Balancing the FY2010 Budget

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.

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

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