Rep. Hynes’ State House Report May, 2005 The Massachusetts House of Representatives has completed action on its version of the state budget for the next fiscal year. This $26 billion plan is about 3% above the current year’s spending, driven almost entirely by cost increases in health care programs. These annual budget deliberations continue to be characterized by the difficult fiscal conditions confronting the Commonwealth. While the Massachusetts economy is doing better than last year, the recovery from the 2001-2003 recession remains sluggish. During this recessionary period, Massachusetts lost 220,000 jobs and only 30,000 have returned. In this respect Massachusetts clearly lags behind the national recovery which added 274,000 jobs in April alone. Yet recovery is taking place in Massachusetts and revenues are increasing modestly since the free fall three years ago. This has created its own sense of expectations with many of those dependent on the state budget demanding restoration of those services and programs cut during the past several years. Legislators, against this backdrop, acted cautiously, refusing to spend imprudently, even perhaps underestimating revenues available in the coming year, to force down spending expectations. During the budget deliberations I successfully prioritized the following items: Local Aid: the direct revenue sharing of state tax dollars with our municipalities and school districts, suffered considerable losses during the budget reductions of the last several years. Unfortunately, because of its discretionary nature, unlike other accounts where either federal or state law requires a certain level of service, local aid is very often the first to fall under the budget ax. Over $500 million has been stripped from this account from its height of $4.5 billion, four years ago – a 11.5% decline. For the past several months I have been working with colleagues on the Ways and Means Committee to stem these losses. Ways and Means reported its budget with a $177 million increase in the account, $77 million directly for public schools and $100 million for other local municipal services. During the House debate, we were able to add another $30 million for schools. Health Care: Spending on health care, primarily Medicaid, continues to expand notwithstanding declines in revenues, thus causing enormous downward pressure on the rest of the budget. One million poor, elderly, and disabled residents of Massachusetts receive some form of Medicaid service, costing nearly $7 billion annually and representing 28% of the budget. When we try to contain costs by reducing eligibility or services, the roles of the uninsured increase and put pressure on the need to increase contributions to the state’s uncompensated care pool- an $800 million cost, paid largely by hospitals, the state, and private insurers. This contradictory phenomenon was in full view when Ways and Means released its budget, calling for increases in Medicaid but reducing the uncompensated care pool by $155 million. This would have seriously threatened the financial health of the 69 acute care hospitals operating in Massachusetts, forcing over two-thirds into the red. I led a successful floor effort to restore $86 million in these cuts and am hopeful that the state Senate will restore the remainder. This is not simply a health care issue but an economic matter, since the direct health care industry provides 12% of the jobs and is one of the most stable economic engines in Massachusetts. Two other items which I successfully championed: earmarking $500,000 in the budget of the Commission for the Blind for the Talking Information Center. This 30 year old Marshfield based program provides radio reading services to over 20,000 state residents through its own operations and that of several affiliates located throughout the Commonwealth. The MBTA Board of Directors, facing a $10 million deficit going into 2006, voted several weeks ago to eliminate the subsidy for the Interdistrict Bus Program. Created 20 years ago with a federal grant at the time of the reconstruction of the Southeast Expressway, this subsidy provides direct financial assistance to private bus companies for service during commuting hours. Plymouth and Brockton Bus Company receives assistance from this account for several South Shore commuter bus routes, including those serving Marshfield – both to Boston and to the Braintree T Station. Over the years the federal government dropped its funding, which was picked up first by the Executive Office of Transportation and then, a few years ago, by the MBTA. Working with others, I was able to insert $1.5 million for the continuation of this critically needed service, and am hopeful the Senate will follow suit. The Senate is expected to conclude its version of the budget just before Memorial Day. A Conference Committee of House and Senate members then reconciles differences before the final bill is passed by both chambers and sent to the Governor. We are hopeful, again this year, to complete this business timely so that the Fiscal Year 2006 budget is signed and in place at the start of the new fiscal year, July 1. Economic Stimuli: I testified recently on a bill I wrote to eliminate the 5% sales tax on boats built, repaired, and sold in Massachusetts. This little known industry employs 1200 residents and generates $2 billion in economic activity annually. Arguably this is an original Massachusetts industry, in that from earliest days, boats were the primary mode of transportation and a necessary vehicle to catch food. Yet Massachusetts is loosing its competitive edge. Almost 10 years ago, about the time when Boston Whaler was moving out of Massachusetts and consolidating manufacturing in Florida, the state of Rhode Island eliminated its sales tax on the building and sales of boats. In that 10 year period, Rhode Island has increased its boat building workforce by 140% and siphoned away a good deal of this business from Massachusetts based companies. Particularly, at a time when Massachusetts job growth remains stunted, this boat sales tax elimination has the potential of stabilizing the industry and encouraging growth. Another economic initiative passed earlier and signed into law is aimed at saving 33,000 jobs at Hanscom Field and the Army laboratories in Natick. Both facilities are being scrutinized by the Federal Base Closure Review Committee, which is scheduled to release recommendations on base closings this month. Our effort here in Massachusetts is to pass a $200 million capital authorization bill for these federal facilities. We are intent on indicating to the federal government our commitment to these resources, recognizing that one of the primary criteria in the Base Closing Committee’s review is to determine the level of local financial commitment to the health of these facilities. If Massachusetts looses these facilities, we loose 33,000 jobs wiping out almost all of the gain in state job growth in the seven months since we hit our nadir in job losses, occasioned by this past recession. Reflections: “Like theology … economics deal with matters which men consider very close to their lives.” John Kenneth Galbraith “Budgeting – a method of worrying before you spend instead of afterwards.” Anonymous |