Cahill asserts Patrick failed budget test

Treasurer says his advice on shortfall unheeded

By Andrea Estes and John R. Ellement
Globe Staff / October 22, 2009

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RANDOLPH - State Treasurer Timothy P. Cahill, seizing on the Massachusetts budget crisis as he ramps up his independent campaign for governor, accused Governor Deval Patrick and legislative leaders yesterday of responding too slowly and predicted the shortfall this year could balloon to more than $1 billion.

In his strongest attack yet on Patrick’s leadership, Cahill said the governor and state lawmakers ignored his warnings about overspending last year and put together a budget that relied on overly optimistic revenue projections.

“Our budget is built on phantom figures and based on a hope and a prayer,’’ Cahill said in a speech to the South Shore Chamber of Commerce in Randolph. “We’re 21 months into this recession, and he’s developing a plan now. It should have been done at least last year.’’

Cahill said that without a dramatic improvement in state revenues as a result of an improved economy, the budget deficit this year could hit $1.4 billion, more than double the $600 million figure Patrick predicted last week.

“I’m not trying to be Chicken Little,’’ Cahill said in an interview later, denying that he would exploit the budget emergency to advance his campaign. “I’m just trying to be realistic.’’

Patrick did not respond to requests for interviews. In an e-mailed statement, Patrick spokesman Kyle Sullivan called Cahill’s remarks “ill-informed and inaccurate.’’

“Governor Patrick’s stewardship during this time of global economic crisis has helped put Massachusetts on a road to recovery and in a far more favorable position than other states to come out of this downturn stronger than before,’’ he said. “The governor has made the tough choices necessary to protect core services like education and health care, services that reflect our values and vision for the future. Unlike the treasurer, we recognize the importance of supporting these initiatives and the role they play in ensuring the Commonwealth continues to be a national leader.’’

Patrick’s secretary of administration and finance, Jay Gonzalez, also strongly disputed Cahill’s charge that the administration, which repeatedly sliced the state budget over the past year to bring it into balance, has consistently underestimated the severity of the crisis.

“I don’t know where the treasurer is getting his estimates,’’ said Gonzalez, adding that the administration consulted key economists in government, academia, and private industry. “We took the highest end of the range in terms of the potential revenue shortfall, which was $600 million, to be conservative.’’

He added, “It’s important to note that every economist in the country has had a hard time over the past year-and-a-half forecasting the extent to which the economy was going to fall.’’

Cahill said his comments were made in response to the governor’s announcement last week that the state’s financial crisis was worse than it looked just weeks ago. The governor said that his administration had already eliminated 1,400 jobs, but may be forced to cut up to 2,000 more.

The treasurer said he is opposed to giving Patrick authority to unilaterally cut local aid to cities and towns, a power Patrick has requested from the Legislature. He said the governor should reduce spending in the executive branch agencies first.

Cahill said he does not know of a single state employee who has been laid off. In fact, he asserted, the Patrick administration actually added jobs in 2007 and 2008, nearly 2,000, according to statistics he said he received from the Human Resources Division of the executive branch.

“They claim to have laid off people and made cuts; we haven’t seen it,’’ Cahill said. “We [in the treasury] have fewer employees than we had in 2006. If they had done the same, we wouldn’t be in the mess we’re in now.’’

State budget officials countered that the number of executive branch employees has dropped, not increased, over Patrick’s term. In January 2007, when Patrick took office, there were 44,881 executive branch employees, according to his administration. On Oct. 10, they said, there were 44,635. More than 1,600 jobs have been cut, administration officials said, and 761 people have been laid off.

According to the state Department of Labor and Workforce Development website, the number of state employees overall increased after Patrick came into office. When he was sworn in, there were 115,000 state employees. The number peaked in December 2008, at 118,000, and has been steadily dropping ever since.

Michael Widmer, president of the Massachusetts Taxpayer Foundation, a nonprofit business-funded watchdog group, agreed that there is a risk that revenues for the rest of the year will not meet the governor’s current projections. But, he said, it is unfair for Cahill to say that the administration should have known months ago how severe the fiscal crisis would get.

“If one knew 12 months ago the scale of this, it would have been best to make a series of cuts all at once,’’ Widmer said. “Revenues dropped more dramatically than anybody had forecast. It would have been difficult to foresee the extent of the problem. It has been the same in state after state. Massachusetts has acquitted itself better than other states.’’