Polito and Baker 11714
Massachusetts Lt. Gov.-elect Karyn Polito, left, and Gov.-elect Charlie Baker talk after meeting with the Worcester Regional Chamber of Commerce in downtown Worcester one day last month.
(Paul Kapteyn / Telegram & Gazette file)
By MICHAEL NORTON
BOSTON - Noting incoming governor Charlie Baker may face an immediate $1 billion budget problem, much larger than Beacon Hill Democrats have acknowledged, Lt. Governor-elect Karyn Polito on Wednesday attributed the developing budget crisis to spending and management problems rather than a lack of revenue in state government.
Calling it "eye-popping to us," Polito noted tax revenues are tracking near projections and have hit economic growth targets necessary to trigger an income tax cut on Jan. 1 from 5.2 to 5.15 percent.
"Revenues are coming in, yet we have such a deficit in our state budget," Polito told Boston Herald Radio. "So it's clearly a spending problem. It's clearly a management problem. It's clearly the lack of accountability in holding the system to the goals that we are setting."
A Shrewsbury Republican and former lawmaker, Polito said the state budget problem may be far larger than Beacon Hill officials have acknowledged. "Some people say it could approach a billion dollars," she said.
In November, Gov. Deval Patrick made emergency spending cuts and proposed other budget-balancing ideas to close a budget gap he estimated at $329 million. Patrick administration officials blamed the gap on uncovered costs of a job creation law, the income tax cut, and non-tax revenues that they said are not meeting their expectations.
Outgoing Massachusetts Taxpayers Foundation President Michael Widmer, also on Herald Radio on Wednesday, said Patrick is between a "rock and a hard place" as he prepares to leave office, hoping to exit with a balanced budget but likely unwilling to make the unilateral spending cuts needed to address the full scope of the problem.
Widmer said spending-side pressures on the $36.5 billion budget point to a $1 billion problem. He predicted Baker will face an immediate $750 million budget problem when he takes office in early January, after accounting for spending cuts already made by Patrick.
Baker has taken two budget-balancing options off the table as he's pledged not to raise taxes or cut local aid to cities and towns. "But beyond that everything's on the table," he told reporters Tuesday.
On Wednesday night, Baker joined activists in celebrating another development with budget implications: the voter-approved initiative petition repealing the 2013 law indexing the gas tax to inflation. Voters preserved another law with state budget implications, rejecting a proposal to repeal the 2011 law authorizing casinos in Massachusetts.
While Patrick's budget chief Glen Shor called in early November for "decisive action," legislative leaders have opted against tackling the budget problems Patrick flagged last month, returning to Beacon Hill this month for sessions to say goodbye to departing members and tending to mostly local matters during sessions that will continue into early 2015.
Widmer called Patrick's budget-balancing strategy "high-risk" and designed to avoid making unpopular spending cuts while potentially requiring Baker and the new Legislature to solve problems that could be growing worse while the Legislature is largely out of session.
"There are no easy cuts here," he said.
In addition to over-estimating non-tax revenues like fees and reimbursements to support the 5.6 percent spending increase this fiscal year, state officials face significant unbudgeted costs in the areas of public employee health insurance and emergency assistance for the poor and homeless, according to Widmer.
Baker will also face uncertain costs in connection with more than 300,000 people temporarily placed on Medicaid insurance plans when they encountered problems navigating a website built and run by the Patrick administration, Widmer said, calling that situation a "fiasco" and a "self-administered wound by the administration."
Widmer expects negotiations between the Baker and Obama administrations in early 2015 over how much the federal government may be willing to shell out to cover those health care costs. Those talks, he said, will likely add uncertainty to fiscal 2016 budgeting.
Polito said there are "serious problems" at the Massachusetts Connector Authority, saying "a lot" of the state budget problems are associated with the Connector and MassHealth, major state programs that provide health insurance to Massachusetts residents.
She declined to say if Baker would shake up the Connector Board.
"We have to assess a lot of things when we get in there. We're trying right now to gain as much information so we can hit the ground running on January 8," Polito said. "But the fact is until our administration takes office, our secretaries start to dig in, we don't really know the facts and the figures and who's working and who's not."
The News Service reported in mid-October about percolating fiscal 2015 budget problems. The Patrick administration acknowledged a midyear budget gap two days after the Nov. 4 elections.