Budget Deficit Resolution and the Olympic Games
A lot has happened in Boston this week that will impact the entire state, so let’s get right into it.
The budget shortfall that has consumed much of our efforts these past few weeks is nearly resolved. On Wednesday, my colleagues in the House and I voted to pass H 52, a bill that will resolve the $768 million deficit. This legislation is a mixture of cuts and additional revenues, and you may have heard some numbers being thrown around lately, so let me take some time to break it down and clarify the solutions my colleagues and I have passed.
There is a constitutional requirement for Massachusetts to operate on a balanced budget each fiscal year. A fiscal year begins on July 1st and ends June 30th. This means that there are a still five months left in the fiscal year we’re currently operating in, so slashing budgets would be devastating to programs. Instead, the House voted to cut a small amount from agencies and departments across the board. Most cuts are under 2 percent of each agency’s budget, preventing any debilitating damage. For instance the Secretary of State’s funding will be cut by 1.79 percent, and funding for the UMASS system will be cut by 1.5 percent. There is also $40 million cut from transportation funding, $14 million of which was slated for the MBTA. These cuts are a necessary part of mending the budget deficit.
The package also included increasing revenues, which will be accomplished by a temporary corporate tax amnesty program. This program would waive penalties for companies who owe the state tax money (with some exceptions). Interest owed would also still be collected. The program would last for sixty days and is expected to raise $18 million. This is a one-time, short term fix in a very sensitive situation, we need to be careful with using a tax amnesty program for corporations so that we do not encourage irresponsible behavior.
The biggest way we were able to offset the deficit was by diverting money that was going to be sent to the Stabilization Fund, more commonly known as the rainy day fund. The rainy day fund is an amount of money that is reserved to fund daily operations of the state in times when regular income is disrupted. Currently, there is $1.1 billion in the Commonwealth’s rainy day fund. This is an incredible achievement and allows Massachusetts to have one of the best bond ratings in the country. Taking from this money would have hurt this bond rating, but because we are above the $1.1 billion mark in the rainy day fund, our top budget analysts agreed that diverting the capital gains tax in this case would be a safe move that could help offset the deficit. $131 million will emerge from this.
I believe the legislation we voted on is the best result of a bad situation. The efficiency and bipartisanship by which this deficit was solved is a great foundation for the upcoming session. From this legislation, we as a legislature were able to protect local aid from being cut. We did not increase taxes, we didn’t increase fees, and we did not pull from the rainy day fund to offset the deficit. While it is never ideal to be in a deficit halfway through the fiscal year, this issue has solidified the need for smarter spending in government.
Another big issue in the news lately has been the debate over Boston hosting the Olympic Games in the summer of 2024. There are many plans in the works for this bid, but the issue at the front of everyone’s mind is money (well, other than Boston traffic, which I’ll get into). The leaders of Boston 2024, the organization pushing for the games to be in Massachusetts, have said that hosting the games will cost around $4.7 billion. Their claim is that most, if not all of this money will be from private companies and organizations, yet the organizers met Thursday with Congressman Neal and the entire Massachusetts congressional delegation and pushed for taxpayer-funded security measures for the games and are looking for the state to fund projects to develop infrastructure.
I’m very concerned that if Boston is chosen to host the games, then millions potentially even billions of dollars will be pumped into the city with little regard for the rest of the state, especially here in western Mass. For example, when the idea for the Big Dig was first proposed, the cost was estimated at around $2 billion. The actual price tag was much, much larger, coming in at around $22 billion worth of taxpayer dollars that we as a Commonwealth are still paying for in interest. More recently, legislation that would have funded projects in the 26 Gateway cities across the Commonwealth, including Westfield, was substantially undercut by Boston interest groups.
I’m also extremely concerned that the plan uses transportation and infrastructure projects that the organization claims are already in the pipeline. There are various projects throughout the state that are in need of and slated for funding, but there is a very good chance that projects in the Boston area will be pushed to the forefront because of the possibility that the city could host the games. The recent events at the MBTA show how drastically underprepared public transit is for the influx of athletes, coaches, and spectators that come with hosting the games, but we can’t keep throwing money at an outdated system and expect the problems to just go away. We also can’t keep wasting money in one region of the State and put it on the tab of every single taxpayer in the Commonwealth, even those who do not reap the benefits of these projects.
The House of Representatives took its own measures to protect taxpayers’ interests throughout the organizational process of the Olympic Games. I’ve cosponsored legislation promoting transparency before, during, and after the planning of the 2024 Olympics. If the state is going to host the Olympic Games, we’d better be prepared to hold the organization accountable and protect the taxpayers’ dollars. The legislation, if passed, will create a special committee that will monitor the funds going into the planning and implementation of the games and will create a page of all public and private funds in the Massachusetts Open Checkbook site.
I’d love to hear your thoughts on the possibility of Massachusetts hosting the Olympic Games in the summer of 2024. Feel free to email me at [email protected] or my aide Neesha at [email protected]. As always, please contact me with you concerns, issues, and questions and I’d be happy to help in any way I can. Have a great weekend!
Disclaimer: The views expressed in this column are those of the author and not the staff, editor, or publisher of this publication.
