Bit of budget roulette
There’s an element of smoke and mirrors to the House and Senate effort to balance the state budget for the fiscal year that began last week. Of course there’s a similar element of uncertainty in the size of the budget gap itself.
The good news for taxpayers is that the revised, $39.1 billion budget now on Gov. Charlie Baker’s desk still contains no new taxes or fees.
Also reassuring is the fact that the House and Senate didn’t dip into the rainy-day fund to make the numbers add up (though they did cancel a planned $200 million transfer into the fund).
The bad news? Well, the anticipated revenue slowdown means taxpayers may not get the very modest tax cut that otherwise was expected to go into effect next year — or at least, assuming so spares budget writers from making $80 million in spending cuts. At this rate we may get back to a 5 percent income tax rate in time for the 20th anniversary of the date when Massachusetts voters mandated it.
While spending will increase, modestly, on local aid, higher education, substance abuse services, and at the Department of Children and Families, the House and Senate said they trimmed spending in many other areas. But it’s clear that the balance of spending cuts to budget-balancing gimmicks tended to favor the latter.
For example, the conference committee filled part of the revenue hole by ordering up more efficient government procurement — as in, less money spent on goods and services. Calling for “procurement savings” is a lot easier than finding $100 million to cut.
They also say they’ll defer some Medicaid payments until next year (described as a spending “cut”) and revised welfare and Mass-Health caseloads downward — but without changing eligibility.
That approach risks leaving the state dangerously exposed. Indeed, the Massachusetts Taxpayers Foundation suggests the budget fixes “still leave the state in a precarious financial position.”
Some will argue that Beacon Hill is overreacting to the budget gap anyway — that the revenue shortfall may not materialize, or at least not to the extent that has been predicted. And if that’s the case, then hey, why not just use a little sleight-of-hand and hope for the best?
But to protect the commonwealth from a mid-year disaster we expect Baker to rely on some more realistic solutions.