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Patrick to cut 1,000 jobs from state payroll

Will slash budget $1b; local aid is left intact

By Matt Viser
Globe Staff / October 16, 2008
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Governor Deval Patrick said yesterday that he will eliminate 1,000 jobs from state government and slash the budget by more than $1 billion, reacting to the national economic crisis with sweeping cuts that his administration called the worst single round of midyear budget rollbacks in state history.

The reductions will be spread across almost all sectors of state government, biting deeply into state university campuses and community colleges, the state's health insurance programs, and dozens of social service programs - from assistance for at-risk teens to services for the mentally ill and the elderly.

The cuts range from a hit of nearly $300 million on healthcare spending to the elimination of letters to residents simply reminding them to get their driver's licenses renewed.

Thus far, the governor is sparing local aid to cities and towns and funding for urgently needed bridge repairs. The list of cuts, even targeting populations like disabled adults and the blind, is notable because the reductions come from a Democratic governor who has made protecting disadvantaged populations a core theme of his administration.

"I know you are anxious. There is real cause for concern. But not for panic," Patrick told state residents during a State House briefing televised live late yesterday afternoon. "Just like families all across the Commonwealth, the state government is feeling the pinch."

The governor struck a tone of sympathy for the pain people will feel because of the budget cuts, but he also sought to portray the crisis as manageable and under control.

"People will feel these cuts in certain services," Patrick said. "Expect longer waits at the Registry of Motor Vehicles; expect less community policing patrols; expect slower permitting approvals; expect less frequent maintenance of our parks and open spaces."

Massachusetts and states from New York to California have been forced to revise budgets approved just months earlier in response to the national meltdown in credit markets, plummeting stock and real estate values, and an economy that appears to be tumbling toward a recession. Patrick said the state's job reductions will be accomplished by making a combination of layoffs, not filling open positions, and encouraging current employees to retire.

In revised revenue estimates yesterday, the administration predicted the slumping economy will take such a toll that the state will bring in $1.1 billion less revenue than expected this year.

The biggest drop-off is in income taxes, with the state predicting it will get $515 million less than projected. Combined with about $300 million in unbudgeted costs such as increases in social service caseloads, the state faces a $1.4 billion budget gap.

In addition to making $755 million in immediate cuts, the governor said another $146 million in expected spending requests will not be funded. Offices not under the governor's control - including the attorney general, the Legislature, and the state treasurer - agreed to cut $52 million.

Some of the heaviest cuts, $293 million, are in the state's Medicaid program, known as MassHealth, but there will be no reduction in benefits or eligibility for covered residents said Cyndi Roy, spokeswoman for the Executive Office of Administration and Finance. Instead, hospitals and doctors who provide care for MassHealth patients will receive lower reimbursements for the services they provide.

Just two years ago, the state boosted reimbursement rates to these providers as a key part of its landmark healthcare law.

Last night, the Massachusetts Hospital Association issued a statement that said the cuts will create "extreme hardship for many hospitals and the communities they serve."

Officials at the University of Massachusetts, which saw its $492 million budget reduced by $24.6 million, or 5 percent, said they would trim staff and consolidate facilities to avoid charging students more or scaling back financial aid.

"With much effort, the university can manage through this reduction in revenue without a fee increase at this time," Jack Wilson, UMass president, said in a statement, adding that he would reduce his office's budget by relocating staff currently housed in downtown Boston to university space in Shrewsbury.

Officials at the state's flagship campus, the University of Massachusetts at Amherst, facing a $12 million budget reduction, announced they would halt most hiring and implement one-time, across-the-board spending cuts, and said they would begin planning for the prospect of an extended economic slump.

Mayors and town managers across the state were relieved that cuts to local aid were not part of the governor's proposal, but they will be affected by a large number of the governor's cuts, including the elimination of $4 million in municipal police grants and $5 million from local law enforcement-assistance programs; a cut of $1.6 million in matching grants for school-to-work programs; and the reduction of special education funding by $13.5 million.

Mayor Thomas M. Menino of Boston huddled with top aides last night to comb through Patrick's cuts and figure out what the impact will be on the city. He said he is concerned by cuts to educational, child care, and public safety programs. "The governor has made necessary cuts in state government in very difficult times," Menino said, calling a hiring freeze a real possibility.

The governor also announced that the state will use an additional $200 million from the state's $1.8 billion reserve account. The current state budget already relies on about $400 million from that rainy-day fund.

In his plan, about $341 million will require action from the Legislature, and top lawmakers are weighing whether to return for a special session or wait until their next formal session, in January. Patrick indicated he wanted legislative approvals "as soon as possible," but did not call lawmakers back to Beacon Hill.

Democratic leaders in the House and Senate were noncommittal late yesterday and are scheduled to hold separate caucuses this afternoon to discuss the budget situation.

"Behind every cut the governor made are important services for the Commonwealth, jobs that support families and worthy programs," House Speaker Salvatore F. DiMasi said last night in a statement. "Make no mistake, these cuts will certainly inflict pain, but, in these unchartered and choppy waters, the worst financial crisis since the Great Depression, we must act."

Senate President Therese Murray also said the governor's proposal was "indicative of the serious nature of our budget situation," but she did not indicate how the Legislature would respond.

The governor is trying to revive several initiatives that have failed in the Legislature. He wants to add tiers to healthcare plans for state employees by adjusting them according to income levels, raising the premiums for the highest-earning employees, and bringing in $28.5 million in additional revenue. He also wants to raise $13 million by tightening the tax code to allow municipalities to levy taxes on telecommunications companies for the telephone poles they put up in communities.

Republicans yesterday used the opportunity to score political points, accusing Patrick of being a free-spending Democrat.

"Every Republican member of the Legislature voted against the budget that was passed last July," said Senate minority leader Richard R. Tisei. "At the time, we pointed out that we were spending beyond our means. Clearly, the situation we find ourselves in today has been made much more severe by the Patrick administration's refusal to heed the warnings of fiscal watchdogs."

Administration officials and longtime budget observers said these were the deepest cuts in memory, although other budgets had been trimmed earlier in anticipation of such problems.

Spending decreased in 1992 by 1.7 percent, for example, and it went down in 2003 by 1.3 percent, according to Michael J. Widmer, president of the Massachusetts Taxpayers Foundation.

"There were all sorts of warnings in the spring that we were headed into difficult waters," Widmer said. "We should have had a budget that was at least $500 million less."

Noah Bierman, Kay Lazar, Peter Schworm, and Donovan Slack of the Globe staff contributed to this report. Matt Viser can be reached at maviser@globe.com.

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