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Stalking the 'stealth budget' |
from NewsLink, Vol. 2, No. 2, Summer 1998
The most casual observer of Massachusetts government would conclude that the state has been an especially generous spender over recent years. State budgets have been growing at more than twice the inflation rate. The Fiscal Year 1999 budget represents a $1.1 billion increase over FY 1998.
The state is, moreover, awash in money. In FY 1998 alone, it brought in more than $1 billion in surplus revenue (revenue collected over and above budgeted expenditures). The cumulative total surplus revenue over the last six years is about $4.3 billion. Of that $4.3 billion, only about $235 million or 5.5% was refunded to taxpayers. The rest was spent on unbudgeted projects or put in various state coffers.
In reporting on a BHI study of Massachusetts surpluses, the Wall Street Journal recently noted a distinction that clarifies this particular fiscal phenomenon. This is the distinction between: (1) the “official” budget signed, ideally, before the start of the fiscal year and including, presumably, all spending items to be financed out of that year's revenues and (2) a stealth budget that takes shape around the end of the fiscal year and that consists of spending from revenues received over and above those provided for in the official budget.
The stealth budget consists of spending on projects that, by definition, did not qualify for inclusion in the official budget – the only document on which voters and taxpayers can rely for an expression of the fiscal priorities of their elected officials. It is, moreover, spending that those very officials are inclined to advertise, not as the unbudgeted tax take that it is, but as an indicator of their sensitivity to every Massachusetts community with some unmet spending need.
The anomalous thinking that underlies and provides a rationalization for this stealth budgeting is illustrated by newspaper articles that criticize acting Governor Cellucci for recent budget “cuts.” The governor has reportedly angered certain communities by blocking end-of-the-year attempts by the legislature to fund certain pet projects out of “surplus” revenue. When the legislature learned that it had more than a billion dollars in surplus FY 98 revenue, it came up with $400 million in unbudgeted (stealth) spending. Then, when the acting Governor vetoed half of this spending, he made himself vulnerable to accusations of stinginess. By vetoing expenditures for which the state never budgeted in the first place, he inflicted budget “cuts” representing hardships to the communities that would have benefited from what was, in fact, unbudgeted spending.
Thus we read accounts of how residents of the city of Lynn can be expected to remember on election day how they were “denied” improvements in a baseball field. And of how the Boston Public Library's McKim building will now have to go without needed repairs. Pittsfield will lose a redevelopment grant, and bacteria will continue to keep swimmers out of Braintree's Sunset Lake. No lazy days of summer for litigants who appear in the Greenfield courthouse. They will go on suffering without air conditioning.
In an era in which newspapers are holding themselves increasingly accountable to standards of truthfulness, it might be appropriate for some writers to look more carefully at how they represent Massachusetts fiscal issues to their readers. The issue here is not whether projects denied state funding are worthy or not. Maybe it would be better to repair the McKim building than to fund some other project that got approval as part of the official budget. Maybe it would be better to clean Sunset Lake than to let taxpayers keep the money for themselves.
But, if the word “budget” is to have any meaning, then it has to encompass all the various projects that the legislature and the governor agree to be worth funding. Otherwise, there is no budget but only a plan to spend whatever amount of money the state takes in on whatever claimant is able to muscle ahead of the line.
NewsLink is the quarterly newsletter of the Beacon Hill Institute for Public Policy Research at Suffolk University. © 1996-2002. All rights reserved. Posted on 8/28/98.
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