Mass. Budget Troubles Consistent With National Trend
By Scott Brooks
WASHINGTON – Massachusetts’s growing budget gap, which is threatening to hit $3 billion in the next fiscal year, is well in line with state budget crises across the nation, according to a report released Tuesday.
While the state’s predicted budget shortfall next year is expected to be among the highest in the nation, a National Conference of State Legislatures report shows that Massachusetts’s current fiscal troubles rank only slightly worse than the median for the 50 states. The survey indicates, however, that the state’s budget crisis may be deepening more rapidly than in other states.
The study estimates Massachusetts’s fiscal 2003 budget gap—the difference between spending and revenue—at 3 percent, which is just above the national median, with all but one state reporting. Next year, however, the gap is expected to surge to 13 percent, a figure exceeding the median gap by almost half. Eleven states did not offer figures on next year’s budget.
Nationwide, state budgets are under siege, and there is no immediate end in sight, according to the NCSL report. Looking ahead to 2004, roughly three-quarters of all states are staring down budget gaps.
“We’re experiencing similar problems as the rest of the country,” said Nicole St. Peter, a spokeswoman for Gov. Mitt Romney, R. “Our economy is lagging a bit in terms of growth, but our budget is very similar to most states in the nation.”
As with most states now facing large gaps, Massachusetts’s struggles are largely due to the collapse of the bull market, according to Robert Tannenwald, an economist at the Federal Reserve Bank of Boston. States knew the drop was coming, he said, but they had no idea just how profound it would be.
Where Massachusetts took a harder hit than most, Mr. Tannenwald said, was in its preference for employee stock options. After the market fell, Bay State employees were left with significantly less dollar power than they expected.
The NCSL report points to several other reasons for Massachusetts’s problems. While tax collections fell well below expectations, the state’s expenses only look to grow. The report notes $1.45 billion in expected spending growth, much of which cannot be cut. Gov. Romney will submit his fiscal 2004 budget proposal by the end of this month.
While many governors have said they are considering a tax hike to reduce their state’s gap, Gov. Romney pledged repeatedly during his campaign last fall that he would not raise taxes. Instead, the governor told voters he would try to slice $1 billion off state spending, and he already has started making cuts.
Last week, Gov. Romney announced about $300 million in appropriation cuts, mainly in health and human services spending. About one-third of the governor’s spending cuts will affect local aid, including a cut of roughly $2.3 million for New Bedford.
Within the next few months, the governor expects to lay off about 125 state employees, making Massachusetts one of only eight states calling for job cuts this fiscal year. Massachusetts also is among only a handful of states to call for employee furloughs and travel bans as ways to lower expenses.
The goal, according to Ms. St. Peter, is to “find efficiencies and root out duplications.” She said the state already has reduced the number of press secretaries in government and ordered a reorganization of the state’s legal offices.
The NCSL report shows that Massachusetts is cutting costs in ways other states are not considering. In addition to layoffs, the state has sought to lower payrolls by offering early retirement, a method that has otherwise been on the table only in Colorado. Massachusetts also has discussed delaying capital projects and borrowing for some of the capital spending, which also are unpopular actions in most states.
Sen. Mark Montigny (D-New Bedford), who until last month chaired the legislature’s Ways and Means Committee, said good planning has kept Massachusetts from falling to the “bottom of the barrel.” The state took advantage of more than $2 billion in reserve funds, and legislators started making cuts and seeking revenue increases over a year ago. Still, he said, when the technology bubble burst a few years back, Massachusetts fell hard.
“We have clearly experienced more pain than many states,” Sen. Montigny said. “Even the pessimists are shaking their heads.”
NCSL president Angela Monson said states are not to blame for their fiscal difficulties. On the whole, she said, economic troubles have trickled down from the national level, where so-called unfunded federal mandates have placed a heavy burden on states.
“The economy is different,” Ms. Monson said. “It’s not because the states have budgeted poorly. Things have happened.”
Although several states have not yet reported 2004 data, only three states — Arkansas, New Mexico and Wyoming — are not expecting to face a budget gap next year.
Published in The New Bedford Standard Times, in Massachusetts.
