Governor Deval Patrick’s proposed cuts in the state budget to meet a $540 million mid fiscal year shortfall is the opening move in a negotiating process that will involve the Legislature, which would have to improve some of the cuts. The extent that the "fiscal cliff" negotiations in Washington D.C. have on the state’s economic situation is debatable but any possible impact is another argument for a resolution, which will come down to the willingness of House leadership to actually compromise.
The proposal includes $9 million in cuts in local aid which would be painful to communities trying to avoid property tax increases. Cuts in state aid, however, can’t be seen as a shock to communities and the towns and cities that have budgeted responsibly can best withstand them. Also included are $11 million in cuts to special education, and in an editorial board meeting with The Eagle Wednesday, Pittsfield Mayor Daniel Bianchi expressed particular concern about those cuts. These are important programs that communities cannot assume the burden of financing.
The governor would close a large chunk of the gap by removing $230 million from the state’s rainy day fund, leaving $1.2 billion, a reserve that is the envy of most states. Legislators, who will bear the wrath of local aid cuts, are likely to argue for taking more money out of the reserves. The shortfall also appears to be a worst-case scenario and better than projected tax collections would ease the problem.
Governor Patrick asserted that the approaching fiscal cliff, which could trigger spending cuts and across the board tax hikes on January 1, was largely responsible for the budget shortfall because a private sector wary of the impact of a fall from the cliff cut back on investment, stalling economic growth. The slow recovery from the recession of three years ago would seem to be a likely cause of the gap, but there is no denying than the needless drama in Washington cannot be good for the economy. The parameters of an agreement are in place but a resolution involves House Republicans’ dropping their indefensible position that the wealthiest Americans shouldn’t have to play a part in lowering the budget deficit. GOP intransigence, unchanged in spite of its shellacking November 6, may do great economic harm.