On or before March 4, 2015, the Governor's office is expected to release its recommendation for Fiscal Year 2016. Building a $36 Billion budget for the Commonwealth is no simple task and the Governor's staff has been working hard at addressing left over fiscal problems from the preceding year and the collateral impact on the subsequent budget year.
Key factors that will influence the Governor's Budget include:
Excerpt: 1/30/15
The State's Economic Strength:
According to the UMASS Donahue Institute, the Massachusetts economy has grown at a significantly stronger clip than the U.S. economy during the fourth quarter.
In its MassBenchmarks report, the institute said real gross domestic product (GDP) for Massachusetts grew at an annualized rate of 4.7 percent in the fourth quarter, compared to an annualized rate of growth of 2.6 percent for the U.S. GDP. Growth in the state economy during the fourth quarter slowed from 6 percent in the third quarter and 5.2 percent in the second quarter, but the data points to nine months of strong growth after the state economy contracted by 2.4 percent during the first quarter of 2014. Looking ahead, the state economy is expected to grow at an annualized rate of 5.2 percent over the next six months, according to the MassBenchmarks leading index. The strong economic news contrasts with a more bleak state budget picture on Beacon Hill where Gov. Charlie Baker is studying his options to close a midyear budget deficit he estimates at $765 million and which he attributes largely to overspending. State tax collections have largely met budget targets half way into fiscal 2015. "The budget gap for FY '15 doesn't have that much to do with the state's economic performance or even the state's revenue receipts," said Dr. Michael Goodman, co-editor of MassBenchmarks and executive director of the Public Policy Center at UMass-Dartmouth. Calling the state's economic growth "quite robust," Goodman noted unbudgeted health care expenses, including some tied to the Health Connector's website problems, appear a major factor behind the state budget difficulties. "Hopefully these are one-time expenses," he said. Agreed upon revenue growth by the Executive and the Legislative Branch of 4.8% (State House News 1/30/15) suggests that the Governor is not facing a Great Recession-like budget crisis as handled by Legislative leaders in the recent past. During the height of the Great Recession, the State lost nearly $5 Billion dollars in tax receipts over a three year period.  Advocates are hoping that Governor Charlie Baker and his team will be able to protect services and supports in his budget and were greatly encouraged by the Governor's comments last week on his WGBH radio call in program when the Governor noted: "funding for mental health and rehabilitation services and programs that serve the developmentally disabled have been relatively flat for the last four to five years because all that money's been going to Mass Health." (State House News, 2/19/15).
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