The Guv today exercised real leadership - ideas on cuts

By Jim Stergios
October 2nd, 2008

Yesterday morning we worked on a press release that started:

BOSTON– Given near-certain steep declines in capital gains, sales tax and other critical revenues, as well as once in a quarter century uncertainty in the economy, the Governor needs to revise the revenue estimate and make cuts now. Waiting till after the election will only exacerbate an almost impossible problem for the Commonwealth, as the Governor will necessarily have to make even deeper cuts the longer we wait.

“We need to remember the lessons of 2003, 2001, and 1991, when Governors had to make deep midyear cuts into programs. We face the decline with a steady hand on the wheel now or we will have to try and steer ourselves over a cliff,” said Pioneer executive director Jim Stergios. “The road to the cliff is easy to reach. The way down is harder to control. We need a show of courage, and we need it now.”

Well, the Governor beat us to the punch — and he is to be commended. Acting now, before the elections, is what most leaders are afraid to do (that’s why calling them “leaders” is probably a misuse of the term). Good on ya, Guv. Today’s Pioneer press release was instead:

BOSTON – Governor Patrick is to be commended for acting swiftly and decisively to address daunting state fiscal challenges that have been exacerbated by the crisis in the nation’s financial markets.

In addition to making so-called 9C emergency spending cuts within the executive branch, the Governor is calling on the Legislature, Judiciary and constitutional offices to do the same, and demonstrating leadership by cutting Governor’s office spending by 7 percent. He is also calling for reforms that will not only save money now, but serve the Commonwealth’s long-term interests by reforming the state and MBTA pension systems, dismantling the Turnpike Authority and consolidating other state agencies.

In a show of leadership, the Governor has vowed to implement cuts by October 15th, rather than waiting until after the election.

Remember: In 2002, state revenue fell nearly 15 percent when the bottom fell out of capital gains receipts. We should expect a similar drop in revenue this time. Given the $223 million first-quarter budget shortfall, officials should be prepared to make up to $1 billion in cuts to stem the tide of red ink. That means we should not make further withdrawals from the stabilization fund until after cuts are implemented and we have a clearer sense of the likely length and depth of the fiscal crisis. This could be a long recession.

What to cut? None of it is pretty, but here is a start that will get you close to the goal line:

· Return the number of state employees to 2003 levels ($350+ million).
· MassPike consolidation into MassHighways — a Pioneer idea the Guv picked up ($20 million).
· Pull 30 percent of the 829 earmarks, which are valued at almost $740 million ($220 million).
· How about the Quinn Bill, community corrections programs in the Trial Court, $10 million to promote the lottery, $20 million for MWRA sewer rate relief?
· Increase the match paid by state employees into the GIC ($10s of millions).
· Eliminate prevailing wage on public construction projects and other state work (many many millions).

And, oh yeah, forget about all those expensive pieces of the Readiness Project such as free community college and universal early childhood education that could cost up to $2 billion annually.