Budget Struggles at Session Mid-Point

JANUARY 2010 VOICE: The 2009-2010 Massachusetts Legislative Session has reached the mid-point, with the Legislature set to complete formal business on July 30.

As the state's economy continues to suffer through the recession, Beacon Hill leaders struggle to plug gapping holes left in the Commonwealth's budget. Observers fear that there could be as much as a $1.5 billion structural deficit for the coming FY11 fiscal year.

This past October, Governor Deval Patrick was forced to trim some $600 million from the existing FY10 budget to cover ongoing revenue shortfalls. State officials and area economists are closely monitoring month-to-month tax collections, with the hope of signs of an economic recovery beginning to take hold.

However, economists believe that it will likely take several years before Massachusetts is back to a pre-recession budget level. State officials are heeding the warnings and making judicious use of what remains of the Rainy Day Fund and federal stimulus.

"The economy is going to continue to be a major obstacle; there is no way around it. Thankfully, we've seen some recovery with our pension funds. But, so far, this is a jobless recovery and it continues to have a major impact on tax revenues," explained Association President Ralph White. "Our biggest concern remains protecting health insurance benefits, at both the state and local levels. These are large budget items that are natural targets for savings."

While direct state aid to cities and towns remains largely intact, there is great concern that reductions in tax receipts may finally impact local communities in FY11. Decreased property values and foreclosures are also a growing problem in many communities.

Bill Status

The Association filed nineteen separate bills or pieces of legislation to start the 2009-2010 Legislative Session. All bills have now had a public hearing, at which time Association officials offered detailed testimony in support of our proposals.

Eighteen of the bills sponsored by the Association are currently under review by the Joint Committee on Public Service, chaired by Senator Thomas McGee (D-Lynn) and Representative Robert Spellane (D-Worcester). The remaining bill, which provides veterans' non-contributory pensions with tax-free status, is being studied by the Joint Committee on Revenue.

"Given the reality of the economic situation, the prospect of passing any bill that increases or creates new benefits is very unlikely at this time. A compelling case can be made to pass each one of these proposals, but the money is just not there right now," said Association Legislative Liaison Shawn Duhamel. "We will get through these tough times. Right now it is important to protect current benefits.

"That said, I think there could be an opportunity to make changes to areas where no appropriation is required. Disability retirement reform is one such area where we are working with the Public Service Committee."

The Option C recalculation, Medicare reimbursement, basic life insurance increase and higher minimum pensions for long-term employees and survivors remain top priorities. However, no action is anticipated on most of these issues until the state's economy improves.

Senator Ken Donnelly (D-Arlington), who is the lead sponsor of S1044, which increases the minimum pension for survivors of disability retirees, has vowed to make survivor benefits a priority.

"It has been fifteen years since the last increase in the minimum disability survivor benefit. I know these are tough times, but they are even tougher for those who need help the most," said Donnelly. "We need to find ways to get results that people need."