June 30, 2003

ROMNEY SIGNS NO NEW TAX BUDGET IN TIME FOR NEW FISCAL YEAR

Says reforms are a good start, but will continue to fight for more

Governor Mitt Romney today signed into law a $22.1 billion budget for Fiscal Year 2004 that closes a nearly $3 billion gap and does not raise taxes on the people of Massachusetts.

He also announced that he expects the current Fiscal Year 2003, which ends today, to be “in the black,” a major turnaround from the $650 million deficit he inherited upon taking office.

Romney vetoed just over $200 million from the spending plan to meet his constitutional requirement to balance the budget. The budget proposes to spend $300 million less than the $22.4 billion that is projected to be spent in the current fiscal year.

He applauded the Legislature for completing the budget in a timely manner so that he could sign it before the start of the new fiscal year, noting that this is the first budget in seven years and only the fourth in 21 years to be finished on time.

“We have successfully closed the largest deficit in our state’s history without raising taxes,” Romney said. “Not many states can make that claim, but here in Massachusetts we can be proud of what we have accomplished on behalf of our citizens. I am grateful to the Legislature for their efforts.”

He added, “With this budget, we’ve launched the state on the road to reform. We didn’t get everything we wanted, but we got a lot. And as Arnold Schwarzenegger might say, ‘I’ll be back.’”

The Fiscal Year 2004 spending plan embraces many of the ideas Romney proposed earlier this year, including:

• Creating a unified parks system for the state by merging the patronage-laden Metropolitan District Commission with the Department of Environmental Management to form the new Department of Conservation and Recreation;
• Streamlining the 16 health and human services agencies into four groups to replace the confusing maze of bureaucracy with a user-friendly system that is more responsive to the people it serves;
• Adopting a system of co-payments for Medicaid recipients to control the skyrocketing cost of health care;
• Establishing the Executive Office of Economic Development, led by Secretary Bob Pozen, to coordinate policy for the newly named Department of Business and Technology, Office of Consumer Affairs and Business Regulation and Department of Labor;
• Putting in place the Commonwealth Development Coordinating Council, chaired by Commonwealth Development Chief Doug Foy;
• Increasing the contribution state employees make to their health care costs from the current 15 percent to a sliding scale depending on the employee’s salary (employees who earn up to $35,000 will continue to pay 15 percent, employees who earn $35,000 or more will pay 20 percent and new employees will pay 25 percent);
• Expanding the mission of the Executive Office of Public Safety to include homeland security;
• Transferring state property to the pension fund to cover pension liability;
• Extending the three percent Investment Tax Credit for five years to Fiscal Year 2009;
• Eliminating most minor funds, requiring the Commonwealth to balance its budget honestly;
• Giving the Governor’s Chief Legal Counsel discretion over the hiring of outside legal counsel and reassigning Executive Branch lawyers if necessary; and
• Allowing the Trial Court to retain $40 million in fees, giving the court administrators an incentive to collect them.

Romney said the reforms in the budget represent a solid start, but ticked off a number of items on his agenda that remain unfinished, such as workforce changes and major reforms to transportation, education and the courts.

“Change doesn’t happen overnight or in six months,” Romney said. “Reform is a four year job and we’ll be fighting for it every step of the way.”

Lieutenant Governor Kerry Healey agreed, saying, “The people of Massachusetts can take pride in the progress that has been made so far. We are putting our state’s finances in order and setting the Commonwealth on a long-term road of fiscal stability and economic prosperity.”

She added, “Governor Romney and I look forward to working hard to continue the momentum for change in the months ahead. Together, we will give our Commonwealth a state government that is as efficient, honest and hard-working as the people of Massachusetts deserve.”

Because of faulty revenue assumptions and because the Legislature did not adopt all of his reform proposals, Romney vetoed $201 million in spending, the largest of which was a $23 million reduction in the Additional Assistance category of local aid. He also rejected several items in the budget, saying they take the state in the wrong direction.

Specific vetoes include language that would have:

• Moved the Alcoholic Beverages Control Commission (ABCC) from the Office of Consumer Affairs and Business Regulation to the Treasurer’s Office. Romney also reduced the ABCC budget by $940,000, in line with his budget recommendation, to prevent the restoration of 11 patronage positions he had eliminated earlier this year as part of his 9C cuts;
• Expanded the reach of the Boston Municipal Court (BMC) to include all Suffolk County courts. In his budget, Romney proposed merging the BMC with the rest of the district court system, calling into question judicial equity between district courts. He noted that the administrative overhead costs at the BMC – with one courthouse and 11 judges – is comparable to that of the district court system, with more than 60 courthouses and 170 judges. Romney also reduced funding for the BMC by $1.5 million, bringing it in line with the Springfield District Court budget, which has roughly the same caseload, according to recent studies;
• Given the Massachusetts Turnpike Authority oversight of Interstates 395, 84 and 291 in addition to Interstate 90. Earlier this year, Romney had proposed merging the Turnpike Authority with the Massachusetts Highway Department to eliminate duplication and free up a $191 million reserve for this year and at least $23 million each year in administrative savings. He said the Turnpike Authority was not accountable to the taxpayers and questioned whether expanding its jurisdiction would result in greater mismanagement and new or higher tolls for commuters. Romney also noted that the Massachusetts Highway Department requires $76,000 to maintain each mile of roadway while the Turnpike Authority requires $211,000 to do the same job;
• Renewed the ill-conceived $1.30 pharmacy tax levied on every prescription filled, which has a disproportionate impact on senior citizens and others who live on fixed incomes. This tax was scheduled to be reduced to 65 cents on July 1, 2004, but with Romney’s veto will no longer be imposed;
• Changed the English immersion ballot initiative to permit “two-way” bilingual programs, creating a major loophole in the new law;
• Watered down the Massachusetts Comprehensive Assessment System (MCAS) graduation requirement for special needs students. Romney said he will hold all pupils accountable to high standards and will not abandon special needs students, noting that 75 percent of special needs students in the class of 2003 have passed the test; and
• Allowed education and training to substitute for the 20-hour per week work requirement for able-bodied welfare recipients. This veto saves $8 million and preserves the cornerstone of welfare reform, which has been the work requirement. Romney signed into law a provision expanding the work requirement to recipients who have children between the ages of two and five.

“This year’s budget represents just the first step,” Romney said. “We still have financial challenges ahead of us, but with ingenuity and hard work, we can solve them.”

He added, “We will continue to push for our plans to merge the Turnpike Authority, adopt court reform and institute workforce changes that will give us the tools to manage effectively. Our energy is limitless.”

In the budget Romney signed, the Prescription Advantage program is preserved and MassHealth Basic coverage to 36,000 individuals who lost it earlier this year is restored.

Saying he is not in favor of taxpayer funds being used for political campaigns, Romney also allowed to stand a repeal of the Clean Elections system. During the campaign, he proposed a way to shift the burden off of the taxpayers and onto the politicians themselves. Under his plan, political candidates who do not abide by the spending and fundraising limits would transfer 10 percent of their receipts in order to subsidize qualified candidates who abide by the limits.

Romney endorsed the changes to the Quinn Bill, but filed an amendment to ask for two exemptions. He proposed grandfathering in law enforcement officials who have served 30 or more consecutive days in active military duty since the terrorist attacks of September 11, 2001 or who have more than half of the credits necessary to earn a degree.

“I support the changes to the Quinn Bill,” Romney said. “The exceptions I have proposed are fair to our police officers who have either served their country or are more than halfway through their course of study.”

In addition, Romney returned with an amendment a budget provision requiring the Health and Human Services Secretary to develop a coordinated prescription drug procurement program. The amendment requires the state move forward with coordinated purchasing, but makes key changes to make sure it is implemented more effectively. It institutes a competitive bid process to select a qualified pharmacy benefits management company, extends the implementation time from six months to one year and allows the Executive Office of Health and Human Services to have more discretion over the program guidelines.

Romney also fulfilled a commitment to provide signing bonuses to teachers by filing an amendment to the budget that will provide $4 million in already pledged bonuses to educators.

To the Honorable Senate and House of Representatives:

06-30-2003

Pursuant to the provisions of Section 5 of Article 63 of the Amendments to the Constitution, I am today signing House 4004, An Act Making Appropriations for the Fiscal Year 2004 for the Maintenance of the Departments, Boards, Commissions, Institutions and Certain Activities of the Commonwealth, for Interest, Sinking Fund and Serial Bond Requirements and for Certain Permanent Improvements.

I commend you for completing this budget in a timely manner without raising taxes and without using our dwindling Stabilization Fund reserves. However, because I believe that available revenues will not be enough to support the level of expenditures you have recommended, I am vetoing $201 million to ensure that the Fiscal Year 2004 budget is balanced and that we maintain a more sustainable level of government spending. I am also vetoing many other sections of this bill, including provisions that would have moved the Commonwealth's pension funding off budget. I am filing today legislation to account for this spending in the appropriate way.

It is encouraging to see that you adopted a number of the reform provisions that I put forth in my House 1 budget recommendation and Article 87 Reform, Restructure, and Revitalize legislation. Among my proposed reforms, I am pleased to be signing today legislation that:

• merges the Metropolitan District Commission and the Department of Environmental Management;
• streamlines the functions of the Executive Office of Health and Human Services;
• establishes a new Commonwealth Development Coordinating Council;
• gives the Chief Legal Counsel the authority to determine the need for outside counsel;
• provides the Trial Court with an incentive for collecting court fees by allowing them to retain a portion of that revenue;
• reforms the way the Commonwealth divests surplus property;
• expands the mission of the Executive Office of Public Safety to include homeland security;
• establishes a more reasonable share of employee health insurance costs;
• requires the Commonwealth to be honest in balancing its budget by eliminating extraneous funds;
• implements many new initiatives to control the skyrocketing costs of the Commonwealth's Medicaid program, including requiring co-payments for services; and
• creates a new Cabinet-level Executive Office of Economic Development.

It is also encouraging that, after working with my Secretary of Health and Human Services, you have adopted our plan to restore 36,000 members to the MassHealth Basic program, as well as much-needed preliminary reforms in the Uncompensated Care Pool.

Your enactment of two other proposals is an important step in our continued efforts to maintain a positive business environment and improve access to affordable housing. Extending the Investment Tax Credit for five years to 2009 will help revive our economy, and investing $70 million in capital funds through the Affordable Housing Trust will help meet the state's critical need for reasonably priced housing.

While I did not propose it, I am also signing the repeal of taxpayer-funded elections. Although I am supportive of campaign finance reform, I do not believe that taxpayer money should be used for that purpose. That view is also consistent with the recent referendum vote.

We have taken significant steps in this budget to put the state budget back on track, but we need to work on more extensive changes, especially in the areas of workforce reforms and Executive Branch management authority, to ensure that it stays on a sustainable course for the future. My vetoes today reflect the need to hold the line on state spending and manage the Commonwealth effectively and efficiently. Therefore:

• I am hereby reducing appropriation amounts in items of section 2 of House 4004 enumerated in Attachment A of this message by the amount and for the reasons set forth therein;

• I am striking wording in items of section 2 of House 4004 also set forth in Attachment A, for the reasons set forth therein;

• I am striking in their entirety those sections of House 4004 itemized in Attachment B of this message, for the reasons set forth in that attachment; and

• pursuant to Article 56, as amended by Article 90, Section 3 of the Amendments to the Constitution of the Commonwealth, I am returning sections 19, 39, 117, 185, 361, 453, 596, 698, and 701 with recommendations for amendment. My reasons for doing so and the recommended amendments are set forth in separate letters of even date which are hereby incorporated by reference and included with this message as Attachments C, D, E, F, G, H, I, J, and K.

I hereby approve the remainder of this Act.'

Respectfully submitted,

Mitt Romney's signature

Mitt Romney Governor

http://www.mass.gov/eoaf/gov_veto_docs.htm