The Governor needs to find at least $750 million in savings to bridge the budget gap in this fiscal year. The Pioneer plan urges that he and legislative leaders start with emergency and targeted cuts that will save $311 million in the final half of FY09. These common sense reforms will return the state workforce to 2004 levels, end corporate welfare, and consolidate overlapping state functions. Combined with a $300 million withdrawal from the rainy day fund and a measured 4 percent cut in local aid ($200 million), the Governor could avoid further cuts to the safety net and core services.
Importantly, Pioneer’s budget recommendations are premised on avoiding blind, across-the-board cuts and on embracing a more principled approach based on four tenets.
1) Don’t raise taxes or close so-called “loopholes” during a deep recession. We face a lethal combination of a monumental financial meltdown, irresponsible budgeting and a persistent structural budget gap. We need to address these factors.
2) Refocus government on core services, such as care for the vulnerable, safety (public, environmental, infrastructure), and education. Preserving the safety net should be a priority in times of economic turbulence. We should ensure that we can continue to fund these services in the future by looking for reforms that reduce their cost.
3) Don’t sacrifice reforms that can have long-term impact. Reforms like the 2006 Health Care law have their shortcomings, but rather than ending them, we should seek to correct them to ensure long-term sustainability.
4) Avoid fiscal shell games and one-time gimmicks. In October, the Governor shifted the current budget burden to future generations when he extended the schedule for paying off unfunded pension liability. He was also too quick to draw down the rainy day fund. With $600 million already drawn from the fund this year and next year’s budget promising to be equally difficult, we should be parsimonious in our use of the remaining $1.7 billion.
Pioneer’s plan avoids fiscal shell games. The Institute recommends limiting withdrawals from the rainy day fund to no more than $300 million and avoiding any further extensions in the public pension payment schedule.
The Institute also recommends that the state not pass the fruits of its own unwillingness to reform on to local officials. The Pioneer recommendation for a $200 million cut in local aid is difficult as it is. We balance it with a call to implement reforms that overall would save localities up to $250 million. These actions include consolidating locally managed pension funds into the state system, giving municipal executives the right to bring public employees into the state health insurance pool, and eliminating mandates such as prevailing wage requirements.
Pioneer’s full budget policy brief can be found at Pioneer’s website.
Liam Day
Director of Communications
Pioneer Institute
Obama’s people are floating that 70b of the stim would be paid as education dollars to states.
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p>We’re 2% of population, so perhaps 1.4b for us, spread over 2 years.
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p>That’s a lot of scratch.
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p>How does that fit in?
In fact, USA Today ran a headline the other morning on just that very topic – States continue spending sprees.
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p>Nevertheless, we did not include any potential stimulus money in our plan for a couple of reasons. 1) Federal stimulus is not yet a done deal and, even if it is passed, we could not project exactly how much the Commonwealth might get and for what. 2) We believe Massachusetts has long-term structural budget problems that need to be addressed whether or not the feds step in. And 3) building on that, we worry about whether federal stimulus money might not exacerbate those structural problems. If, assuming you’re correct, we do get $1.4 billion over the next two years which we apply to operating costs, what happens in year three when the federal money is no longer there? Relying on federal money to close an FY10 budget gap would simply be kicking the difficult decisions we need to make down the road.
I will react to the summary you provided by stating that Pioneer Institute does credible work and I frequently read the proposals that are floated. I do not agree with the continued conservative mantra of “no new taxes” as it does not reflect the historical context that has played into many of the current fiscal issues.
Local aid must be protected to the greatest extent possible as it is the safety net and the closest form of government to taxpayers and citizens. Regarding loopholes, Verizon should put-up and shut-up, we all know corporate welfare in MA and the USofA is egregious.
Don’t cut the safety net… but don’t raise taxes? Even some of the worst loopholes still left on the books?
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p>We have a structural deficit, mainly because of health care, energy, construction and other expenses. Where do we cut that doesn’t cut core services in order to end that structural deficit? Using the rainy day fund and cutting local aid certainly won’t end the structural deficit that hits us in good years and bad. It’s just a new band aid on an open wound that will have to be replaced with newer, deeper cuts just a year later.
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p>Sure, there are some ways to contain some costs, like health care, but we face tremendous legislative hurdles to get there that have yet to be passed in a single state of this country. I don’t see the Pioneer Institute arguing for those reforms. The Pioneer Institute doesn’t dupe nearly as many people as the organization would hope, no matter how compassionate you try to make your conservatism sound. Compassionate conservatism is dead, as is the starve-the-beast mentality that’s really the driving force behind your organization – from your constant pushing of charters to ridiculous levels of testing and everything else that puts strains on school budgets everywhere, including your desire to cut their budgets 4% midyear, which would essentially be like cutting them 8% at the beginning of the fiscal year, because midyear cuts are extra painful. Nice try at the PR, though. Unlike creating good policies for this state, Pioneer’s actually good at rosy PR.
But I would encourage you to follow the link to our brief. Some of the recommendations in the policy brief are quite specific regarding what programs and/or offices might be reduced, consolidated or eliminated. They won’t get us all the way where we need to be. But we do believe they are a good place to start.
And is actually a “you can pay now – or pay more later”.
Why is it bad to “raise taxes or close so-called loopholes” during a recession but its OK to cut wages by “eliminating mandates such as prevailing wage requirements”?
Every tax cut is a benefit cut to your family, too.
Every tax cut allows me to keep what is mine. That which I have earned through hard work. I have to sacrifice every day to pay my bills and feed my family. So keep your sarcastic Yah Yah for the lazy beggars who want to steal what I have worked hard to earn.
Your tax cut “gives” you worse roads. Fewer cops, prison guards, prisons, border guards, security, firefighters, EMTs, teachers, doctors, and nurses. Less reliable and less safe power, water, food, and transportation. Such a deal! It’s a sucker’s game.
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p>Nobody is “giving” you money with a tax cut, they’re bribing you with chump change at the price of a working society.
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p>I tire of these conservatives who are too ignorant or too ideologically riven to admit that their lives depend greatly on the services their taxes fund. Why don’t they just move to the Sudan, Chad, the DRC, Bangladesh, or Somalia, all countries where there is no organized government that can collect these horrid horrid taxes?
That’s why I don’t feel the need to use invectives to make my point. Please don’t paint me with the brush which colors those who want to pay no taxes. I pay my share and I rarely complain, but the point was made that if we don’t raise taxes we’ll have to “cut” some state employee wages or salaries(prevailing wage). I just wanted to point out that it seems OK to cut my wages with a tax increase but not to cut theirs. Even here at BMG there are many on both sides who see incompetence and inefficiencies all around us, but the raise taxes mantra just keeps on playing.
It depends on what taxes are being increased. Closing tax loopholes can mean closing business tax loopholes (for example the phone company property tax exemption)which primarily benefit the wealthy. There are ways of taxing the wealthy which I would assume (not knowing your circumstances) won’t cut your wages.
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p>And as a side note, prevailing wage laws don’t benefit state employees, they primarily protect wage levels of private sector workers.
You can’t cut 6,000 state jobs and not have it affect the most vulnerable. Just because the introduction sounds all nicey nicey, doesn’t mean the meat of the document isn’t filled with ideas of cutting state services that disproportionately benefit lower income communities.
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p>Too much libertarian poppycock hurts my brain.
However, I don’t think either of us knows exactly where the 6,000 jobs that have been added to the state payroll in the last 5 years have been added. I suppose it’s a perfect example of the need for greater transparency in state government. Without precise knowledge as to where and why the state government payroll is growing, it is difficult to assess any cuts.
My problem with the report and your posts is that you imply that reducing staff to 2004 levels won’t hurt emergency services because the cuts are just “common sense” and imply that any growth in government employees over the last four years have been needless. I’m not convinced.
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p>Any plan that calls for workers to take it on the cheek but insists that businesses who have been stealing from the state by not paying their fair share not be burdened with a “recession extending” tax increase, is weighted unfairly towards business.
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