Rep. Bradley, House Approve FY2010 State Budget

Makes tough fiscal choices; focus is on preserving local aid, education

May 5, 2009

BOSTON—State Representative Garrett J. Bradley joined his colleagues in the Massachusetts House of Representatives in passing a fiscal year 2010 operating budget designed to close a $3.6 billion budget gap through a combination of policy reforms, program cuts, and revenue enhancements.  The balanced budget addresses Massachusetts’ fiscal challenges yet still protects core programs and services.

Due to the decline in state revenues as a result of the larger economic downturn, the House took dramatic steps to cut non-essential state programs, in the end cutting over $1.2 billion from the budget and eliminating dozens of line items.  In seeking cost savings measures, the House of Representatives brought reform to sections of state government long considered sacred cows, saving millions of dollars this year and in the future.

By cutting spending in programs throughout the budget, the House was able to balance the budget without using any funds from the state’s stabilization account.  This fund, which was built up in more favorable economic times, is used to augment state spending when unanticipated events occur.  The state’s rainy day account, which now contains only $1.3 billion, began the fiscal year at over $2.1 billion. Instead of further depleting state reserves, the budget proposal relies on approximately $1.4 billion in federal funds, directed to the state as part of the American Recovery and Reinvestment Act of 2009.  In resisting drawing down the reserve account, the state will be better prepared to supplement revenues when the federal stimulus money goes away in fiscal year 2012.

The budget comes after the House has passed unprecedented reforms in the areas of transportation, pension and ethics and campaign finance.

While struggling with a sudden decline in tax receipts, the fiscal year 2010 budget adopted by the House still was able to guarantee cities and towns level funding of Chapter 70 state education aid in the year ahead.  At almost $3.5 billion, state aid for education comprises over 14% of the state budget.  In addition to Chapter 70 aid, the budget will direct over $1 billion in unrestricted government aid to municipalities to help pay for local services including police and fire.  This was achieved by passing an amendment to raise the sales tax by 1.25%.

“The increase to local aid will enable cities and towns to retain teachers, police officers and firefighters, mitigate the need for property tax increases, and provide basic city services,” said Representative Bradley.  “My vote will provide an extra $167,529 for the town of Cohasset, an extra $297,027 for the town of Hingham, an extra $463,055 for the town of Hull, and $533,515 for Scituate over what was originally filed by the House Ways and Means Committee.”

These funds are available through the House’s vote to pass a 1.25% increase in the sales tax. The vote keeps the exemption on key household items, such as food, clothing and home heating oil, which have never been taxed. It also eliminates the need for burdensome taxes on gas, alcohol and sugar.

The budget also made sweeping reforms to the manner in which the state manages tax receipts from capital gains.  Though the recession has decreased all tax revenue streams used to fund state services, capital gains receipts have been particularly constrained.  After bottoming out in FY02, revenues from capital gains have continued to increase until reaching a peak of $2.335 billion to begin FY08.  These monies were used to support many functions and expansions of state services over the past six years.  With the economic downturn, however, receipts from capital gains have largely evaporated.  In an effort to insulate the Commonwealth from these dramatic swings in tax receipts, the House adopted broad reforms to how the state uses capital gains taxes.  The new plan would mandate that half of the yearly growth of capital gains receipts be deposited directly into the state’s rainy day account, thereby quickly replenishing the state’s reserve account and tempering the wildly inconsistent revenue stream.

“In tough economic times government must focus on what is most important.  I am happy that, even with all the cuts we’ve had to make, education funding and local aid has, in large part, been spared.  Massachusetts’ schools are national leaders and will be the foundation of our economic recovery and future prosperity,” said Representative Bradley.

           The Senate will debate its version of the budget later this month.  After their debate, a conference committee will be formed with both House and Senate members who will debate the differences between the two budgets and release the final version to be voted on by the Legislature and sent to the Governor.  The Governor will then sign the FY2010 budget into law or veto certain sections and send it back to the Legislature, which may then vote to override those vetoes.