Our Supplemental Budget

This week, the House and Senate voting overwhelmingly, passing an $80 million supplemental budget and placing it on the Governor’s desk. It had a lot of good things in it, such as restoring funding for Regional Libraries, emergency food banks, and the like. However, despite the fact that these were some of my priorities in the FY 2010 budget, I could not vote for this budget. I don’t feel that we should spend this amount of money at a time when we are not sure where revenues will bottom out and when we are being told we are in deficit in this year’s budget.

This is difficult and I don’t blame people for voting to restore these programs. For example, this spending bill restored food bank funding to the level of last year. Last year the food banks ran out of money and this year the demand for food will be even greater. But I felt that it was false for the Legislature to take up and pass additional spending that, I believe is unsustainable as we go forward.

There are several reasons that I voted against this budget. First, instead of taking up each of the Governor’s budget vetoes and deliberating over whether we should override a particular veto, the entire $80 million was placed into one spending bill. Therefore, if one wanted to increase spending on one line item, whether it was as little as $25,000 for beach preservation, you had to vote for $80 million in spending. I didn’t feel that we should do so.

Second, our revenues are still coming in less than even last month’s downsized predictions. We don’t know how much money we will have to spend. In caucus, I spoke about an individual from my district who always contributes to local cultural facilities. He told me he would be contributing again, but not right away. He said, “Dan, I still have money, but I am not sure how much and won’t know until the economy bottoms out. Then I will reassess and contribute.” We are like that guy. We know that we have some 20+ billion dollars, but we are not sure how much money we have and until we do, we should proceed cautiously.

Another factor in my decision was the timing of the supplemental budget. Again, as we have not seen any revenues yet from this fiscal year, we need to get some kind of idea as to how we are performing revenue-wise in the new fiscal year. July is not generally a good month for revenues and the first real benchmark will be the first quarterly payments in September. I believed that we should wait for the first quarter to see if we could afford to spend more money.

The signs are not good. It appears that the mid-month reports indicate that we will not meet the lowered revised benchmarks for July. The Senate President stated, on the day we passed the supplemental budget, that we may have to revise or cut local aid line items. And Michael Widmer, Director of the respected Massachusetts Taxpayers Foundation, has stated that he feels we are several hundred million dollars out of balance at this time.

Taken together with the timing of the budget on the week before a higher sales tax took effect, I felt the timing was not right to restore these items even though many of them are good programs.

Lastly, if revenues are down as predicted, we are fooling ourselves if we think that we can sustain these line items. The Governor has a constitutional responsibility to balance our budget. If we are out of balance, he will cut these items under his constitutional right to do so. Even if he doesn’t, next year we will be faced with even bigger budget deficits and this additional spending inflates the budget and creates a structural deficit that will be harder to deal with next year. That is not right. Add to that two other factors: federal stimulus money and our stabilization fund. Next year, we will not be able to rely heavily on federal stimulus money as this was a temporary fix. That creates problems for us and gaps in our budget. And our stabilization fund will be depleted. We have been supplementing our spending from these revenue sources, but will no longer be able to do so. This is unsustainable. More spending now means more to cut later unless revenues make a dramatic turnaround. We cannot rely on a dramatic rebound, but must be prudent in our budgeting.

I have written in the past about our budget process. We have had both tax increases and we have cut the budget this past year. We need enact more reform as to how we conduct business in Massachusetts. And we need to prepare our economy so that we grow revenues from increased business activity. This is not easy, but we must start now to plan for next year. That is the prudent business course. Next year is an election year. It will get harder to handle these problems. Again, that means we must start now.