FY14 Budget Remarks

By:  Deval Patrick
Date: Jan. 23, 2013
Location: Boston, MA

Good afternoon and thank you all for coming. Today, we file our budget proposal for fiscal year 2014.

Our budget proposes a $34.8 billion spending plan. This consists of $838 million in new revenue based on consensus revenue growth and $1.2 billion based on the tax proposals I made last week.

This is a plan to grow jobs. The budget makes investments in education, innovation and infrastructure to grow opportunity in the near-term, and strengthen our Commonwealth in the long-term. We have also again proposed a number of reforms to improve the way government functions and achieve further savings. The total projected annual savings from those measures, if enacted by the Legislature, will be over $100 million.

Let me highlight both the key investments and the key reforms.

Our innovation economy relies on a well-educated, well-skilled workforce. This budget proposes to propel that economy forward. By providing access to high-quality early education for all low-income children; by extending learning time in high-needs schools; by making college more affordable; and by supporting community colleges as the platform for skills training, this budget substantially invests in the Commonwealth's signature economic advantage -- the brainpower and creativity of our people.

In that same vein, I am proposing to fund Chapter 70 school aid at the record level of $4.39 billion -- an increase of $226 million from last year. This level not only funds every district's foundation needs but also provides an increase of $25 per pupil and finishes the Chapter 70 equity reforms of 2007. This new funding should enable school districts to better supply their classrooms and begin to restore enrichment and STEM programs that some local districts have cut.

Let me add here that, with the proposed increase in Chapter 70 funding and a $31 million increase in Unrestricted Aid, local aid grows to 14.6 percent of the annual budget, or $5.57 billion in FY14.

Like education, transportation is another critical foundation of a growth economy and absolutely essential to accelerating job creation and expanding prosperity today and into the future.

Our residents have told us that they want subways that run later into the evening. They want regional buses and commuter trains that run on the weekends. They want bridges that are safe. They want projects that are built more quickly, and a system that is more modern. They want safer, smoother roads that are more convenient to drive on and cause less wear and tear on their cars and trucks. They want access to jobs, affordable housing, and recreation -- and they want it equitably in all regions of the Commonwealth

These are not frivolous or unreasonable wants. What our residents want is what this Commonwealth needs to be economically strong in the future. So, in the transportation plan I announced last week, we commit to reinvesting in our transportation system to ensure we can pay the bills we inherited, repair our aging roads, rails and bridges, and make targeted expansions to unlock long-term economic development across the state. This budget begins paying for the 21st century transportation system that the people and businesses of Massachusetts need and deserve.

So, we are proposing to invest in accelerated growth. And as you know we are proposing to pay for these investments by cutting the sales tax to 4.5 percent, raising the income tax to 6.25 percent, doubling the personal exemptions, and eliminating or limiting a number of itemized deductions and exemptions, including a couple I have proposed before.

I do not submit this proposal lightly. I understand that many households in Massachusetts continue to struggle from the impact of the Great Recession. But I am confident that investing meaningfully in education and transportation today will significantly improve job growth and expand economic opportunity tomorrow.

My consideration of tax changes has been guided by three principles.

First, new revenue must be comprehensive, sufficient to pay our bills, maintain what we have, and invest in strategic development calculated to foster economic growth.

Second, particularly in the case of transportation, new revenue must be dedicated, targeted to specific investments and projects so we maintain the discipline of our plan over time, and so that the public can hold us accountable.

And third, new revenue sources must be competitive and fair, so that taxes remain within range of our competitor states and each contributes according to his or her ability to do so.

With those principles in mind, our budget proposal gives us a tax code that is simpler and fairer, with sales, income and business taxes that are competitive with other states and less burdensome on poor and moderate income wage earners.

In fiscal year 2014, we will also continue to use the budget as a vehicle to reform state government.

Earlier this month we laid out a number of further reforms to reduce redundant fees and unnecessary paperwork and bureaucracy for businesses, to consolidate public housing agencies to realize efficiencies, and to achieve up to $20 billion in savings in state and local retiree health care over thirty years.

Beyond, you'll see in this budget a number of further reforms -- such as a program to save on energy costs and the start of implementing electronic tolling on roads and bridges. The Secretary and his team will take you through any and all of those in detail in the briefing that follows upstairs.

I do want especially to mention that this year the budget is presented in a new program format, to enable regular people to better understand the budget. Instead of budgeting based on who spends the money, citizens will be able to see what the money is spent on.

Over the past several years, we have made great progress in addressing our generational challenges. From legislation to control health care and pension costs to efforts to streamline operations, we have worked with the Legislature and with many partners and citizens in the private sector to strengthen Massachusetts for the long-term.

The progress we have made is happening because we have faced those tough choices and made them together, inspired by our commitment to leave to others a better Commonwealth than we found. In that spirit, I look forward to working with the Legislature on this budget.

And I want to thank Secretary Shor, Secretary Gonzalez and their team for the exceptional work they have done to prepare this budget; all the members of the Cabinet and the administration for their creativity and flexibility; and all of the people of the Commonwealth for encouraging us to do the very best by you, every day.

With that, I want to yield the podium to the Lieutenant Governor. Then we'll take your questions.

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