Thursday, January 26, 2006

MBPC Analysis of Romney FY07 Budget

Yesterday, the Mass. Budget and Policy Center released its Preliminary Analysis of the Governor's FY 2007 Budget (PDF). While they were heartened that the proposal made headway in reversing some of the cuts made in the past few years in areas such as education, public health, local aid, etc, they note that, adjusted for inflation, those areas are still below what they were before the fiscal crisis. They also warn that the budget would "create significant new fiscal pressures in the years ahead" since it not only factors in a lower tax rate, but also drains various reserve funds. Here are some of the highlights of their report (emphasis added):

[T]he budget proposes a tax cut that would cost $132 million in its first year, but in the second year the cost would balloon to $488 million, and the full cost would be $610 million a year. In addition, the budget relies on the use of reserve funds, including the Stabilization Fund and the Health Care Security Trust Fund. It also spends tobacco settlement money that existing law would require to be saved for future use, and it does not budget for a deposit into the Stabilization Fund required by current law.
In his budget proposal, the Governor provides a $167.9 million increase for unrestricted aid to cities and towns, including an additional $158.7 million in lottery distributions to localities (by removing the cap on lottery revenues) and $9.2 million more to fund the Payment in Lieu of Taxes (PILOT) program. Despite the proposed $167.9 million increase for local aid for FY 2007, the level of funding is $146.5 million lower than where it was in FY 2001, after adjusting for inflation.
The Governor's budget would increase funding for Chapter 70 aid from $3.289 billion in FY 2006 to $3.453 billion in FY 2007, a $163.7 million or five percent increase over the current appropriation. In real terms, this proposal for Chapter 70 aid is still $190.9 million lower than its FY 2002 level. Education costs, however, often grow more quickly than inflation because schools face certain unavoidable cost increases such as those relating to rising health insurance costs. To more accurately measure cost changes in education, state law identifies a particular measure of inflation that is to be used in calculating state aid to education. Using this measure, the Governor's proposed level of funding for Chapter 70 aid would leave Massachusetts schools with approximately $500 million less in Chapter 70 aid than they received in FY 2002.
Among the areas in public health still suffering deep cuts since the fiscal crisis: AIDS prevention and treatment funding is $23.3 million below FY 2001 levels; family health services are $9.8 million below FY 2001; early intervention is funded at $2.9 million below FY 2001; smoking cessation and prevention programs are $53.9 million (93 percent) below FY 2001 levels.