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FINANCE SECRETARY LESLIE KIRWAN She cited an increasing strain on social safety net programs, predictions of weak revenue growth, and dwindling reserves. |
State budget chief warns more spending cuts may be necessary
State government leaders face the “perfect storm’’ of cost pressures tied to an increasing strain on social safety net programs, predictions of weak revenue growth, and dwindling reserves and federal funds to balance future budgets, the state budget chief told local officials yesterday afternoon.
With unemployment still on the rise, federal stimulus funds flying out the door, and a once $2.3 billion state rainy day fund nose-diving toward $500 million, administration and finance secretary Leslie Kirwan also cautioned local government leaders of potential mid-fiscal 2010 budget cuts.
Administration officials are monitoring tax collections this month and readying plans to reduce spending.
“September is going to be key, and I can’t emphasize this enough,’’ Kirwan said. “It’s a big month, and it’s going to be very indicative.’’
Kirwan has instructed state department heads to prepare budget cuts that could be triggered next month if the administration, based on September collections, decides spending reductions are necessary.
“We are not going to make that call until Oct. 15,’’ Kirwan said.
Whether the governor asks the Legislature for expanded powers to cut spending beyond the executive branch, as he did last fiscal year, depends on the magnitude of revenue losses, Kirwan said.
During a meeting of the Local Government Advisory Council, local government leaders said they are getting crushed by pension system costs, investment losses, and contract-related fallout from a slashing of a state fund for police reimbursements under the Quinn bill. And local officials said they are fearful about the impact on traditional public schools of a push on Beacon Hill to expand access to charter schools.
Kirwan said state government was still dealing with “remnants’’ of fiscal 2009, which ended June 30. He said the state reduced its workforce by 1,000 positions last fiscal year but still faces a $180 million gap as the state comptroller moves to close the books. Budget reversions “may cure that shortfall,’’ she said, but additional draws from the state’s rainy day fund, which is closing in on $500 million after hitting a $2.3 billion peak, are possible.
A 25 percent increase in the state sales tax, rainy day funds, and “generous’’ use of hundreds of millions of one-time federal stimulus package funds are helping to balance the current fiscal 2010 budget, along with spending cuts. Kirwan said this year’s budget eliminates 750 state positions.
“Most of the 750 could be layoffs,’’ she told two reporters after her remarks before the council.
The fiscal 2010 budget uses about $1.6 billion in federal stimulus funds, leaving about $720 million available for use in fiscal 2011, administration officials said.
© Copyright 2009 Globe Newspaper Company.
