Baker relents, for now, on unilateral budget cuts

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BOSTON — Democratic legislative leaders this week urged Gov. Charlie Baker to delay mid-year budget cuts and Baker aides on Thursday outlined "alternative measures" his administration would take to close a $294 million deficit without slashing spending four months into the year.

Baker's budget chief Kristen Lepore did not rule out budget cuts or layoffs in the future, but informed House and Senate budget leaders on Thursday that it hoped to address the immediate budget concerns with a mix of new non-tax revenue, voluntary payroll reductions and one-time legal settlements.

"We are closing the budget gap through fiscally prudent solutions such as unanticipated non-tax revenue and a voluntary separation incentive program. While we are not reducing allotments at this time, we are actively monitoring tax revenue and additional spending exposures in the coming months before finalizing our decision on the extent of allotment reductions and other actions to ensure that the FY17 budget is in balance," Lepore wrote in a letter to the chairs of the House and Senate Ways and Means Committees.

Lepore in mid-October lowered revenue estimates for the year by $175 million, citing slower than anticipated sales tax growth, and projected a $294 million budget gap also attributable to underfunding by the Legislature of other accounts in the budget.

The administration in July vetoed $265 million in spending from the fiscal 2017 budget, but watched the Legislature override $231 million with a net effect of $219 million on the budget's bottom line.

Though Lepore said at the time that a budget solution would require a blend of "savings initiatives and spending reductions," the administration for now has backed off the idea that budget cuts will be required.

Baker recently said he would prefer not to wait until January to make cuts because it becomes more difficult to trim spending later in the fiscal year, but Thursday's announcement suggested the administration is now content to wait and see how revenue collections perform over the "coming months."

"I think it's a little unusual. If there's been a downgrade to tax revenue there's usually accompanying 9c cuts, but I think some of it is the administration has been managing and reducing spending without 9cs, doing it informally in a sense," said Massachusetts Taxpayers Foundation President Eileen McAnneny.

Both House Speaker Robert DeLeo and Senate President Stanley Rosenberg on Monday publicly urged Baker to hold off on making emergency budget cuts, arguing that with the state only trailing revenue projections by $11 million through September it would be more prudent to wait.


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