Budget relies on one-time fixes

The $950 million in "savings and efficiencies" that Governor Deval Patrick touted in his budget address this week is actually a compilation of corporate tax increases, hoped-for improvements in tax collection and fraud detection, lower spending increases than originally anticipated to keep up with inflation, and smaller surgical budget cuts in dozens of state programs and subsidies.

To balance his budget, the new governor also tapped $225 million in one-time revenue by eliminating the state's annual $100 million payment to its rainy-day fund, drawing $75 million in interest from that fund, and taking $50 million from the state's tobacco fund.

"These are not gimmicks, but they're dubious policy initiatives," said Michael Widmer, president of the Massachusetts Taxpayers Foundation, who served on Patrick's transition team. "Using nonrecurring revenues or savings to close the gap, it means you're starting [the next year] with a spending base that is higher than your revenues. It delays the day of reckoning."

Patrick also proposed the elimination of $86 million in "earmarks" -- money set aside by the Legislature for a specific purpose -- including about $26 million in payments to hospitals and $22 million in small tourism programs scattered across the state.

The state's share of the Medicaid program, which covers healthcare for the poor and disabled, is the source of some of the biggest savings -- $179 million -- but some reductions in promised funding to hospitals and nursing homes could run into opposition in the Legislature. The budget, however, does not include any cuts in benefits for Medicaid's approximately 1 million members.

Patrick turned to one-time infusions and other revenue increases to mend a $1.2 billion gap between the revenue the state expects to pull in next year and what it would cost to provide the same services, assuming low inflation. The governor also had to find room to pay for some of the initiatives he proposed during the campaign, including more full-day kindergartens, an expansion of the extended school day program, increased public health spending, and strengthened community policing.

"This is a framework, we believe, and creates a foundation for lasting and meaningful reform and ways to strengthen our economy, our communities, and our government," the governor told reporters at a midday briefing yesterday.

Patrick said his budget contained no gimmicks, but some observers and political foes said they at least found some creative budgeting.

"The difference between his claims and the actual content of the budget is extreme," alleged Brian Dodge, executive director of the Massachusetts Republican Party.

Dodge pointed to state aid for local schools, an account Patrick increased by $200 million over this year.

Under a formula contained in the current year's budget, however, local education aid was supposed to increase next year by $255 million. Not only did Patrick not meet the funding target, he counted the $55 million as part of his savings, Dodge contended.

"If we were talking about a Governor Romney budget," he said, "the Legislature would be screaming about a $55 million cut."

Widmer also questioned whether the administration will be able to squeeze $179 million in savings out of Medicaid. "That is very aggressive. Finding an additional $179 million will be very difficult. "

Aides to Patrick said the savings would come from cutting rate increases for nursing homes by about $24 million and delaying about $34 million in increased payments to hospitals promised under the universal healthcare law.

Typically, each dollar in state spending is matched by the federal government to make up the program's $8.1 billion budget.

Dr. JudyAnn Bigby, secretary of health and human services, said the administration sought to keep Medicaid spending tight to allow full funding of the state's landmark universal health insurance program.

The budget for healthcare includes $472 million in subsidies to help low-income residents get health insurance, as well as $354 million for free care provided by hospitals and community health centers to the uninsured. And it would allow the administration to shift money between the two accounts if enrollment in new subsidized plans is slower or more rapid than expected.

Another $41 million in anticipated savings would come from reducing fraud and $35 million from cutting the number of days that new or renewing Medicaid members have to prove their eligibility. In addition, the budget includes $9 million in anticipated nursing home savings by more quickly discharging patients who are ready to go home .

Patrick had pledged to make the budget simple to understand, but several observers found the document more difficult to navigate than previous ones. The budget was available online, and in some spending categories, year-to-year comparisons were easy to see. But other spending categories were blended together, making comparisons difficult.

"This clearly is not a transparent budget," said Senate minority leader Richard R. Tisei of Wakefield. "What he did was just roll a whole bunch of line items into each other. There's no way to find out what happened to a particular program. If you're concerned about human services programs, for example, I guess you're supposed to take his word for it that within a big lump of money the funds will be directed to the populations that need it.

"It is a much less detailed budget than I've ever seen in the 22 years I've been in the building. Rather than providing more information, it provides less. That runs contrary to what the governor has pledged about opening up the process and letting people see what's inside."

Patrick began the day yesterday by pitching his budget to the Greater Boston Chamber of Commerce, which has sharply criticized the governor's plan to raise an additional $295 million by changing corporate tax law. Though the more than 500 people in the audience greeted Patrick with a long standing ovation, his pitch for closing the so-called corporate tax loopholes appeared to meet with a chilly reception.

Patrick told the business leaders that distributing the tax burden more evenly was a matter of "basic fairness." He added that he, too, used accountants and lawyers to exploit loopholes in the tax code when he was a corporate executive. And he said other states competing successfully with Massachusetts had already closed the same loopholes.

"Indeed, our total tax burden for businesses is among the lowest in the nation today," Patrick said.

Andrea Estes of the Globe staff contributed to this report.