Baker Confirms $765M Shortfall In State Finances

The state's budget deficit for the current fiscal year is projected at $765 million, and more spending cuts will be needed to help close the gap, Gov. Charlie Baker said Tuesday after crunching the numbers with senior aides.

The Republican, who took office less than two weeks ago, said he would lay out plans in the coming days for eliminating the shortfall, but he continued to rule out new taxes or cuts in state aid to cities and towns.

"There are a few things I heard from voters when I was on the campaign trail. And the one of the big ones I heard from them is, we feel like we have been nickeled and dimed every single year for a very long period of time, and we think it's time for the commonwealth to live within its means," he said.

Baker's predecessor, former Democratic Gov. Deval Patrick, had estimated the deficit to be a considerably lower $329 million. Before leaving office, Patrick ordered spending cuts and took other actions to close the gap by about $250 million.

Baker's estimate of the shortfall is roughly in line with that of the Massachusetts Taxpayers Foundation, a nonpartisan research group.

The state is operating under an approximately $36 billion spending plan for the fiscal year ending June 30, and the state constitution requires a balanced budget.

While state spending is expected to increase by 7.3 percent in this fiscal year, tax revenues are only growing at 4.4 percent, the Baker administration contends.

"That simply isn't sustainable this year or next," the governor said.

Other factors driving the deficit include a projected $230 million shortfall in Medicaid, tied to the failure of the state's health connector website last year, which prompted state officials to move hundreds of thousands of people into temporary Medicaid coverage, Baker said.

Revenue from state fees and fines was also expected to miss its mark by nearly $180 million, he said.

Senate President Stanley Rosenberg, D-Amherst, concurred with Baker's estimate of the deficit but said it should not be blamed solely on excessive spending.

"As we've said from the beginning, we believe this is both a spending and a revenue problem and we look forward to the governor's proposals for closing this gap," Rosenberg said in a statement.

The governor suggested that $200 million in capital gains tax revenue earmarked for the state's "rainy day" fund could be diverted - with legislative approval - to help close the budget gap. Andrew Bagley, director of research and public affairs for the Massachusetts Taxpayers Foundation, said he believed only $122 million in capital gains taxes would be available for deficit reduction.

Baker promised to work with the Democratic-controlled Legislature on solutions.

"We are obviously going make to these decisions as we go forward with great sensitivity and careful judgment," he said.

This article was originally published on January 20, 2015.



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