House's $28b budget banks on new taxes, program cuts

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Globe Staff / April 17, 2008

House leaders issued a $28 billion budget proposal yesterday that includes new corporate and cigarette taxes and a handful of budget cuts that drew the ire of some social service advocacy groups, who said the budget was being balanced on their backs.

The advocacy groups representing the elderly and community safety-net organizations vowed to lobby the Senate for more funding. Republicans also criticized the budget for using tax increases to help bridge a $1.3 billion budget gap.

But House leaders said their budget is fiscally prudent, given the uncertain forecasts heading into a year fraught with economic difficulties.

"Hopefully better times are ahead," said Representative Robert DeLeo, chairman of the House Committee on Ways and Means. "But if not, this budget prepares us well."

The House budget, like the governor's, includes $5.3 billion in aid to cities and towns, which includes $3.95 billion in local education funding, a 6 percent increase over this year.

House lawmakers have until tomorrow to submit amendments, a time that is typically used to fill the budget with legislative earmarks and pet projects. The full House is expected to start debate on the bill April 28. The Senate will weigh in following House deliberations, then the different plans will have to be reconciled before July 1, when the budget takes effect.

The House proposal adopts several of Patrick's spending priorities - a departure from past budgets where the governor's proposals were all but ignored - but doesn't go nearly as far as Patrick wanted.

Patrick, for example, proposed spending $15 million more to fund an additional 892 prekindergarten classrooms, but House Speaker Salvatore F. DiMasi is backing only $3 million. Patrick also wanted to increase by $13 million the amount spent on extended school day programs, to $26 million, but DiMasi is backing an increase of only $2.5 million.

The House budget also puts money into community policing programs, rather than backing Patrick's proposal to hire more police officers.

"We use a lot of caution and fiscal prudence in the budget," DiMasi said yesterday in a news briefing. "As much as we want to make certain investments, we feel we couldn't do it."

The House budget embraces several other plans that the governor proposed, including spending $10 million on homelessness programs; raising $51 million by increasing state employee healthcare contributions; and raising $166 million in additional taxes and increased enforcement of tax collections.

"We're not discouraged at all," said Joseph Landolfi, the governor's spokesman. "We're feeling pretty good about this. We understand they couldn't match in every case what the governor wanted, but their willingness to put a down payment on them shows a shared commitment."

The House budget also includes $109 million in direct budget cuts, which budget writers said were spread across a wide array of agencies and programs to limit the impact. But a smattering of advocacy groups - to whom a few thousand dollars can mean the difference for a successful year - said they were at risk under the House budget.

The proposal, for example, slashes $45.8 million that the governor wanted to use to fund initiatives aimed at helping the elderly and disabled. The House proposal reduces it to about $15 million. Some of the money may go to the mentally retarded and the developmentally disabled, rather than the elderly and the physically disabled, said Al Norman, executive director of Mass Home Care, a nonprofit network of 30 agencies that serve the elderly.

"Needy populations are being played off each other for a sharply reduced allocation," Norman said. "We are disappointed that the governor's sole elderly initiative pretty much got hacked."

Community organizations also argued that there was not enough funding for youth violence-prevention programs, which contain few increases in the budget.

"This is very disappointing," Lewis Finfer, director of the Massachusetts Communities Action Network, said in a statement. "We feel more should be taken from the rainy-day fund because it is raining here in terms of the huge problems facing families and youth in communities across the state."

The state's reserve account, sometimes called the rainy-day fund, contains more than $2 billion. Patrick has proposed using $469 million in rainy-day funds to balance the budget, while DiMasi has proposed $427 million.

The House voted last week to raise $392 million by tightening corporate income tax rules and boosting cigarette taxes by $1 a pack, a major political victory for the governor, who has been seeking corporate tax changes since he took office. Republicans, who fought the increases on the House floor during last week's debate, once again attacked the budget proposal for what they called overspending combined with excessive tax levies.

"As the economy is stumbling to the curb, you shouldn't kick it there and grab its wallet on the way down," said Brad Jones, House minority leader. "But that's exactly what we did."

A key factor in the budget debate over the next several weeks will be whether the state can afford current spending proposals or whether more cuts will be needed.

Budget writers from the House, Senate, and administration agreed in January to project 3.8 percent in revenue growth for next fiscal year. Since then, the national financial picture has gotten much gloomier, and while state budget officials are bracing for a deteriorating climate, they have not made new predictions.

"The overarching question is, as we head into a recession, is, 'Is it realistic that we can afford this level of spending?' " said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. "The answer is, it's doubtful."

Highlighting the financial difficulties, Patrick yesterday also submitted a request for $267.6 million to pay for unexpected midyear spending increases. The bulk of the spending would go toward paying for unexpected costs from high enrollments in the state's subsidized healthcare program, but it also will cover heavy costs for snow and ice removal.

Revenues this year are running about $772 million above original projections - partly because of one-time tax settlements between the Department of Revenue and some large taxpayers. Budget watchers remain cautious as they wait for the tally from April returns to become clear.

Matt Viser can be reached at

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