Massachusetts Gov. Deval Patrick yesterday filed a $28.16 billion fiscal 2009 budget, with educational programs and local aid initiatives receiving the bulk of a projected 3.5% increase in spending over fiscal 2008.
Along with the $28.16 billion operating plan, the governor released his $2.19 billion capital budget for fiscal 2009. Over the past few months, Patrick has filed six different five-year and 10-year bond bills totalling $10.5 billion to fund his capital strategy.
Of the $2.19 billion, fiscal 2009 capital plan, state borrowing and project-funded bonds account for $1.67 billion with the state using $459.9 million of federal funds for capital improvements.
In looking at various sectors, transportation projects will receive $990.5 million of capital funding, the largest amount, followed by local infrastructure projects, with $272.2 million of funds. Housing developments will receive $170.5 million of financing, with higher educational facilities, and energy and environment initiatives gaining more than $130 million each.
The proposed $28.16 billion fiscal 2009 budget increases spending by 3.5% compared to the current fiscal 2008 projected spending level of $27.3 billion. The state’s structural balance will continue to grow as well, with officials anticipating a $1.3 billion structural deficit. The commonwealth’s current shortfall totals $760.9 million, according to a report released by the Massachusetts Budget and Policy Center.
Debt service costs for the state totals $2.05 billion for fiscal 2009, up slightly from $2.10 billion in fiscal 2008.
While Patrick’s plan calls for a 3.5% boost in spending, the MBPC expects tax revenue growth to decrease slightly, with the state receiving a 3.8% growth in tax revenues for fiscal 2009 compared with the typical tax revenue growth of 5%. Ye, the governor believes the state must incorporate the additional expenditures to fund vital programs.
“We can afford to do what we are proposing,” Patrick said in a press release. “We can’t afford not to. We have seen what the cost of inaction looks like — failing schools, broken roads, violence on street corners — and we must not settle for it any longer.”
Highlights of the $28.16 billion fiscal plan include a $275 million increase for school aid, called Chapter 70, and education initiatives, with $23 million going to preschool programs. Local aid totals $702 million, an increase of 5.12% compared to fiscal 2008, and municipalities could receive more help with an additional $176 million of casino-licensing fees if the legislature passes the governor’s casino-development proposal that would allow for three different gambling facilities, a first for the state. The $176 million would split evenly between transportation projects and property tax relief.
To make room for the additional spending, the budget includes $300 million of savings through the state Medicaid program, nearly $100 million of savings via increased employee health care contributions. New revenues could assist the state as well, with officials expecting to generate $297 million by closing corporate tax loopholes via proposed legislation.
Yet Michael Widmer, president of the Massachusetts Taxpayers Foundation, said he questions the state’s ability to capitalize on the $176 million of casino licensing fees and the projected $297 million of corporate tax within the fiscal 2009 time frame as the initiatives must pass through the legislature as well as other bureaucratic hurdles.
With the casinos, Massachusetts must form a gaming authority and work through the developer proposal process. For the corporate revenues, Widmer believes the state could gain the $297 million of revenues during the next two to three years, as opposed to one year, as some companies will file extensions or appeal the loophole.
“I think if you put that all together it’s virtually impossible to do it in a 12-month time frame,” he said.
The use of one-time funding sources will continue in fiscal 2009.
