Balancing the FY2010 Budget * 1 comment
The yawning budget FY2010 gap of $5.2 billion on a roughly $28 billion budget came in three parts:
- $3.4 billion recessionary revenue drop below FY2009
- $1.4 billion in cost inflation (mostly health care cost growth) above FY2009
- $0.4 billion in carry-over gap from FY2009 since the FY2009 budget was out of balance by this amount.
As any organization does when it faces a budget crunch, the legislature has balanced the Fiscal 2010 budget through a combination of measures:
- $2.4 billion in program cuts and savings
- $1.6 billion in federal stimulus money (mostly flowing through the Medicaid program)
- $0.8 billion in sales tax revenues (increased rate from 5% to 6.25%)
- $0.1 billion from removing the sales tax from alcohol and satellite TV services
- $0.2 billion from the rainy day fund
The $27.4 billion bottom line is down $756 million from FY2009 and over $2 billion below the level necessary to maintain programs in the face of cost inflation.
Specific closely watched decisions include:
- Elimination of all earmarks in the budget
- Elimination of approximately 50 line item programs
- Cut in Quinn bill police training funds down to only $10 million (under 20% of full funding level, but no change in program language from the House version).
- Increase by 5 percentage points in the share of health care insurance costs borne by state employes (from 15% to 20% or from 20% to 25% depending on seniority).
- Authorization of an 0.75% meals tax add on and a 2% hotel tax add-on as a local option; no communities that avails itself of these options will experience a net local aid loss of more than 15%.
- Elimination of the local property tax exemption for telecommunication polls and wires, another long requested local relief measure.
- Institution of a policy that 50% of future capital gains growth shall be committed to the rainy day fund.
- $100 million increase for the Turnpike, the amount of the toll increase proposed in November, therefore believed sufficient to avert a toll increase.
- $160 million for the MBTA, likely sufficient to avoid a fare increase or service cuts in the present year.
- Expansion of public-private partnership options for the state by increasing the Pacheco law exemption from $200,000 to $500,000
For additional analysis within specific programs, see the preliminary analysis from the Mass Budget and Policy Center.
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