January 26, 2005

ROMNEY FILES $23.22 BILLION BUDGET FOR FISCAL YEAR 2006

An improving economy, reforms put state budget back on solid footing

With the economy improving and reforms taking hold, Governor Mitt Romney today filed a Fiscal Year 2006 budget that is balanced, provides important new investments in vital programs and honors the will of the people by reducing the income tax from 5.3 to 5 percent.

The budget’s bottom line is $23.22 billion, a 2.4 percent increase over anticipated current year spending. Romney also filed a $93.7 million supplemental budget for Fiscal Year 2005, which includes $28 million to replenish the snow and ice removal account.

New budgetary spending is paid for by growth in tax revenues and savings from reforms instituted over the last two years. In the Medicaid program, the growth rate has been significantly slowed due to better management, efficiencies gained through new drug formularies and increased federal support.

“Our unemployment rate is low, jobs are being created and the economy is getting stronger. Massachusetts state government is in a position to increase spending on vital programs and still keep our promise to the voters by lowering the income tax,” said Romney.

In a sign of the turnaround in the state’s finances, Romney is proposing to shift $45 million in capital projects to the operating budget. Because the capital budget is capped at $1.2 billion annually, this will free up more money for improvements to parks, beaches and playgrounds.

Many of Romney’s initiatives with regard to economic stimulus, education and healthcare will be contained in legislation filed separate from the budget later in the session.

Still, spending on education in the budget goes up by nearly $100 million. About $77 million of that will go toward an increase in Chapter 70 school aid to local communities. The remainder includes: $8 million in additional funding for adult education; $1 million for the Gifted and Talented program; $2 million for extra help for failing schools; $4 million to implement new data tools to track student performance and nearly $1 million to expand school-to-work programs.

In failing districts, the Governor proposed lifting the cap on charter schools so that parents have more choices in their child’s schooling.

To encourage economic stimulus, the Romney budget provides an additional $13 million, including:

· $3.8 million for a new workforce training initiative in which employers apply

· $2 million to develop job-related skills among young people that are no

· $1.65 million for tourism advertising;

· $625,000 to fund a sales and marketing strategy to bring more companies

· $580,000 for the state’s 32 one-stop career centers.

In his spending plan, Romney proposed a 4.2 percent hike in the major categories of local aid, representing a nearly $180 million increase for cities and towns. He also provided additional funding for district attorneys and sheriffs and authorized $4.4 million to fund a new State Police class.

The Governor’s budget expands vital human service programs by providing $9.3 million to recruit and retain qualified staff at the Department of Youth Services who work with troubled juveniles, nearly $1 million more to create 15 additional community placements for individuals with mental illness and $2.9 million more to support victims of domestic violence and sexual assault.

Lieutenant Governor Kerry Healey said the budget “makes important investments in programs that serve vulnerable populations.”

According to Healey, the budget contains an additional $2.5 million for programs that link individuals who are chronically homeless to more stable housing using the same philosophy that has reduced the state’s reliance on hotels and motels as shelters.

“At our highest point, we had 599 families sheltered in hotels and motels. That number is now down to zero,” said Healey.

Spending in the Medicaid account will grow by 5.6 percent, down from the double-digit increases of the past largely due to efficiencies gained through new drug formularies, drug list purchasing, information technology and better case management.

The Governor also proposed additional funding for childcare, education and job training to ease the move to stricter work requirements for welfare recipients.

As in the welfare program, Romney’s budget imposes work requirements for people receiving housing assistance under the Massachusetts Rental Voucher Program and for individuals receiving cash assistance from Emergency Aid to the Elderly, Disabled and Children, which has been renamed the Emergency Transitional Assistance program.

"We have taken a close look at all our welfare-like programs to make sure that we are giving people the opportunity to achieve independent and fulfilling lives,” said Romney.

Funding for Prescription Advantage is maintained at $90 million to bridge the transition to the new Medicare prescription drug benefit that starts in January 2006, and once underway to fill in financial gaps so that benefits for seniors enrolled in the program will be preserved.

The Governor’s budget recommends a merger of the Turnpike Authority and state Highway Department, with the money saved going back to motorists. Savings are estimated at $170 million in the first year and $20 million a year thereafter, all dedicated to toll relief.

In separate legislation filed today, the Romney administration continues its ongoing examination and review of the state’s tax laws for loopholes that are being used to avoid the full payment of taxes in a way that was not intended by original statute.

For the coming year, loophole closings account for $170 million in additional revenue.

The tax cut delivers on the ballot initiative overwhelmingly approved by voters in 2000 lowering the income tax to 5 percent, but which was halted by the Legislature when the state’s fiscal condition worsened. Now that the budget situation has improved, Romney said the tax cut is affordable.

On an annual basis, reducing the income tax from 5.3 to 5 percent will save a married couple earning $60,000 a year $146; a single person earning $50,000, $133; and a family earning $80,000 with two children, $179.

The capital projects Romney is proposing to fund with operating cash are:

· $21 million for the nanotechnology center at the Lowell campus of the

· $2 million for the Nantasket Beach renourishment and flood control project;

· $570,000 for the Beaver Brook flood control project in Waltham;

· $2,000,000 for repairs to the Cronin rink in Revere;

· $1,000,000 for repairs at Department of Conservation and Recreation pools;

· $2,000,000 for the Winthrop Shores restoration project;

· $2,000,000 for a swimming pool facility in Chelsea;

· $500,000 for the development of the Charles River master plan;

· $500,000 for repairs at Kelly Field in the Hyde Park neighborhood of

· $2,000,000 for the design and construction of Cass rink in the Roxbury

· $1,000,000 for repairs at Department of Conservation and Recreation

· $3,000,000 for the study, design, and construction of a new trial court

· $3,000,000 for the study, design, and construction of a new court facility in

· $2,000,000 for flood control projects in Peabody;

· $2,000,000 for repairs to the Manning Bowl in Lynn; and

· $430,000 for disabled access improvements to the Bristol Community

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