CLT Update
Friday, November 16, 2001

Birmingham's "grim" budget:  No huge increases

In the News Today:

Gov rejects Legislature’s ‘conceptual’ state budget

Leaders outline a 'grim' budget
Legislature eyes cuts of $650m

Budget deferrals

Small sacrifices add up

Lawmakers unveil outline of "grim" state budget plan

Legislators to cut $650M and borrow $700M

Leadership failings

"The issue will come up again next year when another round of tax cuts is scheduled," the Boston Globe vowed today in its editorial, and we can bank on it. The Gimme Lobby just never gives up, never takes no for an answer; we're not even betting that it's over yet this year!

And how about that "grim" budget of Birmingham's? "Funding for most state programs would be frozen at last year's spending levels or cut modestly, and nearly all proposed expansions will be shelved," the Boston Globe reported. "Aid to cities and towns, including local education assistance, will actually be increased, but not as generously as lawmakers had hoped earlier this year."

"Grim" to him means "I can't spend another billion dollars more of taxpayers money this year"!

But they can get by without killing our Tax Rollback, after all.

We must keep our eye on the target until this budget is finalized and voted on. Strange things have been known to happen in the Legislature during holiday distractions, and we're now looking at between Thanksgiving and Christmas.

Legislators will get to vote yea or nay on the budget with no changes allowed; approve or disapprove period. After Gov. Swift wields her veto pen, the override votes begin and, as Boston Globe reporter Rick Klein points out:  "Because both the House and Senate are dominated by Democrats, the plan put forth by Birmingham and Finneran is all but certain to be approved without major changes."

The same can be said about veto overrides, even if in the end the Tax Rollback freeze pops up unexpectedly.

Chip Ford

The Boston Herald
Friday, November 16, 2001

Gov rejects Legislature’s ‘conceptual’ state budget
by Elisabeth J. Beardsley

Legislative leaders reached a "conceptual" state budget agreement yesterday that calls for $650 million in spending cuts, but acting Gov. Jane Swift fired back that a vague outline isn't good enough.

House and Senate leaders hammered out the general outline of a fiscal 2002 spending plan late last night, but the outline lacks any details about which programs will be cut, or even a bottom line.

Over the weekend, the two branches' Ways and Means committees plan to haggle around the clock, with hopes of finalizing the full budget document in time for a Tuesday vote.

"It is a grim budget," said Senate President Thomas Birmingham.

Despite the conceptual agreement, the budget is not at all a done deal. Two years ago, during a similarly protracted stalemate, House Speaker Thomas Finneran and Birmingham trumpeted a deal on Oct. 13.

But sketching out the details -- the same task facing negotiators this weekend -- proved to be a rancorous chore. The final budget wasn't sent to the full Legislature until Nov. 10, and wasn't finished, veto overrides and all, until Nov. 17.

That history prompted Swift yesterday to dismiss the Legislature's deal and threaten to push ahead with huge spending cuts if she doesn't receive a budget by today's 5 p.m. deadline she issued earlier this week.

"We want a budget -- not an outline, not a white paper, not a conceptual agreement -- a budget," said Swift spokesman James Borghesani. "Or on Monday, we file our own budget."

A $1.4 billion hole gaped open in the state's ledger over the past few months, worsening with the Sept. 11 terrorist attacks.

In addition to the $650 million in cuts -- more than the Senate wanted, less than the House and governor demanded -- the lawmakers' plan includes drawing on $700 million of the $2.3 billion the state holds in reserve.

Of the $700 million in reserves, $350 million will come from the $1.8 billion "rainy day" fund, and $350 million will come from the roughly $550 million remaining from the fiscal 2001 surplus.

The Senate won a big victory by convincing Finneran to bend his ironclad position on the state's annual tobacco settlement payments.

Finneran has insisted for several years on spending only 30 percent of the annual kitty, squirreling the rest away into an interest-bearing trust fund for health programs. But with a huge fiscal crisis under way, Finneran agreed to spend half of the money this year and in each of the next two fiscal years.

Finneran, who could not be reached for comment, warned House members in a letter that fiscal times are going to be hard for a while to come.

"We cannot spend more than we take in," Finneran wrote.

As frantic negotiations unfolded behind closed doors, hundreds of human service and health care advocates protested at the State House over the Swift administration's slashing of $66 million from the Department of Health budget.

With the budget so badly overdue, lawmakers are already plotting an end-run around the internal rules that require them to recess for the year after next Wednesday. The Senate yesterday scheduled a special session for Dec. 5 to override gubernatorial vetoes and take up the congressional redistricting map.

The House has not yet agreed to a special session.

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The Boston Globe
Friday, November 16, 2001

Leaders outline a 'grim' budget
Legislature eyes cuts of $650m

By Rick Klein
Globe Staff

Legislative leaders are poised to enact cuts in higher education, human services, and health care as part of their long-delayed plan to close the state's $1.4 billion budget gap.

After 4 1/2 months of private negotiations, Senate President Thomas F. Birmingham and House Speaker Thomas M. Finneran last night unveiled an outline of a budget agreement they said would be finalized over the weekend.

The plan calls for $650 million to be shaved from spending plans approved earlier this year -- affecting just about all services provided by state government.

"It is a grim budget," Birmingham said. "I don't think that too many people are going to celebrate when they see it."

The lawmakers said some jobs would be eliminated, but they do not expect anywhere near the 5,000 job cuts that Acting Governor Jane Swift has called for.

Funding for most state programs would be frozen at last year's spending levels, Birmingham said, or cut modestly, and nearly all proposed expansions will be shelved. Particularly hard hit, he said, will be the judiciary, which will be cut by $20 million, or about 4 percent. Aid to cities and towns, including local education assistance, will actually be increased, but not as generously as lawmakers had hoped earlier this year.

Last night's announcement was the first definitive sign of progress to emerge out of long-stalled budget talks between House and Senate leaders. Massachusetts is the only state operating without a budget. The Legislature is now 139 days late in sending the document to the acting governor -- the longest such delay since 1965.

Because both the House and Senate are dominated by Democrats, the plan put forth by Birmingham and Finneran is all but certain to be approved without major changes.

Yet despite the areas of agreement, House and Senate leaders still haven't settled on where to cut several hundred million dollars in spending. Legislative aides could offer no details on the fate of most specific programs last night, and it's not clear the Legislature will be able to finish its work on the budget by the end of the legislative session next Wednesday.

"There's still a lot of work," said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. "The really tough decisions are in front of them, namely where to cut. The outlines of this are positive, but the pain has yet to come."

Beyond the $650 million in cuts, the budget gap will be closed by using $700 million from state reserve accounts -- more than twice as much as Swift is calling for.

The agreement also would use about half, or $140 million, of the state's settlement with tobacco companies. For the past two years, Massachusetts has spent just 30 percent and saved the rest for health-care needs. House and Senate leaders are agreeing to keep the 50-50 spending-to-savings ratio for three years and then revert to the 30-70 split after that.

Finneran and Birmingham hope to bring the budget to the House and Senate floor by the end of the legislative session next Wednesday. Lawmakers will be given a simple yes or no vote on the compromise. Swift will then have 10 days to decide which line items to veto. The Senate voted yesterday to hold a special session Dec. 5 to take up those vetoes, and the House is expected to do the same.

A final legislative agreement would probably remove Swift, a Republican, from much of the budget process, because Democrats greatly outnumber her party and her vetoes are expected to be easily overridden.

But, hoping to play a role, she said earlier in the day than an outline of an agreement wouldn't convince her the Legislature will be able to promptly finish the budget. She still plans to file her own budget recommendation -- which includes slashes to local aid accounts, public health programs, and social services -- on Monday.

Birmingham said that the Legislature will preserve most K-12 education aid, including a $10 million increase in MCAS remediation spending, which would pay for afterschool and weekend tutoring. Also saved is the $20 million affordable housing trust fund and about $100 million for Prescription Advantage, a new state program that provides drug insurance to elderly and disabled residents, said Senate Ways and Means Chairman Mark C. Montigny.

The Legislature will not pursue an early retirement program Swift is backing to help eliminate 5,000 state jobs, though Birmingham acknowledged that some state agencies may have to lay off workers under the agreement. Birmingham and Finneran agreed on $74 million in savings in contributions to the state pension plan, but would not cut as deeply into that spending as would Swift.

Finneran was not available for comment last night. In a prepared statement, he said the compromise "will protect the Commonwealth's essential financial and policy interests."

With their joint letter to all members of the Legislature, Finneran and Birmingham are hoping that recent history doesn't repeat itself. Just two years ago, Finneran and Birmingham triumphantly announced an end to their extended budget deadlock Oct. 13. They sent out a one-page summary showing that they'd reached agreement on most major issues. But their talks subsequently broke down, and the Legislature didn't approve a budget until Nov. 10, which was, until this year, the latest legislative action on the budget in more than 30 years.

"I'd like to think we've learned from that and it won't happen again," Birmingham said.

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The Boston Globe
Friday, November 16, 2001

A Boston Globe editorial
Budget deferrals

MASSACHUSETTS House and Senate leaders still have not agreed on a budget, but at least they are arriving at the outlines of a deal. They will surely have more work to do next year to see the state through the recession.

The leaders have decided to tap $700 million from the state's reserves, which is about $150 million more than the watchdog Massachusetts Taxpayers Foundation suggests. The foundation expects that fiscal troubles will continue for at least four years. The leadership, by taking almost a third of the $2.3 billion in reserves this year, may be postponing difficult decisions, which will make budget cuts worse later in the decade.

The leadership has yet to finish work on the actual cuts that are required to keep the budget in balance. The difficulty of this task was suggested by a public health advocates' protest outside the State House yesterday. All programs facing cuts have supporters, many of whom, like the public health advocates, can make strong cases for their programs. The Legislature ought to cut administrative accounts for all state agencies before it reduces direct services to people in need.

And the lawmakers should not resort to the gimmickry that in the past has gotten budget writers through one's year crisis but caused trouble later. No raid on the pension funds, no deferral of essential maintenance, and no underfunding of Medicaid. The Taxpayers Foundation fears that the Legislature will have to increase Medicaid spending sometime next year. The Legislature ought to meet this obligation forthrightly now.

A sensible proposal to delay phasing in the tax cut approved by the voters last year, which would have saved at least $200 million, was rejected by the leadership for lack of the votes to override a gubernatorial veto. The issue will come up again next year when another round of tax cuts is scheduled.

At a conference Wednesday about the last budget crisis, in 1989-91, Patricia McGovern said: "When things are tough, you can make profound structural changes." As chairman of the Senate Ways and Means Committee then, she focused on the "budget busters," which, with the exception of Medicaid, have largely been tamed.

The Legislature similarly has an opportunity next year to do a thorough examination of state government to root out patronage, expose inefficiencies, and provide new methods of delivering essential services.

The budget is more than four months overdue, an unconscionably long time when so many people depend on state programs. Next year the Legislature should approve a budget without delay, informed by hard analysis that yields improvements across the entire range of state government.

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The Boston Herald
Friday, November 16, 2001

A Boston Herald editorial
Small sacrifices add up

Some state officials are beginning to do the same kind of calculations that private companies have been doing for the past couple of months -- seeing where they can trim costs, even if it means in their own salaries.

Acting Gov. Jane Swift has pledged to take a 3 percent hit to her $6 million office account and that may well include her salary -- a gesture state Treasurer Shannon O'Brien has already made. A similar effort in the Legislature's expenses (not including their salaries) would save $1 million.

Also on the chopping block are paid State House interns, who earn between $7 and $13 an hour, which adds up to about $4.2 million a year. Sen. Cheryl Jacques (D-Needham) runs her own office internship program -- 32 worked in her office over the summer and nine are on board now. But it's an all-volunteer program and there seems no shortage of willing candidates.

The kind of belt-tightening being encouraged by Swift not only saves money, but sends the message that state officials are willing to make the same kind of sacrifices their constituents are already making.

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Associated Press
Friday, November 16, 2001

Lawmakers unveil outline of "grim" state budget plan
By Steve Leblanc

BOSTON (AP) Legislative leaders have agreed to make deep cuts and dip into the state's "rainy day" accounts to balance a state budget rocked by the Sept. 11 attacks and a slowing economy.

The budget outline calls for $650 million in cuts to higher education, the courts, social services and health care to help close an estimated $1.3 billion budget shortfall.

"It's a grim budget. I don't think many people are going to celebrate," Senate President Thomas Birmingham, D-Chelsea, said Thursday.

The budget is already more than four months late.

The plan, which is still being hammered out, closes the rest of the budget gap by spending $700 million of the state's $2.3 billion reserves.

Lawmakers considered delaying the second year of the three-year income tax cut approved by voters last year. The move, which would have brought in $200 million, failed to receive enough support to withstand a veto by Republican acting Gov. Jane Swift.

A proposed increase in the state's cigarette tax was also scuttled.

But the House and Senate did agree to increase the amount of money they will spend from the tobacco settlement fund.

Currently the state sets aside 70 percent of the $280 million it receives each year from the tobacco industry, and spends 30 percent. The budget plan calls for a 50-50 split.

One of the few increases is in a program designed to help failing students pass the MCAS test. The agreement will add $10 million to the tutoring program.

Other highlights of the plan include:

Cuts to almost all programs, including aid to cities and towns, to levels below initial House and Senate recommendations.

An agreement on a three-year pension schedule designed to encourage bond-rating agencies to boost the state's outlook from "stable" to "positive."

Maintaining level-funding for some programs, including $20 million for affordable housing and $11 million for education technology.

Swift has criticized the Legislature for failing to produce a budget before the start of the new fiscal year in July. She threatened to file her own budget on Friday if the Legislature did not have a plan in place.

Swift has recommended a series of cuts including $100 million in reduced payments to the state's pension fund; $96 million from Health and Human Services; up to $66 million from Public Health; $34 million from the Education Department; and $20 million from higher education.

In a letter to House members, Speaker Thomas Finneran, a Boston Democrat, warned that the tough budget choices may continue for the next few years.

"We know that many significant challenges face us in the upcoming years which will cause us to cut back in some of these areas where we have been most generous," he said.

Birmingham said he hopes to have the budget on Swift's desk by Wednesday.

The House and Senate are expected to return on Dec. 5 to give themselves the chance to override any Swift vetoes.

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The Telegram & Gazette
Worcester, Mass.
Friday, November 16, 2001

Legislators to cut $650M and borrow $700M
By Shaun Sutner
Telegram & Gazette Staff

BOSTON-- With a $1.35 billion deficit looming, budget brinkmanship continued yesterday at the Statehouse as House and Senate leaders jockeyed to agree on a broad outline of what their long-overdue fiscal 2002 budget will look like.

When the final product emerged at 8 last night, it contained deep and widespread cuts totaling $650 million lawmakers say will fall on social programs, higher education and the court system, among other areas.

"I'm not sure how prepared people are for cuts of this magnitude," state Sen. Harriette L. Chandler, D-Worcester, said last night. "This hasn't happened in 10 years."

The framework released by House Speaker Thomas M. Finneran and Senate President Thomas F. Birmingham also set out a schedule to cushion budget cuts over the next three years by drawing from reserve funds: $700 million this year and $500 million each in fiscal 2003 and fiscal 2004.

Details of what will be cut will not be released until early next week. Budget negotiators say they plan to decide on specific cuts over the weekend.

"While none of us relish this budget predicament we are in, we have acted to define its scope as $1.35 billion and are proposing legislation that addresses it fully," the legislative leaders said in the two-page document, addressed to lawmakers. "Our budget must be balanced, and it will be."

Anticipating the release of the document, Gov. Jane M. Swift said earlier in the day that she wanted a budget, not a "press release." She has threatened to make her own steep cuts and lay off state workers if the Legislature did not give her a spending plan by today.

The Legislature's budget will contain across-the-board reductions of 6 percent to 10 percent in most areas other than education, health care and public safety, according to Charles Rasmussen, spokesman for House Speaker Thomas M. Finneran.

The budget outline said cuts would be achieved by "paring administrative costs, reducing program funding, eliminating new initiatives and re-evaluating line items."

The state budget was due July 1. The four-month-plus delay makes Massachusetts the last state in the country without a budget.

Expected at midday yesterday, the outline was delayed by wrangling over the fine points of how to deal with the deficit caused by the economic downturn and plummeting state revenues.

The Senate scheduled a vote on the plan for Wednesday, the last day of the legislative session. The House is expected to vote on the budget Tuesday or Wednesday.

Both branches plan to take up overrides of expected vetoes by Gov. Swift on Dec. 5.

Other framework features include:

  • A withdrawal of $350 million this year from the state's rainy day fund, which is less than expected because lawmakers want to leave as much in the reserve as possible to deal with lean years ahead.

  • Taking $350 million of the $590 million surplus left over from last year and saving the rest.

  • An agreement on how much money would be drawn over the next three budget years from state reserve and pension funds and the state's share of a national settlement with tobacco companies.

  • The withdrawal from the tobacco fund would be $150 million this year, based on taking 50 percent of the revenues coming in and saving the other 50 percent. The 50-50 ratio is a compromise between the Senate's original proposal to use 60 percent of tobacco revenues and the House's intent to use 30 percent. The ratio would stay at 50-50 until fiscal 2004 before reverting to 30-70.

  • The pension fund would receive $912 million this year, $926 million next year and $940 million in fiscal 2004, a schedule the legislative leaders said would continue the practice of fully funding the pension liability.

The budget does not contain a suspension of the income tax rollback approved by voters last year. The freeze would have saved $200 million.

For fear of alarming constituents and advocates, lawmakers have been exceedingly tight-lipped in recent weeks about what programs and services may be cut.

But details began to leak out yesterday about who would feel the budget ax.

A letter to House members from Mr. Finneran and House Ways and Means Chairman John H. Rogers yesterday listed eight budget areas that have grown from 42 percent to 371 percent since fiscal 1996.

They are: local aid, higher education, public libraries, public health, early childhood education, the court system, child care for low-income families and school building projects.

House leaders indicated that cuts would come in "some of these areas where we have been most generous."

State Sen. Stephen M. Brewer, D-Barre, said the judiciary and state college system "are going to take very large hits" that will mean an end to hiring and expansion of programs.

Mr. Brewer, Senate chairman of the Legislature's Natural Resources Committee, warned environmental funding is also likely to suffer, meaning state parks, ice skating rinks and pools could face reduced staffing levels and closures.

"That $650 million is very sobering," he said, referring to the total amount of cuts identified by the Legislature.

Mr. Brewer called the $700 million withdrawal from the rainy day and surplus funds "a conservative raid on these funds."

"We want to be prepared if this is a two- or three-year recession," he said.

The state's senior pharmacy program, which subsidizes prescription drugs for low-income and middle-income seniors, is likely to survive, at least for now, Ms. Chandler said.

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The Lowell Sun
Thursday, November 15, 2001

Leadership failings

It's becoming clearer by the day that the Massachusetts Legislature is ill-prepared to deal with the state budget crisis.

House and Senate leaders ignored early warning signs and now are scrambling to fulfill their duly elected obligation -- to approve a sound state budget -- under mounting pressure from a cynical public.

Their failure to act is irresponsible and embarrassing. Massachusetts remains the only state in the nation without a 2002 budget in place. Say what you want, but 49 other states have found the fortitude to make the difficult choices without fomenting a panic.

Not so in Massachusetts.

Officials in cities and towns throughout the Commonwealth are on pins and needles waiting for the Statehouse shoe to drop. Local budgets, as mandated by state law, were set July 1 -- the same deadline the Legislature faced to complete its budget and set local aid figures for the coming year. The Legislature, however, failed to meet its end of the bargain. Now, deep cuts in local aid could severely affect cities and towns, robbing them of vital services.

Once again, the Legislature is forcing municipalities to sit on the hot seat. It's the 13th time in 15 years this has happened -- a most dubious achievement. But where the Legislature's past tardiness could be attributed to political arrogance, this year's problems approach the level of negligence.

Forecasts of a weakening economy hit the radar screen in January. Declining state tax revenue receipts became a reality in April. Yet House and Senate leaders greeted the alarming data with passivity: they did nothing to revise competing $22.9 billion budget proposals that added $800 million in new spending.

As the budget deadline passed on July 1, House Speaker Tom Finneran and Senate President Tom Birmingham watched the economic news worsen without engaging in any serious budget discussions. Now, five months later, the state's fiscal plight necessitates quick action and painful cuts to resolve a $1.4 billion deficit.

So far, the Legislature's response has paled in comparison to that of acting Gov. Jane Swift's. She's endorsed $700 million in spending cuts, including a 5,000 reduction in state jobs, while tapping reserve accounts to make up the difference. She also pledged to keep the income tax rollback on schedule, putting an extra $175 in each taxpayer's pocket as of Jan. 1.

Finneran, Birmingham and their top henchmen, meanwhile, are trying desperately to formulate a palatable alternative. That collaboration, however, is mired by the deep differences that stalled prior budget reconciliation. Birmingham, for one, wants to freeze the voter-approved income tax rollback for a $200 million savings; Finneran agrees with Swift that the rollback should proceed as planned.

It's obvious the state budget process is in need of serious reform. The legislative leadership's stranglehold on how and when things get done has resulted in a history of frustration and delay -- all at taxpayers' expense. It's an abuse of power that has to end.

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