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June 30, 2005


Budget maintains balance, restores spending to key accounts


Governor Mitt Romney today signed into law a $23.8 billion budget for the new fiscal year that begins July 1, saying it maintains fiscal stability. Romney issued $110 million in vetoes to spending that he considered ineffective, wasteful or simply unnecessary.


The Fiscal Year 2006 budget increases spending on education and local aid, and provides more money for public colleges and universities. Year to year, the total spending increase in the budget is 3.5 percent.


“I want to congratulate the Legislature for sending me a budget that is on time and balanced,” said Romney. “Because of strong fiscal management and an improving state economy, Massachusetts has its fiscal house in order.”


The Governor filed a budget that increased spending by 2.6 percent and lowered the personal income tax to 5 percent, as voted by the people in a 2000 referendum. The Legislature decided not to lower taxes and instead increased spending in certain accounts above the Governor’s recommendation.


Romney vetoed some of that spending, except in areas where he shared the Legislature’s priorities, such as K-12 and higher education and local aid.


One of the largest vetoes was to a $15 million increase in the account that pays for health insurance for state employees. The Legislature reduced the contributions that state workers make for their own health insurance, undoing a key reform of the prior two years.


The Governor’s veto maintains the current tiered schedule, which requires employees to pay as much as 25 percent of their premium instead of the old 15 percent rate.


“This is not the time to retreat from the important reforms we made over the last two and a half years,” said Romney. “State employees should pay the same for their health insurance as their private sector counterparts.”


Romney also returned spending on the Massachusetts Rental Voucher Program (MRVP) to the same level as the prior year, or $24.2 million, and refiled reforms that would impose work requirements and time limits for recipients of the rental subsidy program. The Legislature had rejected the reforms and increased spending by $2 million.


Total local aid climbs to $4.78 billion, a $251 million increase. There is an additional $105 million for Chapter 70 school aid, including $28 million to support a $50 per pupil increase. The lottery distribution was increased by $100 million over the prior year, and there is $2 million to increase funding for the METCO program and $2 million for kindergarten expansion grants.


Higher education got a healthy boost in the budget. Spending is up to $414 million at the University of Massachusetts, an $18.5 million, or 4.7 percent increase, and to $400 million at the state and community colleges, a $24 million increase, or 7 percent over the prior year that will be distributed through a formula.


In the area of public safety, the budget provides $4.4 million for a new State Police class and $12.2 million for improvements at the state police crime lab, a $4.6 million increase.


The Governor also vetoed a $75 sex offender registration fee, calling it a well-intentioned idea that could discourage offenders from registering. Instead, the Governor urged the Legislature to enact tougher criminal penalties for offenders who fail to register.


Said Lieutenant Governor Kerry Healey, “Since coming into office, we have made tremendous progress in reducing the backlog of unregistered sex offenders. The small amount of revenue generated by charging a fee to register does not outweigh the importance of getting everyone signed up.”


Medicaid, a chronic budget buster, is funded at $7.27 billion, a $350 million increase, or a relatively tame 5 percent growth rate when compared to the double digit increases of prior years.


The Governor also vetoed a $43 million mandatory rate increase for nursing homes, noting that nursing homes have already received on average a 7 percent per bed day increase for each of the past five years. The Governor filed legislation to review the rates biennially.


The Legislature adopted the Governor’s proposal to transform Prescription Advantage into a program that subsidizes seniors who will not receive the full federal Medicare drug benefit that begins January 1. The change will save $20 million even as the state maintains its commitment to providing drug benefits to seniors.


Because the Legislature chose not to deal with Romney's proposed welfare reforms as part of the budget, the Governor said he would file as separate legislation the stricter work rules Massachusetts must adopt in order to come into compliance with federal standards.


The budget also increases homelessness assistance by $5 million, from $30 million to $35 million.



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