BOB SALSBERG, Associated Press
STEVE LeBLANC, Associated Press
BOSTON (AP) — Republican Gov. Charlie Baker declared yesterday that it’s time for state government to live within its means as he outlined more than $500 million in spending cuts to help close a budget shortfall.
Some of the plan will require approval from the Democratic-controlled Legislature, while other actions can be taken unilaterally by the governor.
Baker, who took office less than a month ago, said he inherited the deficit from his Democratic predecessor, Deval Patrick, whose administration had originally estimated the shortfall at $329 million and cut about $250 million in spending before leaving office.
Baker last month pegged the deficit in the $36 billion budget as much higher and blamed it on a “spending problem.” The administration yesterday added another $3 million to the projected deficit, bringing the shortfall for the fiscal year ending June 30 to $768 million.
“We’re here today to talk about a state government that lives within its means here on Beacon Hill,” Baker said at an afternoon press conference at the Statehouse.
Baker’s plan calls for $514 million in spending cuts, including nearly $150 million in executive branch reductions that would not require legislative approval.
It also seeks $168 million in savings to the state’s Medicaid program through eligibility redeterminations and other measures.
Baker said the eligibility redeterminations — which are intended to review each year if individuals on Medicaid still are eligible to receive benefits — haven’t been done since the state’s Health Connector website crash last year. He said the reviews would begin at the end of the month
Baker said the budget for the governor’s office itself would be slashed by 10 percent as a symbol of austerity.
In addition to the spending cuts, Baker says his plan calls for more than $250 million in new revenues, including an $18 million tax amnesty plan and diverting $131 million in proceeds from the capital gains tax that otherwise would be earmarked for the state’s reserves — better known as the rainy day fund.
Baker said he set some basic rules for the deficit plan.
“The plan … lives up to our promise that we will not raise taxes, cut local aid, or draw down on the existing stabilization fund,” Baker said, referring to the rainy day fund.
The state Department and Children and Families and programs to aid homelessness would be among those spared from executive branch budget cuts.
Baker said because of the recent heavy snow, the state also will have to seek an additional $50 million in snow removal funds.
Legislative leaders have promised to work cooperatively with Baker to close the budget gap.
Senate President Stanley Rosenberg, an Amherst Democrat, has disputed the Republican governor’s contention that the shortfall is primarily a spending problem.
“This isn’t about overspending, it isn’t about undertaxing, it’s about meeting the proper balance in our system,” Rosenberg said. “This is both a revenue and a spending issue.”
Secretary of Administration and Finance Kristen Lepore — Baker’s top budget official — said the reductions would touch about 300 line items in the budget. She said about 60 percent of those would still be funded at or about their fiscal year 2014 levels.
When pressed for more details about cuts to MassHealth — the state’s Medicaid program — Lepore said the proposed cuts largely target programs that still are in the works.
“They just haven’t been approved yet, and they will probably not be approved this fiscal year, so it’s money that we don’t plan to spend this fiscal year,” she said.
She said the cuts won’t change “services that people are expecting to get this fiscal year because the plans have not been finalized yet or approved by the feds.”
Summary of Gov. Baker’s deficit-reduction plan
A summary of Baker’s proposal to close a projected $768 million deficit in the state budget for the fiscal year ending June 30, with a breakdown of which measures require legislative approval.
SPENDING CUTS
— Executive branch reductions: $145 million. These cuts can be made unilaterally by the governor and do not require legislative approval. Approximately 300 line items in the budget would be reduced. Among a few of the more sizable cuts: More than $10 million in mental health services spread out over several line items; $5 million for substance abuse counselors; $5 million in kindergarten expansion grants; $5.8 million from the state police; and nearly $5 million from the state child support enforcement division. Baker said the governor’s office would take a 10 percent reduction in its budget.
— Non-executive branch reductions: $53 million. The proposed cuts in programs or agencies outside of the executive branch of government, such as the Legislature or judiciary, require approval from lawmakers.
— Transportation: $40 million. Proposed cuts in transportation also require legislative approval.
— MassHealth: $168 million. Baker said savings in the state’s Medicaid program can be achieved through a variety of administrative measures, including eligibility redeterminations that he said had not been done since the state’s Health Connector website failed last year and had to be rebuilt. According to the administration, only $10 million of the MassHealth reductions require legislative approval.
— Reversions: $108 million. These funds were appropriated for state programs that have not yet started and will instead go to offset the deficit. Legislative approval is not needed for the reversions.
Total proposed spending cuts: $514 million.
REVENUE ADDITIONS
— Capital gains taxes: $131 million. Baker is asking the Legislature to transfer $331 million in capital gains tax proceeds that would otherwise be earmarked for the state’s reserves — better known as the rainy day fund — to the General Fund to help reduce the deficit.
— Tax Amnesty: $18 million. The program, which requires legislative approval, waives interest and penalties for taxpayers who agree to pay off overdue tax debts.
— Other revenue: $105 million. The administration hopes to bring in additional revenue from several sources including federal reimbursements and transfers. $30 million of the total would require legislative approval, according to the administration.
Total proposed revenue additions: $254 million.
Online: Executive Office of Administration and Finance: http://1.usa.gov/1uViOxI
