STATE HOUSE, BOSTON ...
FISCAL 2001 SURPLUS: When the books are finally closed on
fiscal 2001, they will likely show a surplus hovering around the $500 million mark. But it will still be awhile before
they're closed.
While the old year has already ended, the books are still
open and "accounts payable" checks will be written for fiscal 2001 until Sept. 15 for bills received by Aug. 31. The state
comptroller's office will then spend 45 days auditing all 150 state funds, including the General
Fund, and will release its audit report by midnight on Oct. 31. It is that final report
that will trigger any possible tax cut.
Current law requires that 60 percent of FY 01 surplus
dollars that remain unspent by Aug. 31 to be placed in the Stabilization, or Rainy Day, Fund. The other 40 percent is
directed into a reserve account for capital projects and other needs.
The likelihood that the Rainy Day Fund will then exceed its
cap and trigger a tax rebate has prompted House Speaker Finneran to suggest that the pool's level be raised before it
is allowed to overflow into taxpayer pockets.
Differing House and Senate ideas about how the surplus
should be used will have to be resolved before Aug. 31 or the 60/40 formula will automatically kick in. Or the lawmakers
could extend the Aug. 31st deadline.
While it's possible to get a reprieve from the Aug. 31
deadline for spending the surplus, House Speaker Thomas Finneran said action on several fronts is likely before then.
The House intends to craft and pass a final deficiency budget in the next two weeks, which
Finneran said would contain funding for true deficiencies like a $59 million Medicaid
shortfall due to computer errors, as well as money for some capital projects.
Finneran said he hesitates to spend much of the surplus or
even call it such, given that so many sectors of the health care industry are in trouble and Medicaid's one-quarter cut of
the entire state budget is "fraught with peril."
The Senate on Aug. 2 passed its version of a plan to spend
$278 million of the FY 01 surplus. The Senate bill includes a three-year paid family leave program, a new open space
trust fund, a series of capital improvement funds, a special two-year reserve fund to buffer
against the phase-in of the income tax, and a proposal to raise the Stabilization Fund cap to
10 percent of budgeted revenues.
Finneran, however, indicated he's unlikely to go along with
the Senate's family leave and open space proposals. "They're big items and they're controversial items," Finneran said.
"It's preferable from the perspective of the members of the House to have changes like that,
substantive long-term significant policy changes, made in legislative vehicles that
are wide open to full unfettered debate."
While frowning on programmatic expansions, Speaker Finneran
did say both branches are likely to approve raising the Stabilization Fund cap before Aug. 31.
Finneran first proposed the idea, the Senate has gone along,
and Administration and Finance Secretary Stephen Crosby said raising the cap to capture more surplus funds is better, at
least, than spending every dime.
The question of the cap level is key to whether taxpayers
will get another tax cut.
At $1.8 billion, the Rainy Day Fund is now about as full as
statute allows it to get. If lawmakers don't spend all of the surplus, whatever's left over after Aug. 31 could be enough
to overflow from the Rainy Day Fund into the Tax Reduction Fund, which sends money
back to taxpayers through a one-time increase in the personal exemption.
The speaker said don't bank on it. "It just doesn't seem to
me to be realistic to anticipate there'll be any significant flow into the tax reversion fund," Finneran said.
