STATE REPRESENTATIVE
PAUL C. CASEY

Room 473-B
State House
Boston, MA 02133
Telephone: (617) 722-2230
District Office
585A Main St.
Winchester, MA 01890
Telephone: (617) 721-7285 or (617) 438-7185

A View from the Hill

FOR IMMEDIATE RELEASE: October 5, 1999
CONTACT: Tom Nolan (617) 722-2240

BATTLE OF THE BUDGET

Historically, most people do not spend their day thinking about the state budget. In all likelihood, their minds are occupied with the issues surrounding everyday life. What should we eat for dinner tonight? Who is going to pick up Jenny from swimming lessons? What time is Luke's soccer game on Saturday? What is that little rattling noise that my car makes every time I go over a bump? For the most part, people see the budget as a silent, invisible process that only affects them indirectly. So long as the highways are plowed, the schools have books, and the car registration comes in the mail, their concerns are allayed.

This year, however, is an exception to the rule. The budget has received quite a bit of attention due to the extended deliberations by the Senate and House of Representatives. The public is aware that there is some kind of holdup in the budget because of differences between the two legislative bodies. Suddenly, there is deep concern over something that rarely, if ever, found its way into the public spotlight. Commentators now devote time in the nightly news to recap the "progress" being made on Beacon Hill and daily papers keep a close watch on the discussions involving Speaker Finneran and President Birmingham.

Unfortunately, what many do not realize are the reasons why, in these times of economic boom, we are still without a budget. The press would have us believe that the holdup stems from the political aspirations of the Speaker and Senate President. Others postulate some secret conspiracy brewing on Beacon Hill. Neither assertion addresses the true issues surrounding the budget discussions. It is highly unlikely that the budget debate is simply a "battle of egos," or a forum to express gubernatorial aspirations. There are many ways to promote oneself in politics, and stalling a budget is not one of them. Furthermore, a glance at each version demonstrates that there is no ring of conspirators secretly delaying negotiations, but rather, a host of philosophical differences between the House and Senate budgets at the root of the debate. These points of disagreement are over key fiscal policies that will heavily impact the economic integrity of the Commonwealth.

For starters, the House has emphasized the funding of existing obligations before committing to expansions that may prove difficult to sustain in the future. We have funded essential accounts, including snow and ice, the Quinn Bill, and Chapter 90 at basic maintenance levels to prevent underfunding and avoid forcing these accounts into deficiencies. Unlike the Senate, the House embraced provisions to restructure budget busting accounts such as the MBTA and initiated a review of Medicaid expansions. As for the MBTA, the House adopted "forward funding" provisions, giving it a set budget to operate with each year. This is, in fact, how every other administrative agency is funded. As it stands, the "T" accrues expenses and then submits a bill to the taxpayers at the end of the fiscal year. This policy permits the "T" to operate at a deficit, draining the state's resources, and as we recently saw in the Boston Globe, this often results in overspending and bad contracts.

The House version also advocated spreading the costs of the MBTA operations over a larger number of communities that benefit from its resources. Under this plan, communities like Winchester will see a significant reduction in their "T" assessments over the next 6 years and the burden will be lessened by all member towns. If the proposal went into effect, Winchester would find itself with an extra $246, 942.

Another point of difference is the expenditure of anticipated revenues from the Tobacco Settlement. Although both branches agree upon the establishment of a special commission to research and advise upon the most efficacious expenditure of the funds, they differ as to how and when to do so. Recognizing that these funds may not materialize until FY'01, the House recommended that the principal from the settlement be locked into a trust fund while the special commission pursues its investigation. In contrast, the Senate relies upon 40% of next year's not-yet-received settlement to achieve its budgetary goals. While the House is not opposed to funding worthwhile programs, earmarking those funds now could prove costly in the event of delay.

The branches also disagree on the configuration of the Ed Reform formula and the allocation of funds in excess of the statutorily required funding. To be sure, both budgets fully satisfy the required level of spending mandated by the Ed Reform Act of 1993. They differ over where to invest the remaining funds over and above those necessary to meet "foundation." The House espoused the approach that the funds in excess of foundation would be best invested in the expansion of full day kindergarten and early literacy, health, and nutrition programs to assist our children in the critical early years. The Senate plans to distribute more discretionary education funding to cities and towns by amending the Chapter 70 formula and allowing the Department of Education to determine a funding schedule for these remaining monies. While both plans reinvest these funds in education, the target groups emphasized in each are obviously different.

Finally, the House embraced an across-the-board income tax cut in its budget, in addition to several targeted tax cuts that will return significant surplus revenues to taxpayers. The Senate did not include a similar measure in its budget recommendation, instead using these revenues to increase the accounts of existing programs or to develop new ones.

While these points of contention are significant, they hardly imply that the Legislature is hopelessly deadlocked or that the state is grinding to a halt. The agreements between the House and Senate certainly outweigh the disagreements.

Both sides continue to negotiate. Cities, towns, and programs funded in FY'99 have continued to receive necessary funding through interim budgets, including last week's measure to fund the month of October. In fact, the interim measure approved for September provided quarterly education funding based upon the minimum amount of Chapter 70 aid that communities can expect in FY'00, as recommended by the Governor and the House. In this first quarter payment, Winchester received $696,390, allowing its schools to operate as usual.

The interim funding does not account for the additional surplus funds from FY'99 that continue to benefit our communities. Specifically, we approved a final deficiency budget for FY'99 that included $85 million in additional lottery funds to be distributed (above the $597 million initially appropriated in last year's budget). Winchester is slated to receive $129,319 and will be able to use these funds at its discretion. In addition to this, the annual "Cherry Sheets" will be distributed to cities and towns in the near future, so communities will know the minimum amount of aid they can expect to receive.

Since FY'95, state aid has grown over $1 billion and has contributed to the robust fiscal health of the Commonwealth. The House budget proposal for FY'00 is designed to continue that trend through prudent investments in our current obligations, progressive changes to some antiquated funding mechanisms, and a reticence upon existing revenue streams.

It is understandable that people are anxious to see the budget passed as quickly as possible. I share in this anxiety, but we must also look down the road to the years ahead, and realize that the issues at stake will significantly affect the future direction of Massachusetts. Expediency and rushed negotiations for the sake of having a document on the Governor's desk will only sow the seeds for problems in the times to come. As we think about budget, let us keep in mind that we must pass sound legislation and not just any legislation.

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