Wednesday, January 23, 2008
Patrick budget has hundreds of millions in uncertain revenues
BOSTON -- Gov. Deval Patrick released a budget Wednesday that relies on hundreds of millions of dollars in revenue from sources not yet approved by the Legislature, including $124 million from projected casino licensing fees to help provide local aid to cities and towns.
The nearly $28.2 billion spending plan also counts on $297 million in revenues from Patrick's proposal to close so-called corporate tax loopholes.
Patrick's decision to include the funds is designed in part to pressure lawmakers to approve the measures. Both the casino plan and the tax loophole closings have run into roadblocks in the Massachusetts House.
On Tuesday, House Speaker Salvatore DiMasi warned Patrick against relying on projected casino licensing fees in his budget, saying Patrick shouldn't "put any money in (the budget) that you hope you're going to get."
He also sounded skeptical of the tax loophole closing plan.
"When a recession is coming the likelihood of putting (tax) burdens on our citizens and our businesses in Massachusetts doesn't really bode well," said DiMasi, D-Boston.
Patrick vigorously defended the decision Wednesday, saying he has a responsibility to look for new sources of revenue to jump-start the state's economy. Lawmakers have yet to schedule a hearing on the casino plan.
"We have put our ideas on the table. It takes three of us to do this tango and we look forward to dancing that tango with the Legislature in the months to come," he said.
Patrick also said the state can't close an estimated $1.3 billion budget deficit just by cutting spending.
"The job is not just to take the boxes and move them all around, to recount and redistribute what we think have in hand. Life is full of uncertainties," he said. "Our job is to make proposals -- reasoned, sensible, justifiable proposals -- to try to stimulate this economy."
The administration is estimating the sale of casino licenses could bring in up to $800 million. It's recommending spreading that over three years, spending just $300 million in the fiscal year beginning July 1.
Besides the $124 million for local aid, Patrick is recommending splitting the rest between property tax relief and repairs to roads and bridges. That money is not included in the budget.
Lawmakers now must decide whether to include the casino revenues in their budget plans.
Patrick's budget chief, Secretary of Administration and Finance Leslie Kirwan, said if lawmakers don't like Patrick's casinos and loophole proposals, they need to come up with their own revenue sources.
One thing they should resist is dipping too deeply into the state's $2.3 billion rainy day fund, she said. Patrick's plan uses $369 million from the savings account.
"In times of financial uncertainty, the last thing you want to do is to deplete the state's rainy day fund," she said.
The tax loophole proposal drew criticism from Republican lawmakers, who likened it to a tax hike.
"The last thing we should be doing at this time is proposing a massive tax increase on the business community," Sen. Richard Tisei, R-Wakefield.
Patrick's budget also found plenty of supporters.
Melrose Mayor Rob Dolan said he welcomed Patrick's budget, which increases education money for suburban communities.
"I usually start with a million-dollar deficit," he said. "This is the first time I can go to my school committee and give them more money."
Health care advocates praised Patrick's plan, which fully funds the state's landmark health care law.
John E. McDonough, executive director of Health Care For All, pointed to new initiatives in the budget, including money to fight racial and ethnic disparities in health care.
Higher education officials said Patrick's recommended $30 million increase for the state's 29 college and universities will help pay for programs such as one program allowing high school students to enroll in college level courses.
"High schools and colleges will be thrilled," said Patricia F. Plummer, chancellor of the Massachusetts Board of Higher Education.
Patrick's budget highlights a potential problem for municipal leaders, who rely on the state lottery for local aid dollars. Lottery officials estimate the games will generate only about $811 million in the new fiscal year, far less than the $935 million promised to cities and towns.
Patrick's plan makes up the $124 million shortfall with casino license funds, but critics say that's risky. Even if lawmakers agree to the three-casino deal, they say there's no guarantee the state would get the money before the end of the new fiscal year on June 30, 2009.
Patrick's budget also would increase education spending by $368 million, including for programs to expand full-day kindergarten and pay for extended-day classes. State spending on public safety would rise by nearly $106 million, including money targeted at the troubled state Medical Examiner's Office and funds for 100 new police officers.
Patrick said his budget cuts spending, including $300 million in the state Medicaid program, $51 million by increasing the percentage state workers pay for health care, and $40 million by eliminating 300 smaller projects inserted into the budget by lawmakers.
The budget now heads to the lawmakers. The House and Senate will each write their own versions, agree on a compromise budget and send it back to Patrick, who can sign it, and at the same time veto individual line items.
(Copyright (c) 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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