Patrick Offers Gap Plan

Massachusetts Gov. Deval Patrick last week announced his plans to fill a $195 million fiscal 2010 budget gap due to increased state spending.

Caseload increases in the MassHealth program and costs incurred from the special U.S. Senate election in January, among other expenditures, created a mid-year deficit of $195 million to $295 million. The Executive Office for Administration and Finance anticipates various government agencies will absorb $100 million of savings internally, leaving a $195 million shortfall.

“In these challenging economic times, it is critical we maintain our safety-net services for residents most in need,” Patrick said. “Our plan for closing this budget gap ensures that we can continue to provide vital services like health care and shelter while managing state resources in a fiscally responsible way.”

In addition, the federal government will reimburse Massachusetts for some of the additional spending. The state would then be faced with filling a $118 million gap.

To address the $118 million, Patrick proposes transferring $50 million in excess funds from the commonwealth transportation fund to the general fund to support transportation spending and tapping into $30 million of rainy-day funds. The funds come from $80 million of Medicaid savings, with the remaining funds set aside to counterbalance any underperforming revenues that may occur later in the fiscal year.

Patrick also plans to reduce spending by $38 million among 10 accounts, including $24.1 million less in debt-service payments.

“This only reflects a change in timing for necessary debt-service payments, not a reduction in the administration’s actual capital plan,” according to a list of the targeted spending reductions.

Transferring the $50 million from the transportation fund and the $38 million of spending reductions require legislative approval.

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