By David G. Tuerck | January 10, 2007
TAKING office, Governor Deval Patrick announced his intention
to restore $384 million in spending previously cut by Governor
Romney from the state budget. Included in the restored spending
is $100,000 apiece for a gazebo in Braintree and an ice rink
in Randolph and $735,000 for HIV treatment and prevention.
after the announcement, Patrick's aides warned about a looming
deficit of $1 billion in the state budget, partly the result,
the governor then implied, of mismanagement by the Romney
administration. The governor began to hedge on some of his
promises for new programs. The possibility of a tax hike is
in the air. Taxpayers might wonder why, if the new governor
faces a $1 billion deficit, he didn't forgo the gazebo and
ice rink as part of the price of treating people for HIV.
They might also wonder how the state came to face a budget
gap, considering that state tax revenues have come in over
budget by $782 million per year over the last 10 years.
fact, a budget gap is not something handed down by nature,
the economy, or a prior administration, but the creation of
a government unwilling to live within its means. And if revenues
do not grow in line with expectations, the government does
not have to raise taxes. It can just as well cut spending.
school spending. Chapter 70 aid to public schools accounts
for $3.5 billion in state spending or about 14 percent of
the budget. The state could cut this spending by $374 million,
which is about 4 percent of total school spending, without
cutting into the "foundation budget" for schools.
there's healthcare. In fiscal year 2007, the state substantially
increased Medicaid payments to healthcare providers and expanded
eligibility for Medicaid benefits. If the state cut $484 million,
or about 6.5 percent, from its Medicaid budget, it would save
$242 million, after adjusting for federal reimbursements.
Adding $374 million cut from schools, $242 million saved on
Medicaid, and Romney's cut of $384 million, which could be
restored and, if necessary, extended into fiscal year 2008,
we get $1 billion in savings.
opportunities to save abound. The state could save money by
repealing the prevailing wage law and by ending the practice
of performing public construction projects under project labor
agreements. It could cut back on police details and Quinn
Bill incentive pay, both of which help police officers rank
among the highest-paid government workers in their communities.
course, there are immense political obstacles to these suggestions.
But that is just the point. The fact that the political culture
is so hostile to spending cuts means that taxpayers have only
one recourse for imposing fiscal discipline, which is to constrain
lawmakers to live with a certain amount of revenue and no
more. Taxpayers cannot be expected to sort out all the priorities
that compete for their tax dollars. They can, however, demand
that lawmakers honor their wishes on the matter of how much
in tax revenue is available to spend.
problem is getting lawmakers to understand this principle.
tried to impose a revenue constraint in 2000 when they cut
the state income tax rate from 5.85 percent to 5 percent.
But as soon as the first budget "crisis" came along,
the Legislaturefroze the rate temporarily at 5.3 percent and
did so at the urging of the same budget experts who have the
governor's ear now.
and budget expertscannot, however, preach fiscal discipline
in one breath and then defy the express wishes of taxpayers
to constrain revenue growth in the next. There is no discipline
in announcing a budget gap and then raising taxes to fill
the gap. Real discipline lies in recognizing that there is
only so much revenue to spend and that thestate will have
to make do with thatmuch revenue and no more. Senate President
Robert E. Travaglini, who has declared that tax hikes are
off the tablethis year, appears to understand this principle.
the state actually have to cut spending? Probably not. It
appears that revenue growth will be strong enough to carry
us through fiscal years 2007 and 2008. Patrick should not
be warning about budget gaps that are unlikely to materialize
but taking the initiative to identify spending cuts he is
prepared to make in the event that they do.
G. Tuerck is executive director of The Beacon Hill Institute
and chairman and professor of economics at Suffolk University.
This article originally appeared in the Boston Globe
on January 10, 2007.