Center Estimates $1.2B Budget Gap Next Year

Ahead of Gov. Deval Patrick's planned fiscal 2014 budget release, a group that tracks state spending says the governor will need to close a roughly $1.2 billion gap between anticipated spending and revenues.

According to the Massachusetts Budget and Policy Center, the weak national economy has increased the number of people in need of government services and hampered the growth of state revenues. The center also blames income tax cuts approved in the 1990s for funding challenges faced today in transportation, education and public safety.

The budget gap accounts for savings and revenues available this year but not next year, the likely rate of revenue growth next year and projected cost growth tied to inflation or caseload increases.

Massachusetts voters in 2000 approved a ballot question ordering a reduction in the income tax, which fell to 5.3 percent before the Legislature froze it at that level in 2002 as part of a package of tax increases. The center says three tax cuts dating back to 1998 are costing the state $2.5 billion a year in revenue: the reduction in the income tax rate from 5.95 percent, a cut from 12 percent to 5.3 percent in the tax on dividend and interest income, and a doubling of the personal exemption from $2,200 to $4,400 for single filers and from $4,400 to $8,800 for married couples.

House Speaker Robert DeLeo said late last year that he intended to take up legislation closing a $540 million deficit in the fiscal 2013 budget in January, but a House budget-balancing bill has not emerged and there's been no debate scheduled.

With health care costs increasing at a faster clip than the economy, the center estimates that the state is still in the midst of a fiscal crisis that began 15 years ago, with inflation-adjusted local aid down 45 percent since 2001, funding for public higher education down 31 percent and funding for public health down by 25 percent.