Massachusetts Gov. Charlie Baker spelled out $514 million in spending cuts to help the Bay State seal a $768 million budget gap for fiscal 2015.
"To make a long story short, spending seems to be the primary issue here," Baker told reporters Tuesday at a State House press conference in Boston. According to the governor, tax revenue is about parallel with benchmarks. "State spending, on the other hand, is going to up 7.3%, far in excess of the growth of state revenue and therein lies the problem."
The plan also calls for $254 million in new revenue, including enhancements at the Massachusetts Health Connector, the agency that brokers health insurance plans.
"This is a responsible and sensible plan to balance the budget without impacting core state services," said state budget chief Kristen Lepore. Baker must submit his fiscal 2016 budget proposal to lawmakers by March 4.
Baker, a Republican who succeeded Democrat Deval Patrick last month, said his plan does not raise taxes or local aid and involves no drawdown from the commonwealth's stabilization or rainy-day fund, although it does divert about $130 million in capital gains tax proceeds that would have been earmarked for a rainy-day deposit.
Massachusetts ranks among the top five states with roughly $1.25 billion in its rainy-day fund. It withdrew $140 million for its fiscal 2015 budget.
Patrick, shortly before leaving office, had pegged the deficit at about $330 million, even after $250 million in cuts. State budget officials on Tuesday bumped the shortfall by a further $3 million, from $765 million, citing tweaks to tax data and the cost of last week's blizzard that dumped as much as three feet of snow in some parts of the state.
According to Baker, notable savings initiatives include a 10% budget for his own office, using so-called "9C authority" cuts that need no legislative approval; a $168 million reduction by redetermining eligibility in the state's Medicaid program; and $22 million from a hiring freeze.
He said notable saving from programs not yet started will total $73 million. They include $37 million lopped off from an economic development bill; $2.3 million from a clean water planning and technical assistance program; $600,000 from a water technology innovation program; and $200,000 from a parking management study.
Fitch Ratings and Standard & Poor's rate Massachusetts' general obligation bonds AA-plus while Moody's Investors Service assigns its Aa1 rating. Speaking in December at the commonwealth's annual investor conference in Baker said state officials should aim for a triple-A rating.
"State debt ratios are among the nation's highest," Moody's said in a mid-December report. Moody's also labeled large healthcare and other social services costs as budget drivers.
