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Baker is bracing to face a budgetary baptism of fire

Governor-elect Charlie Baker could face a $750 million hole in the current year’s state budget.Dina Rudick/Globe Staff/Globe Staff

Man, meet moment.

Charlie Baker made his name on Beacon Hill in the 1990s as a budget whiz. He pulled Harvard Pilgrim Health Care back from the brink of financial catastrophe. And he won voters’ confidence in November with an upbeat bipartisan message.

Now, after Baker places his hand on a family Bible and takes the oath of office as governor Thursday, he will finally have the opportunity to tackle the job for which he’s spent nearly a lifetime preparing.

Massachusetts faces an urgent budget gap that will almost certainly force Baker, who has vowed not to raise taxes or fees, to make hard decisions about cuts. He will have to prove his bipartisan chops negotiating likely funding reductions with a Democratic legislature.


And there are significant longer-term fiscal challenges, some related to health care spending, that analysts say are expected to increasingly squeeze state government over his four-year term and limit his ability to fund major initiatives.

“The choices will be very difficult. Many worthy causes will be disappointed,” said Michael J. Widmer, president of the business-backed Massachusetts Taxpayers Foundation.

While it will be hard for Baker, “I think there are enormous opportunities to improve how government manages itself,” Widmer said. “The circumstances will make that imperative.”

All the accrued skills and wisdom will be quickly put to the test.

The $36 billion-plus state budget, which runs from July 2014 through June, faces a midyear fiscal shortfall that Widmer and other outside budget analysts have pegged at about $1 billion, though aides to Governor Deval Patrick dispute that number.

Through cuts and savings, Patrick had bridged about $250 million of the deficit, according to Widmer’s group, but Baker could still face a $750 million hole.

And the pressure to act soon will be intense, as each day brings the June 30 end of the fiscal year closer.


The shorter the period of time the cuts are spread over, the greater their relative pain, said Andrew S. Natsios, a secretary of administration and finance under former governor Paul Cellucci.

Natsios backed Baker’s promise not to raise taxes or fees but said it meant the new governor “has either got to make very large cuts that are real very quickly or he will run out of options.”

Baker has ruled out taking money from the state’s rainy day fund, now totaling more than $1.1 billion, to bridge the current deficit.

Although the governor has the authority to make some unilateral cuts, many others require legislative approval. That will likely require Baker, a Republican, to reach an agreement with the Democratic-held House and Senate, which have members with constituencies that may strongly oppose budget cuts.

In an interview this week at his transition office, Baker said he would know a lot more about the scope of this year’s deficit after he takes office but acknowledged it will be a significant problem.

“The big challenge, in the short term, is going to be the budget,” he said.

Over the sweep of his four-year term, analysts see less acute but equally profound fiscal challenges.

Widmer, a respected figure on Beacon Hill, and his colleague, Andrew C. Bagley, who directs research at the Taxpayers Foundation, cite several pressing budgetary demands that will exist long after the current deficit is solved.

State revenues are likely to grow more slowly than in past economic recoveries. Relatively fixed costs, such as Medicaid, are eating up a greater and greater share of the budget. And that is putting tremendous pressure on items legislators and the governor have more control over such as aid to cities and towns, funding for higher education, human services, and public safety.


Those trends alongside Baker’s intention not to raise taxes, analysts say, are likely to limit his ability to launch initiatives.

“There are no easy answers to budget challenges that Baker faces,” said Noah Berger, the president of the liberal-leaning Massachusetts Budget and Policy Center.

Berger said all options, including raising taxes and fees, should be considered by Beacon Hill policy makers. He said this is particularly true because the income tax rate has gone down over the last 15 or so years meaning the state has forgone billions in revenue.

Dismissing higher taxes and fees out of hand, Berger said, means budget items that have a direct impact on ordinary residents — including those that help keep public higher education costs stable — could take a hit.

In the interview, Baker bristled at the idea that raising taxes and fees is necessary.

“We can’t just push the revenue button every time it gets a little complicated,” he said. “We have to be willing to think differently about how state government operates.”

On the campaign trail, Baker said he would not raise taxes or fees. He reaffirmed that position this week, but gave himself a sliver of wiggle room.


Baker said he would not consider it a violation of his position if the state rolls out a new service that has never been offered and attaches a fee to it.

The governor-elect acknowledged that “perhaps” he would be limited in funding major new programs — but that did not seem to faze him.

He spoke broadly about issues he has emphasized before: a better economic environment in every region of the state, improving the quality of languishing schools, tackling the opiate addiction crisis.

He indicated that his view of accomplishment over the next four years will be attached to metrics measuring quality of life and how effectively the government runs.

Pressed to specify some ways to measure how he does as governor, Baker said he’d be paying attention to the total jobs in the state and the disparity in employment rates among counties; crime data; and more public schools getting better scores in the state’s five-level rating system.

And his overarching message was clear. “I’m not a big believer that the amount of money you spend necessarily defines your commitment, your level of effort, or your ultimate success. The measure,” Baker said, leaning forward, his voice rising, “should be whether the money you spend actually gets you something.”

Joshua Miller can be reached at Follow him on Twitter @jm_bos.