Governor Deval Patrick's administration today announced a broad plan to slice more than $800 million from next year's state budget anticipated federal funding doesn't come through, proposing cuts across nearly every aspect of state government. Only the local aid Beacon Hill sends to cities and towns would be protected, preserving a priority Patrick has set as he campaigns for re-election.
Patrick, the House, and the Senate all built into their spending plans for next fiscal year money the state expected to get through a federal stimulus program that boosts Medicaid reimbursements, which frees up money to fill other budget gaps. But Congress has so far failed to extend the program past Dec. 31, leaving the funds in doubt.
Massachusetts is one of about 30 states depending on a six-month extension to help ease the effects of the economic crisis on its budget, but some in Congress worry the increase in spending will further swell the federal budget deficit.
Patrick, in a letter to the budget chiefs in the House and Senate, proposed cutting 3.6 percent from nearly every line item. His pledge to leave school aid and other local assistance unharmed sets up a potential clash with state lawmakers, who had planned to cut $160 million from local aid even without the specter of further reductions.
In his letter, Patrick said he remained optimistic Washington would approve the money, but acknowledged that it might not. Both the US House and Senate have approved measures that include the funding extension, with support from President Obama, but they have yet to pass the same bill through both chambers. US Senate leaders today added language restoring the money to a House jobs bill that had previously stripped it out.
The uncertainty comes just weeks before Patrick and legislative leaders must finalize the budget for next fiscal year, which begins July 1.
Regardless of what federal lawmakers ultimately decide, the issue has already reverberated in the gubernatorial campaign, with Republican Charles D. Baker accusing Patrick of throwing a "Hail Mary pass" instead of designing a prudent budget that would better protect the most vulnerable. State Treasurer Timothy P. Cahill, running as an independent, also called for more fiscal discipline and said the potential shortfall is a further indication that Massachusetts and other states cannot afford universal health care as federal subsidies are phased out.
State Senator Steven Panagiotakos, a Lowell Democrat who leads the Ways and Means Committee, said the budget for next year is already austere. He said he expected legislators, who are now meeting in a conference committee behind closed doors to complete a compromise budget, would probably take a more targeted approach to cutting services than Patrick, if forced to do so.
"If we've got to cut $800 million from where we are currently, it will have dramatic, substantial, adverse effects for anybody who depends on state services, or whose jobs are subsidized by state dollars," Panagiotakos said.
That would likely include cuts to MassHealth, the state's health insurance program for the poor, he said. While many programs within MassHealth are federally required, there are programs such as dental care and insurance for some legal immigrants that might take substantial cuts, he said. Panagiotakos also doubted that local aid could be spared, saying it has been largely protected during the recession and that itaccounts for nearly $5 billion of about $28 billion in the state budget.
He and his counterpart in the House, Representative Charles A. Murphy, said Patrick and lawmakers acted on the best information that they had -- including federal assurances that the stimulus money would be available -- in preparing their spending plans.
"There’s going to be a lot of pressure brought to bear in DC, so I’m still optimistic that we’re going to see this money," said Murphy, Democrat of Burlington.
Although the federal grant is closer to $600 million, losing it would cost the state more than $800 million, officials said, because of a loss of additional federal matching funds for certain programs.
Patrick's budget chief, Jay Gonzalez, also said the proposed cuts were more of a contingency than a likelihood and that "signs are good right now" that the money will come through. But if the cuts have to be made, the administration is also seeking more flexibility for state agencies to shift money around within departments to minimize their impact, he said.
"Spreading the pain is an important part of how we need to manage through this," Gonzalez said.
But no matter how widely the pain is spread, its impact would be deep, said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded watchdog group.
"Since most of these programs have already suffered several rounds of cuts, this additional cut will have very serious consequences for human services, public higher education, health care, and a wide range of other programs," Widmer said.
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