Cuts in local aid to be considered, Murray declares

Lieutenant Governor Timothy P. Murray said yesterday that the Patrick administration will not rule out cuts to local aid as part of its broad plan to close a deeper budget deficit than previously forecast.

Administration officials said Monday that tax revenues could plunge by up to $749 million, beyond the $1.4 billion budget gap that the state addressed in October.

"No final decisions have been made, but clearly, if you have to cut another $750 million, you have to look at everything," Murray told reporters at a State House press conference after being asked whether local aid would be cut.

He said the administration would try to preserve the funding, which cities and towns use to pay for programs, from teachers to trash collection, but after the first round of budget cuts just two months ago, "there's not a lot of other places to go."

Murray made the remarks after announcing that the administration was awarding $8 million to eight regional pilot programs around the state that are working to end homelessness.

Meanwhile, mental health advocates flooded the State House yesterday and confronted Governor Deval Patrick as he entered his office. Carrying signs such as "How the budget cuts stole Christmas," the group was protesting previous cuts to programs that serve those who are mentally ill.

Patrick listened intently, but offered no promises to restore the money or preserve remaining funding in the next round.

"Nobody is enjoying this," Patrick told the group. "This is not simple. It's not easy. It's not obvious what the choices should be. I see you. I see you. I'm not making decisions not knowing that it has a real-life impact on people's lives. I'm trying to find alternatives, I don't have them yet. . . . Whatever I do in one place has an effect someplace else, and you know that."

At a hearing this week, the Department of Revenue estimated that the state would take in $648 million to $749 million less than lawmakers had anticipated just two months ago, when the governor announced plans to close the $1.4 billion shortfall. That plan did not include cuts to local aid, but top state officials are not ruling out reducing what is a large funding source in many municipal budgets.

Other options could include raising the gasoline tax or tapping the $1.7 billion in the reserve account. State officials are also hoping that a stimulus package from the incoming Obama administration could help, although it is unclear what conditions the federal government would put on the spending and whether state officials could use the money to make up current budget shortfalls.

Local officials, who are already preparing for deep cuts to budgets next year, are holding out hope that the state will not reduce their current aid levels.

"Communities are struggling financially and have been struggling financially for some time now," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association. "They have been . . . looking at a terrible year next year in how the recession will impact the state."

Matt Viser can be reached at maviser@globe.com.