STATE HOUSE, BOSTON, APRIL 9, 2014……House budget writers on Wednesday moved closer with their $36.2 billion budget proposal toward weaning the state off its reliance on one-time revenue and reserves to support spending.
But as House Democrats boasted of their reduced reliance on “rainy day” funds, the leading Republican candidate for governor and former Cellucci administration budget writer called it “inappropriate” to touch the fund at all.
“I don’t think taking money out of the rainy day fund makes a lot of sense. You should use the rainy day fund when it’s actually raining,” Republican candidate for governor Charlie Baker told the News Service after attending an event in the State House in support of employment for the mentally ill.
The House budget proposed by Ways and Means Chairman Brian Dempsey uses $140 million in reserves and cuts in half to $260 million the amount of one-time revenues used to balance the budget. Patrick used $175 million from the rainy day fund and $334 million in one-time revenues sources. In both cases, those numbers are down significantly from recent years, and would leave the rainy day fund with $1.2 billion, one of a handful of states with stabilization funds exceeding $1 billion.
“It’s understandable given the slow growth in the economy, but this should be the last year that they draw on funds from the rainy day fund,” said Massachusetts Taxpayers Foundation President Michael Widmer.
With tax revenue collections in fiscal 2014 exceeding estimates – collections are outpacing original budget estimates this fiscal year by $631 million – Baker said there’s no excuse for continuing to draw from the fund.
“The mere fact that they’re making a big deal out of the fact that they’re taking less out implies that they know it’s not good fiscal policy to take money out of the rainy day fund when it’s not raining. That’s supposed to be there to solve problems and to help the state weather really tough times,” he said.
The House budget also adopts a recommendation made by Gov. Deval Patrick to halt the practice of automatically depositing one-time tax settlements in excess of $10 million to reserves, a strategy used to replenish the “rainy day” fund during and since the recession.
Those tax settlements would become available for spending from the General Fund if the proposal is adopted.
In addition to relying on $24.3 billion in taxes, the House Ways and Means Committee’s fiscal 2015 budget proposal counts on $240 million in tax settlement revenues and $45.8 million from the delay of business tax break known as the FAS 109 that has never actually been implemented.
Copyright 2014 State House News Service