For the second year in a row, Massachusetts is in the middle of a budget crisis and nobody wants to say why.
With an unemployment rate below the national average and a state economy that has been in a sustained period of consistent—if uneven—growth for years, Beacon Hill’s rallying cry has become, “let’s just get to next year.” Budgets have been patched together with a combination of one-time revenues and gimmicks that give the illusion of fiscal prudence on the part of Governor Baker.
Meanwhile, programs that help people are cut and solutions to the Commonwealth’s biggest problems get deferred.
Economic inequality is the challenge of our time. If Massachusetts is going to step up and lead the country in tackling this issue, we’re going to have to start telling the truth about why Beacon Hill is stuck in this cycle of crisis.
Part of the story is clear. While many on Beacon Hill, including many of my fellow Democrats, want to preserve important services and tackle big problems, too few are willing to say that we need new revenue. At the same time, there are many who say they want to cut taxes but are unwilling to take the blame for cutting the programs those tax dollars fund, programs their constituents want and need.
This year, we already know that our budget has fallen a staggering $439 million short, and it’s only June. Last year, the final shortfall estimates for this budget escalated to as high as $950 million dollars.
Beacon Hill keeps us in a perpetual state of budget crisis, which prevents us from having a serious discussion about how we tackle economic inequality, and it’s all made possible by a lack of transparency in the budget process that keeps the public from knowing what is going on.
Every year, leaders on Beacon Hill huddle in private to produce our state’s budget. Because public scrutiny is deliberately limited, appropriators can offer up rosy assumptions about projected spending and revenue collection. These accounting gimmicks lead to real pain in the future, like the 9C cuts in December which slashed $1.9 million from substance abuse treatment, the hundreds of millions of dollars diverted from our state’s rainy day fund, or the $142 million that was gutted from Medicaid and pushed into the future.
If we reform our budget process, we can finally begin to make long-term investments in the Commonwealth – like single-payer healthcare and free public college. The Massachusetts Budget and Policy Center (MassBudget) has proposed two reforms that do just that. If elected Governor, I’ll fight to turn them into law:
- First, Beacon Hill should disclose the baseline funding levels each service needs in order to be maintained from year to year. While the budget shows a dollar figure for a given service, we never know whether that figure is above or below its “maintenance level.” In other words, as MassBudget explains, “if the budget proposes a decrease in funding for a particular child care account, that could be because of a projected reduction in the number of people who will be eligible for the program or a decision to serve fewer of those who are eligible.” Simply put, if this information were public, we would know whether funding levels are realistic or whether supplemental funding will be needed later.
- Second, Beacon Hill needs to be more honest about revenue estimates. This means incorporating economic growth and contraction into our projections and adding in previously enacted tax changes. For example, revenue estimates this year were unrealistically optimistic, but because of the way our projections are calculated the public couldn’t have known it. Had Beacon Hill incorporated the impact of a dip in the stock market in 2015 around tax time and last year’s Earned Income Tax Credit change, we could have anticipated the shortfall earlier in the year.
This fiscal shell game is hurting the Commonwealth: according to the , FY 2016 was the first year in more than a decade when tax revenue projections were revised upward during the year, and yet end-of-year collections came in below the original benchmark.
These shortfalls limit our ability to add to our rainy day fund, which is what led Standard & Poor’s to revise its outlook on Massachusetts debt to negative at the end of 2015.
I’m optimistic that we can do better because we’ve done better in Newton. When I took office in 2010, the city faced a structural deficit of more than $40 million, a pension trust fund that had suffered a large loss in principal, and no rainy day fund. With laser like focus on outcomes that matter for people, we went to work in an open and transparent way to turn around the city’s budget. Seven years later, we’ve eliminated Newton’s deficit and established a $20 million rainy day fund.
Massachusetts is home to the most determined, talented, and hardworking people in the country. We can be the state which leads the fight against growing economic inequality. But until we fix our budget process by making it more transparent, we will be unable to invest in strategies like free public college and a single payer healthcare system.
It all starts with telling the truth.