ROMNEY FILES $25.19 BILLION BUDGET FOR FISCAL YEAR 2007
With revenues rising and reserves at record levels, Governor Mitt Romney today filed a Fiscal Year 2007 budget that proposes significant new spending in education, health care and local aid while also cutting taxes. For the fourth year in a row, the Governor's budget is balanced and maintains the Commonwealth's financial stability.
Total budgetary spending is up 5.3 percent to $25.19 billion, an increase made possible by continued strong growth in tax revenues. Revenue projections on which the 2007 budget is based are 8.4 percent ahead of original 2006 estimates. The state's rainy day fund is projected to rise to $2.3 billion, the highest level in history.
"While Massachusetts regained its economic strength, we resisted new spending we could not afford and avoided tax increases that could damage our recovery," said Romney. "Choosing fiscal discipline and reform has paid off, and we are now in a position financially to make important new investments in areas that will improve the lives of all of our citizens."
Romney again proposed to reduce the personal income tax to five percent, but this time suggested it be done in two stages - from 5.3 percent to 5.15 percent effective January 1, 2007 and from 5.15 percent to five percent on January 1, 2008. The cost of the tax cut is $132 million in fiscal 2007 and $488 million in fiscal 2008. The budget also draws $60 million from the stabilization account to refund taxpayers who are owed as a result of the Peterson case.
Romney's budget commits significant additional resources for education at all levels. K-12 spending grows by more than a quarter of a billion dollars - a 7.3 percent increase - while spending for higher education rises by five percent.
Chapter 70 education aid to communities grows by $164 million, with nearly half of this amount dedicated to increases in inflation and enrollment. The rest of the funds are tied to reforms to the Chapter 70 formula itself, which has not seen a major revision since its inception in 1993. The current formula has led to inequities in school funding. In order to distribute school aid more equitably and efficiently, the budget modifies the formula to make it more sensitive to growth, a change that is especially important for schools with rapidly rising enrollments.
"We have worked hard to help communities offset the costs that follow growth," said Romney. "By reforming Chapter 70 we will make sure that growing cities and towns receive the additional assistance they need to serve their citizens."
The new formula links a city or town's required local funding contribution more closely to property values and its residents' income levels, helping towns that are overpaying relative to their wealth and income. The current formula does not include these factors and allows communities of similar wealth to contribute widely different amounts toward their schools.
To help communities tackle rising school employee health care costs, the new Chapter 70 formula boosts this part of the foundation budget by five percent and provides incentives for cities and towns to establish their own group insurance commissions to design more cost effective health care plans.
The balance in additional K-12 funding supports the Governor's education reform initiatives. These include: $25 million for targeted intervention in turnaround schools; $25 million for teacher performance pay; $18 million for laptop computers for students in grades six and seven; and $10 million for differential pay for math and science. Fifteen million dollars to fund extended learning time in schools is also included.
Following up on a pledge made in his State of the Commonwealth speech last week, Romney said his budget sets aside $200 million from the general fund in a reserve account to support health care reform in Massachusetts. The funds are not intended to supplement other health care programs if broader reforms to the system are not enacted. To defray potential one-time costs associated with reforms, the budget transfers $50 million from the Health Care Security Trust Fund to the general fund.
The Governor's budget recommends $59.6 million for Prescription Advantage and redesigns the program to benefit Commonwealth seniors by filling in gaps in the new federal Medicare Part D program.
While Medicare Part D covers annual drug costs between $250 and $2,250, it does not pay any expenses between $2,250 and $5,100. Romney proposes to use Prescription Advantage to bridge the $2,850 coverage gap to prevent seniors from having to pay it out of their own pockets.
The Governor's budget continues past support for public safety agencies and programs. An additional $10.5 million allows newly expanded correctional facilities in Middlesex, Hampden and Franklin Counties to house an additional 689 inmates. To reduce recidivism, an extra $4.4 million is included to expand parolee and inmate transition and re-entry initiatives.
The funding plan also dedicates a further $2.5 million to the Office of the Chief Medical Examiner and provides a $2.8 million boost to the State Police Crime Lab to help these departments deliver the timely forensic analysis that is critical to criminal investigations. The budget calls for $750,000 to pay for a witness protection program.
As promised, the Governor proposes to hike state aid to cities and towns by $197.9 million, a 17 percent boost from last year that puts local aid above the pre-fiscal crisis level of 2001. The budget returns 100 percent of Lottery revenues to local communities and raises PILOT payments to cities and towns by $9.2 million to $25.3 million. An additional $30 million in incentives are available to communities that show improvement in the creation of new housing.
Lieutenant Governor Kerry Healey said the budget's additional $11.6 million in substance abuse funding will create 241 new spaces for treatment and rehabilitation. Also included is $4 million for an integrated prevention curriculum to target teen pregnancy, youth violence and substance abuse.
"As we rebuild capacity within substance abuse programs our goal is to integrate services in a way that uses resources effectively and treats people in the most appropriate setting," said Healey. "With a focus on prevention, we are targeting at-risk adolescents to steer them away from an addiction to drugs and alcohol." She also said spending to support victims of domestic and sexual violence increases by nearly $2 million.
With more than a third of homeless individuals reporting some form of mental illness, the Romney budget takes new steps to prevent homelessness among the mentally ill. The Governor's proposed $3.2 million investment in this area yields $16.2 million in federal money to add 180 individual spots for at-risk or chronically homeless people with mental illness.
Healey added: "Chronically homeless individuals often have issues with mental illness, and expanding permanent housing capacity and services will help them receive the treatment they need in a safe environment."
The budget recommends an additional $5.6 million to maintain and improve state parks and recreation facilities and environmental programs. More than $1.3 million that was saved by privatizing certain Department of Conservation and Recreation (DCR) skating rinks will pay for the operation of five new Central Artery parks. Also included is another $1 million for DCR stormwater management plans and an extra $512,000 to enhance inspection capacity within the Office of Dam Safety.
The Governor's budget proposes increased funding in a range of other areas, including:
* $22.6 million to promote self sufficiency within the welfare system and bring Massachusetts into compliance with federal requirements;
* $14.2 million for economic development initiatives;
* $7.9 million to hire 130 new public defenders and $22.3 million to increase pay for private attorneys who provide indigent counsel;
* $4.8 million to assist seniors who wish to remain in their homes; and
* $1.3 million to help departing Department of Youth Services clients re-enter society.
The budget also proposes the following savings:
* $102 million by freezing nursing home reimbursement rates that have grown faster than inflation even as nursing home usage has dropped;
* $85 million by bringing state employee health insurance contribution rates and co-payments in line with private employers;
* $8 million by reducing Lottery advertising to $2 million; and
* $2.6 million by eliminating the Office of the Inspector General and transferring its functions to the Auditor's Office.