The $36.2 billion budget proposal that the Massachusetts House Ways and Means Committee released this afternoon includes a host of important decisions that affect our state and the people who live here. (If you’re looking for a primer on the budget, read my preview.)
For the sixth year in a row, these decisions are being made against the backdrop of a large state deficit. When it comes to deficits, Massachusetts is not like the federal government. Every year, the state has to close its deficit and balance the budget. That’s a constitutional requirement.
Currently, there’s a gap between the amount of money the state expects to take in next year (through taxes and fees) and the amount it would cost just to keep running the programs we already have, much less add new services.
How big is our deficit?
To their credit, the House Ways and Means Committee actually provides an estimate: $780 million. That’s a big number, but then the budget is full of big numbers so you really need to ask: is this actually a lot? And the answer is yes, it is. It’s about 2 percent of the total budget, and more than we spend on early education or the environment. More generally, it’s troubling that we still face persistent deficits even as the economy begins to improve and other states begin to leave their recession-era deficits behind.
How would the House proposal close the deficit?
There are a couple of different ways to close a deficit. You can increase taxes, you can cut spending, you can borrow from our state’s savings account (colloquially called the “rainy day” fund), or you can try to cobble together money from smaller sources like gambling revenue, trust fund transfers, and tax settlements. The governor’s proposal, which came out in January, used several of these approaches: $130 million in new revenue initiatives, $185 million from the rainy day fund, and another $150 million of cobbling.
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