Mass. Governor Deval Patrick warns of revenue decline, plans cuts; decries ‘fiscal cliff’ uncertainty

By Noah Bierman, Globe Staff

Governor Deval Patrick said an economic slowdown is affecting state revenues and forcing him to make cuts and tap the rainy day fund. By Noah Bierman/Globe Staff.

Governor Deval Patrick blamed gridlock in Washington’s fiscal cliff negotiations for a $540 million state budget gap he announced today, and said he would begin immediate efforts to cut local aid, reduce spending on safety net programs, and dip into the state’s reserves.

The cuts, some of which need legislative approval, are expected to have an immediate impact. They include $9 million less in the local aid funding used to pay salaries for teachers and firefighters, $11 million less than budgeted for special education funding, reductions in local reimbursements for towns to bus homeless students, and across-the-board reductions in spending on the overburdened court system.

Just under half of the shortfall will be bridged by a $200 million withdrawal from the state’s rainy day fund, which is expected to have about $1.2 billion left at the end of the budget year on June 30. The Patrick administration said the state would still have one of the highest reserve fund ballances in the country.

Municipal leaders vowed to fight the $9 million local aid cut in the Legislature.

They say it comes on the heels of several difficult budget years and, when combined with other local cuts Patrick announced Tuesday, would amount to $28.75 million loss in local spending, plus another $20 million in cuts to a school building fund.

Patrick cast the situation as serious but not catastrophic. He said the state faced a gap that was six times larger during the height of the fiscal crunch in 2009. And he said the state would not need to raise taxes to fill the current void. But he continued to warn of a potential tax increase to cover the longer-term problems in transportation, which lawmakers are expected to take up in the new year.

“We’ve been here,” he said at a State House news conference. “We know how to do this.”

“I don’t think this is draconian,” he added. “We are spreading the pain as broadly as possible.”

Patrick decried the “fiscal cliff” facing the country if President Obama and Congressional Republicans cannot come to an agreement in deficit reduction talks. He said the uncertainty posed by the looming cliff and the resulting slowdown in growth were “the direct cause of our budget challenges.”

“Congress and the President must come to terms on a solution so the private sector will continue to make the kind of investments that create jobs, grow state and federal tax revenue collections and contribute to a lasting economic recovery. Until then, just as we have throughout the course of this Administration, we face these challenges together and take a balanced, purposeful approach to dealing with them,” Patrick said in a statement.