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11-10-2006

Page history last edited by PBworks 17 years, 4 months ago

November 10, 2006

ROMNEY WITHHOLDS $425 MILLION IN SPENDING

 

 

Governor Mitt Romney today used his budget-balancing powers to withhold $425 million in spending in the current fiscal year. The reductions amount to 1.7 percent of the $25.7 billion state budget.

 

The Governor said the budget gap is not the result of a flagging economy or a drop in state revenues. In fact, the state economy is growing at twice the national rate, and state revenues are at an all-time high. Instead, he said, it reflects a dispute with the Legislature over the use of the rainy day fund.

 

Romney repeated his warning that the Legislature is heading down a “dangerous path” by dipping into the rainy day fund to pay for millions of new spending. Last month, Romney vetoed a transfer of $450 million from the rainy day fund, necessitating today's action.

 

“State revenues are at an all-time high, jobs are being created by the thousands and the stock market is at historic levels. This is not the time to be dipping into the rainy day fund. The state is not in a fiscal crisis, but a crisis is looming if the Legislature continues to overspend,” Romney said.

 

The Governor used his “9C” authority to withhold spending in the following manner:

 

$388 million in items previously vetoed by the Governor and overridden by the Legislature, or in accounts where a surplus is projected. Millions of dollars in earmarks for pet projects and providers were eliminated, as well as funding to build decking over portions of the Central Artery slated for private development, the annual purchase of service rate increase for private vendors, water and sewer rate subsidies and retroactive pay increases at institutions of higher education.

 

$37 million through an across-the-board reduction of one percent in payroll and administrative expenses. Many agencies received increases to their budget this year and planned to hire additional personnel. In most cases, these reductions will force agencies to forego the planned hires.

In all, there are 455 budgetary items that will be reduced. The median reduction is $60,000. Exempt from any reductions are debt service and local aid payments, including Chapter 70 and other local education accounts. In addition, Constitutional Officers and the Judiciary are exempt by law from reductions. The Governor also directed that programs benefiting veterans and the DSS social worker account be held harmless.

 

“The problem we have here is overspending. Rainy day funds should not be used in the good times to support a level of spending that is not sustainable. This level of spending will put us on the same road to ruin we’ve been down before,” said Romney.

 

The rainy day fund has a balance of $2.1 billion, thanks to sizable annual deposits over the last couple of years.

 

The Governor’s power to act comes from Chapter 29, Section 9c of the state finance law, which permits him to reduce spending if revenues are determined by him to be insufficient to pay for expenditures.

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