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Steep cuts in Patrick’s budget plan

Seeks health care, prison changes; human services, higher ed take hit

By Michael Levenson
Globe Staff / January 27, 2011

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Two state prisons would close. Nine hundred jobs would be eliminated across state government. Space to treat 160 mentally ill patients would disappear.

Everybody would be hit, at least a little. A bottle of Gatorade would cost a nickel more, and drivers would pay an additional $2.50 on their annual car insurance bills.

Governor Deval Patrick proposed dozens of deep cuts, a few new fees, and some one-time fixes yesterday, as part of what he called a painful but ambitious plan to close a projected $1.2 billion budget gap and help to reinvent Massachusetts government.

The governor said his $30.5 billion blueprint for the budget year that begins in July would cut overall spending by 1.8 percent, or $570 million, the largest year-to-year cut in the state budget in 20 years.

“It reflects many difficult and, in some cases, painful choices,’’ he said. “But we are making those choices to support our priorities — job creation, health care cost control, better schools, and reduced youth violence — priorities I know will make a stronger Commonwealth for all of us.’’

In laying out the first spending plan of his second term, the governor argued that he was doing more than just making cuts to balance the books. His proposal calls for a series of tradeoffs, reinventions, and redistributions, to steer money toward programs that reflect his priorities and find new ways to handle criminals and finance health care.

In perhaps his most ambitious goal, the governor said he could save $1 billion by changing how the state pays for health care for the poor, proposing that contracts with providers be changed to encourage them to work together to drive down costs. Independent analysts said the initiative was laudable but would at most save half that amount.

Patrick’s spending plan, which now becomes part of the budget debate in the House and Senate, seeks a number of shifts in policy. For example, while the governor wants to close two prisons, he seeks sentencing changes that would make 650 nonviolent drug offenders eligible for release from overcrowded jails and keep those convicted of violent crimes behind bars longer.

While he is proposing to cut local aid to cities and towns by $65 million, he is offering municipalities $140 million more for schools and new authority to make changes to the health care plans of local employees and retirees, which he says would save communities $120 million.

And while Patrick would slash funding for homeless shelters by 14 percent, or $23 million, he is trying to put in place a new system to send the homeless to permanent housing, instead of costly shelters and motel rooms subsidized by the state. None of the 7,000 homeless families who currently receive state help would be forced onto the streets, Patrick insisted.

Yet the governor acknowledged the stark reality that most residents will see less support from the state next year. Higher education would lose $116 million, in part due to the loss of federal money, and human services would lose $115 million, said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, a business-backed budget watchdog group.

Birth control and other family planning services would be slashed by 21 percent. School health services would be cut 16 percent. Pregnant women, the blind, and poor people who get help to buy clothing would also be hit with cuts.

The governor’s plan was issued as the state faces the loss of $1.5 billion in federal stimulus money as it tries to bounce back from the recession. Tax collections have been improving, but have not rebounded fully, and Massachusetts is entering the fourth consecutive year of cuts.

“This is going to be digging very deeply into basic programs that the public expects government to provide,’’ Widmer said.

The governor sought to blunt the bad news by highlighting a few spending increases — notably for youth violence prevention programs that he had singled out as a priority in his inaugural address earlier this month. Spending would double, for example, on antigang and teen job programs that have been hit by cuts in recent years. Special education would receive $80 million more, Patrick said.

Legislative leaders, who will draft their own spending plans in the coming months, offered muted responses to the governor’s plan. House Speaker Robert A. DeLeo praised the governor for giving cities and towns new tools to control their health costs, which he called a “budget-buster.’’ But he was otherwise noncommittal.

Patrick and his aides were short on many details yesterday, including which prisons would be closed and which jobs would be eliminated. But many of the cuts and attempts to overhaul government were clear.

Patrick said his plan to save $1 billion in the state’s Medicaid program would require striking new contracts with health providers, even as the old deals have yet to expire.

Widmer praised the governor for trying to tackle the exploding cost of Medicaid, but was skeptical of the savings. “He is very ambitious and bold,’’ Widmer said. “But talking about saving $1 billion, I think that’s exceedingly unlikely. On the other hand, if he saves $500 million, that would be a huge achievement.’’

State employees would be forced to reapply for health insurance, with the state offering deep discounts to join lower-cost plans, saving an average worker as much as $800 a year.

In addition, Patrick is pushing to cut the state’s pension liability, in part by raising the minimum retirement age for future employees. And he is proposing replacing the state’s current system of relying on private lawyers to represent indigent defendants. Instead, Patrick wants to hire 1,000 public defenders, saying the change would save $60 million.

Patrick’s budget would hit residents with some new fees and costs, although no new taxes. Auto insurance customers would pay a new $2.50 to $2.75 fee, raising $4 million to fund a class of 150 state troopers.

Patrick also wants to raise $20 million by expanding the nickel deposit that now applies to carbonated soft drinks and beer to include bottled water, coffee-based drinks, juices, and sports drinks. The state would also look for an additional $61.5 million by hiring more auditors to scrutinize tax returns at the Department of Revenue.

Though Patrick said he was making structural changes to close the budget shortfall, he also relied on some one-time fixes. He proposed further depleting the state’s reserve fund, taking $200 million, and leaving it with $569 million at the end of the year. He would raise another $100 million by selling abandoned property now held by the state Treasury.

Michael Levenson can be reached at mlevenson@globe.com.

CORRECTION: Because of an editing error, a Page 1 story yesterday on Governor Deval Patrick's budget proposal for next fiscal year misstated the amount of additional special education funding he is seeking. Patrick is proposing spending an additional $80 million over this year.