Gonzalez, state budget chief in the Great Recession, managed difficult cuts, colleagues say
It was the summer of 2011. The state was still reeling from the Great Recession. Lawmakers had sent the governor legislation that would allow cities and towns, without drawn-out negotiations, to shift health care costs to employees and retirees.
Unions were apoplectic. Cities and towns were dug in about the need for savings to avoid laying off workers. And Deval Patrick’s budget chief, Jay Gonzalez, was assigned an unenviable task: Somehow, some way, get everyone on board.
In just days, he had to persuade municipal workers to give up some of their hard-won collective bargaining rights, get cities and towns to compromise further on how much they would save, and get lawmakers to renegotiate legislation they thought was already complete.
After much gnashing of teeth: A pact emerged that preserved more than $100 million in annual savings for cities and towns while giving union members a share of the savings to help ease the pain. Remarkably, union officials stood alongside city officials, legislators, and budget watchdogs as the revised bill was signed.
Gonzalez’s high-wire act in that critical moment illustrates the even temperament and political savvy that helped him steer the state through trying fiscal times, according to interviews with those who worked with him during his 2009-2013 tenure as administration and finance secretary.
“It showed he was creative, he was determined, he was skillful, he was able to build consensus,” said Michael J. Widmer, the then-president of the Massachusetts Taxpayers Foundation and a key proponent of the health care reform.
It was often ugly as well. Gonzalez made cuts to vital services such as early education, social workers for abused and neglected children, and programs for the developmentally disabled. And Governor Charlie Baker — who held the same position, administration and finance secretary, during in the 1990s — has made a campaign issue of the cuts Gonzalez imposed while also talking up his own fiscal record as governor.
Gonzalez’s colleagues in the trenches came to admire his focus on helping the state emerge from the fiscal disaster in better shape than most.
In a difficult stretch, Gonzalez “did a creditable job,” Widmer said. “In fiscal crises, there are no shortcuts. You have to cut spending,” Widmer said.
Gonzalez, in his 21 months on the gubernatorial campaign trail, has touted his time in state government — in the budget office and as budget chief — as giving him a deep understanding of how to move ideas to reality on Beacon Hill.
“All of that experience is going to allow me to hit the ground running,” he said in an interview on a Blue Line train to Revere this week.
But now, as the Democratic nominee for governor, Gonzalez is under fire from Baker for slicing key programs such as early education and children’s social services as Massachusetts was coming out of a fiscal hole.
In the two televised gubernatorial debates so far, Baker contrasted those cuts with his administration’s investments in the Department of Children and Families and early education. “He cut early childhood education by $85 million at the same point and time that state spending grew by 6.5 billion,” Baker charged.
While Baker’s accusation on cuts is inflated — he included time during which Gonzalez was not in charge of the budget — the broader charge is right, and Gonzalez acknowledged he had to make painful chops during his tenure.
“It was during extremely tough times and we had to make a lot of hard decisions, and, yes, line items like early education and others got cut,” he said in the interview, referring to the building blocks of the budget. “Virtually every line item did.”
But the Democrat pushed back on Baker’s insinuation that he was chopping programs as the budget picture was flush as “misleading.” After all, he said, the state was digging out of one of its worst fiscal holes in modern times and much of the increased state spending was going to provide health care for the poor and disabled.
In his first full fiscal year as administration and finance secretary, from July 2010 through June 2011, state expenditures on Medicaid, the health program for the poor and disabled, grew by more than 10 percent, as enrollment jumped. But other program and service spending actually fell due to program cuts, data from the state comptroller show.
While the Legislature and the governor have final say on all state spending, the budget chief wields considerable power and responsibility. People who regularly worked with Gonzalez during his three-year tenure as secretary praised his temperament, his ability to find common ground, and his smarts.
“You couldn’t have asked for a secretary who was more on top of the details with extraordinary granularity,” said former state treasurer Steve Grossman, who worked closely with Gonzalez for two years while he was budget chief.
Amid managing a series of tough choices, Gonzalez, a onetime bond lawyer, also pushed to impose new fiscal discipline, put a limit on borrowing, and replenish the state’s rainy day fund.
When he took charge of the state budget in October 2009, that fund had been drained. Just $647 million was in the account. But when he left office in January 2013, the fund was at $1.7 billion. (By the end of Patrick’s term in January 2015, it would drop by hundreds of millions of dollars.)
Gonzalez’s efforts to make more regular deposits into the account, also known as the stabilization fund, helped contribute to S&P Global Ratings boosting its measure of the state’s creditworthiness in 2011.
“The upgrade reflects Massachusetts’ ongoing progress in improving financial, debt, and budget management practices, while at the same time implementing cost-control and reform measures,” S&P wrote. “The upgrade also reflects the commonwealth’s commitment to its stabilization fund.”
Gonzalez notes that the same rating agency downgraded Massachusetts’ creditworthiness in 2017 — two and a half years into Baker’s tenure — because policy makers hadn’t replenished the rainy day fund as promised. (The Baker administration, for its part, underscores the account has increased by about 60 percent on its watch.)
Gonzalez also acknowledged places where he fell far short, such as a 2013 Patrick tax plan he helped craft that would have raised the income tax while cutting the sales tax in an effort to raise billions for education and transportation.
The Needham Democrat said the administration developed the plan without any input from lawmakers then dropped it on the Massachusetts political world. “It landed with a thud,” he said of the proposal which died a quick death. Gonzalez said he learned a lot from the failure — including that, from the start, you need lots of input from a wide variety of people to craft a major change.
“That’s a big takeaway of mine,” he said. “I learned a lot during my time in the Patrick administration that I’m going to take with me to the governor’s office.”