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New England News

First Task For Baker Is To Close Budget Gap

A white man in a suit stands in front of a bookshelf.
WAMC
/

Massachusetts Governor-elect Charlie Baker will walk into his new office at the Statehouse next week and confront a sizable shortfall in the state budget.  The amount of the mid-fiscal year budget deficit is in dispute, and Baker’s options for closing it appear limited.

Baker, a former state budget chief in the Weld administration who stressed his ability to master the complexities of state government during his successful campaign, acknowledges the projected budget gap — whatever the size --- poses an early challenge in his first term.

"I think that is going to be our number one issue coming in the door," said Baker

 The governor-elect said he first learned the state was facing a projected budget deficit when he sat down with Governor Deval Patrick the day after the election.

" He speculated it was somewhere in the $300 million range. That number has gone up based on third-party estimates," said Baker.  " I don't think people have been deliberately dishonest with respect to this at all."

Baker has said his transition team is looking into all areas of the state budget, but he has declined to discuss specifics about how he plans to address the budget gap until he takes office on January 8th.  He has ruled out raising taxes, dipping into the “rainy day” fund, or reducing state aid to cities and towns.

" No local aid cuts. Local aid cuts are off the table," Baker declared.

Throughout the campaign, Baker’s mantra was the “Commonwealth has a spending problem.”

Making cuts won’t be easy because so much of the state budget is made up of what is considered nondiscretionary spending, according to Michael Widmer, president of the Massachusetts Taxpayers Foundation.

"There are no easy pockets of money to be saved and there is precious little time."

Widmer, who has run the business-backed fiscal watchdog organization for more than 20 years, estimates the total budget gap is $1 billion.

"The ( Patrick) administration has taken steps to address about $250 million of that billion, so that would leave a hole of about $750 million," said Widmer.

The Taxpayers Foundation estimate, which is strongly disputed by Patrick administration officials, is based on lower-than-expected tax collections, some budget categories where spending has been higher-than-expected, and a large uncertainty over whether the state will have to pay for the health care of people who were enrolled in a temporary Medicaid program after the breakdown of the state’s health insurance exchange website.

As he deals with a deficit in the current state budget, Baker must prepare a budget for the next fiscal year to file with the legislature just eight weeks after he takes office. 

The Republican governor will have to deal with a Democratic dominated legislature that wants funding for education, the state’s cities, veterans’ services and a myriad of other popular programs, according to Democratic State Representative Aaron Vega of Holyoke.

" What kind of budget he presents will really set the tone for how we move forward," said Vega.

Vega said he is anxious to see how Baker tackles health care expenditures, which account for 42 percent of the state’s $36 billion budget.

" He has some expertise in the area and perhaps will bring a new fresh set of eyes to that spending."

The Massachusetts Budget and Policy Center, a liberal think tank, said part of the budget deficit is caused by the automatic cut in the state’s income tax from 5.2 percent to 5.15 percent that occurred on January 1st, 2015

The center, in a press release, said the primary beneficiaries of the automatic tax cut are the very highest income households.

The income tax rate cut is triggered when state revenue growth hits certain benchmarks.

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