Governor Patrick Seeks Budget Cuts, Plus Some Lasting Reforms

Responding to a softening local economy, Governor Deval L. Patrick announced last week he will cut spending and implement a series of cost-savings reforms, as part of a five-point fiscal action plan, to address fiscal challenges confronting the Commonwealth.
The announcement came as the Department of Revenue reports September revenues fell below benchmark, resulting in a $223 million revenue shortfall for the first quarter of the state’s fiscal year, excluding one-time receipts. Given the likelihood revenues will continue to slow because of continuing economic deterioration, Governor Patrick has directed Administration and Finance Secretary Leslie Kirwan to revise the state’s revenue estimate, which supports the budget, and to prepare for emergency spending cuts.
“We have prepared for these circumstances and are ready to implement our plans to assure a balanced and responsible budget,” Governor Patrick said in a press release, adding that the administration had to be “sensitive to both short-term challenges and the long-term interests of the commonwealth.”
Highlights of Governor Patrick’s plan include:
•<2002>Revenue adjustment and spending cuts
Secretary Kirwan will lower the consensus revenue number by October 15. Lowering the revenue figure automatically triggers the governor’s authority to make mid-year, so-called “9C” spending reductions within the executive branch.
The secretary will work with the Department of Revenue, and continue to consult with outside economic experts to determine what the new FY09 tax revenue estimate will be. The governor will then make cuts throughout the executive branch consistent with the revised revenue estimate.
•<2002>Spending cuts outside of 9C authority
The governor has asked the legislative leaders, the chief justice, and the other constitutional officers to reduce their spending voluntarily. As a benchmark, Mr. Patrick will reduce the budget in the executive office of the governor by seven percent.
•<2002>Reforms and restructuring
While cuts will be necessary to address tfall today, Governor Patrick said, he will seek additional reforms to improve the state’s long-term fiscal health.
 He has directed the secretary of transportation to prepare legislation to dismantle the Turnpike Authority, merge the remaining transportation agencies, and restructure the Big Dig debt.
 He has directed Lieutenant Governor Timothy P. Murray to oversee an administration-wide effort to consolidate departments and agencies and their offices, and to develop means of delivering state services with the quasi-public agencies in a more efficient and coordinated fashion.
•<2002>Pension reform
 The governor has asked the treasurer to work with the administration and the Pension Reform Commission to develop a legislative proposal to reform the state pension system and the Massachusetts Bay Transportation Authority pension system.
•<2002>Containing healthcare costs
 The administration will accelerate plans to contain and ultimately reduce the costs of healthcare in the commonwealth.
 Anticipating potentialallenges several months ago, the Patrick-Murray Administration has already implemented cost savings measures across agencies through spending and hiring controls, the suspension of merit pay raises and a shared responsibility healthcare solutions package.
Mr. Murray said, “The downturn in the national economy will affect us all, squeezing the budgets of households, businesses, and the commonwealth alike. In demanding times like these, we share not only the burdens caused by national economic trends, but we also share the responsibility to address this challenge in a manner that is both fiscally responsible and that reflects our values as a commonwealth. I commend Governor Patrick for his quick and decisive actions and stand ready to work side by side with him in the days and weeks to come to deal with this ongoing fiscal challenge.”
“When the governor signed the FY09 budget, he laid out a management plan to prepare agencies for potential cuts,” Secretary Kirwan said. “My team has worked closely with each secretariat on implementing that plan. None of these cuts will be painless, and we realize there will be significant impacts on residents, but like everyone else, we must find places in these challenging times to cut back.”