Budget gap estimated as high as $1.5 billion; service cuts, layoffs expected

October 14, 2008 04:52 PM Email| Comments (0)| Text size – +

By Matt Viser, Globe Staff

Governor Deval Patrick is expected to announce Wednesday that state revenues will decline this year by as much as $1.5 billion, giving greater urgency to the sweeping budget cuts and layoffs he is planning.

The gap was created in large part by a looming shortfall in capital gains tax collections -- a direct result of the Wall Street and real estate meltdowns.

The state disclosed the revenue shortfall -- which it said could range from $800 million to $1.5 billion -- in a disclosure document filed jointly for bond investors by State Treasurer Timothy P. Cahill and Secretary of Administration and Finance Leslie A. Kirwan. The document was filed Friday but not previously released.

Patrick this morning painted a dire picture of the budget cuts he plans to announce Wednesday, saying average residents will be affected and state workers will be laid off.

“People will feel this in their services,” Patrick said at a brief news conference. “This is not about cutting so-called fat. This is going to cut muscle, because the scale of the issue requires that.”

He indicated that he had no current plans to cut money given to cities and towns. Patrick does not have the authority to make cuts in local aid, but he has asked the Legislature to grant it to him.

“We’re doing our level best not to go at either local aid or Chapter 70 [local aid to schools] funding,” Patrick said. “So far, I think we’ll be able to do that, or at least not touch it in significant ways.”

He ended the news conference as he was being asked about whether public colleges and universities would see cuts. The Globe reported last week that higher education administrators are scrambling to reduce spending after receiving word from state officials that their subsidies will be cut by an estimated 5.6 percent.

The governor said this morning that most of the decisions have already been made, but that the plans for "hundreds of millions of dollars" in cuts would not be made public until Wednesday.

The announcement is slated for 5 p.m. Wednesday in Room 157 of the State House.