State lawmakers examine Governor patrick’s $36.4 billion budget

State lawmakers examine Governor patrick’s $36.4 billion budget

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Gov. Deval Patrick’s budget chief on Tuesday defended his administration’s commitment to helping cities and towns in the face of criticism from municipal leaders over his local aid proposal.

As House and Senate lawmakers kicked off the annual budget hearing process, Secretary of Administration and Finance Glen Shor presented Patrick’s $36.4 billion budget proposal for fiscal 2015 to the Joint Committee on Ways and Means at the State House. It was the first of eight public hearings over the next month on the governor’s final budget proposal.

“Foremost, this is yet another education budget for Gov. Patrick,” Shor said, highlighting his proposals to increase Chapter 70 school aid by $100 million, boost higher education funding by $68.4 million to freeze tuition and fees and increase early education funding by $15 million to take 1,700 kids off the pre-kindergarten waiting list.

Shor also said the governor’s budget proposed to capitalize on a “historic opportunity to reorient our criminal justice system” with a focus on rehabilitation and training of former offenders to successfully re-enter society. Patrick’s budget (H 2) proposed some new investments, and the administration plans to present a more detailed prisoner re-entry strategy in the coming weeks.

Some of the most pointed questions and commentary from lawmakers focused on Patrick’s level funding of local aid, which the Massachusetts Municipal Association has criticized and House Speaker Robert DeLeo has pledged to “do better.”

“Unfortunately this year, we find ourselves again level funding our local aid account,” said Rep. Matthew Beaton, a Shrewsbury Republican.

Shor said local aid has increased under Patrick from $4.8 billion to $5.3 billion, and capital spending on cities and towns has grown from $196 million to $383 million. He said Patrick’s budget boosts school aid and preserves increases from fiscal 2014 to unrestricted local aid, special education, and regional school transportation.

Shor said the administration, over the past seven years, has also found $3.8 billion in savings for cities and towns through municipal health reform, telecommunications taxes, pension reform and local meals and hotel tax options.

“These are indicators, collectively, of an incredibly strong partnership with municipalities,” Shor said. In response, Beaton referenced a campaign pledge from 2006 when Patrick talked about lowering property taxes and his call on cities and towns last week to “hold the line” on property taxes.

“The promise was a reduction in property taxes and I don’t think there’s a single community that can say their property taxes have gone down,” Beaton said.

Rep. David Vieira, an East Falmouth Republican, also took issue with Patrick’s proposed use of $175 million in “rainy day” funds, which is half of the total relied upon by the administration and Legislature in fiscal 2014 to balance the budget.

Vieira asked Shor to identify spending in the budget totaling $175 million that could be put on hold and released only if revenues came in next year higher than expected to match the spending.

“I guess I would have to say I don’t think that policy is necessary,” Shor said.

Senate Ways and Means Chairman Sen. Stephen Brewer, in his opening remarks, thanked House Ways and Means Chairman Rep. Brian Dempsey for his partnership at the outset of his fourth and final budget process as Brewer prepares to retire at the end of the year.

Brewer called the expectation of 4.9 percent revenue growth in fiscal 2015 agreed to by House and Senate leaders and the Patrick administration a “middle-of-the-road approach.” Dempsey said the Legislature intends to proceed cautiously, asserting that when programs and agencies receive funding increases “we own that for years to come.” “We cannot predict the future and need to proceed cautiously with respect to our spending,” Dempsey said.

Noting that health and human services account for $19 billion of the state budget, Brewer asked Shor to explain the 10 percent increase in proposed spending on MassHealth, the state’s Medicaid program.

Shor said enrollment in MassHealth grew by more than 110,000 subscribers in January due to the expansion of the program under the Affordable Care Act, which will also increase federal reimbursements to the state to 75 percent, up from 50 percent.

With offsetting decreases in spending at the Health Connector and Commonwealth Care Trust fund, Shor said the ACA will add $70 million in new MassHealth costs, but bring in $350 million in new federal revenue.

The increase in the line-item from MassHealth also accounts for a full-year of provider rate increases approved as part of last year’s budget, a full-year of adult dental coverage for tooth fillings, and the administration’s proposal to expand dental coverage to dentures.

The hearing also offered an opportunity for the other constitutional officers and the inspector general to make their budget requests to the Legislature.

Attorney General Martha Coakley asked the Legislature to level fund major accounts in her office.

“Our office is a unique public agency in that we are a revenue generator for the Commonwealth,” Coakley said. According to the state’s top attorney, the AG’s office recovered or saved $366 million in settlements in fiscal 2013, returning $33.8 million to the general fund that nearly paid for its $34.8 million budget allocation.

Treasurer Steven Grossman asked the Legislature to support Patrick’s funding request for his departments, which includes $9.9 million for the Treasury and $94.4 million for the Lottery.

Included in that total is Grossman’s request for a $3 million increase for the Lottery’s advertising budget. Since the advertising budget was boosted two years ago to $5 million, Grossman said the Lottery has been able to demonstrate a return on investment in ticket sales, and forecast an added $7 million profit for the Lottery with the increased ad budget, which he described as the smallest in the country.

Questioned by lawmakers about online Lottery sales and the impact of expanded gaming on the Lottery, Grossman said he has asked the Legislature for the authority to begin testing online Lottery ticket sales, but pledged never to implement such a program unless he was confident that the livelihood of Lottery sales agents can be protected.

“We will not be the competition of the 7,400 agents,” Grossman promised. One possible way to protect retailers, he said, would be to sell gift cards in stores than can be redeemed online for Lottery purchases, with the same percentage of sales and prizes going back to the stores. He also said he would be interested in limiting purchases and the use of credit cards to protect against gambling addiction.

As for casinos, Grossman said it was impossible to predict their impact on Lottery sales, but suggested if casinos are successful in netting new revenue for the state then residents will continue to benefit in the long run no matter what happens.

Secretary of State William Galvin told the committee that the funding proposed by Patrick in his budget proposal “adequately reflects our needs,” and takes into account his longstanding concern that registries of deeds should be located in public buildings and not rental space.

He also requested that the Legislature extend for five years the historic rehabilitation tax credit program and a $5 fee charged for registry documents to fund technology upgrades that are both due to sunset in July 2016. Galvin said it was important to act now because many project and technology purchases are planned years in advance.

Asked about the “mountain” of elections coming up, Galvin said, “We have a mountain of elections behind us.”

The secretary pegged the cost of special elections at roughly $30,000 to $50,000 for a House race and $100,000 to $150,000 for a Senate race. “I’m hoping with the general election now underway, hopefully there will be fewer special elections, but you never know because exits can be quick and unplanned.”

Inspector General Glenn Cunha requested an increase in his budget for fiscal 2015 of $377,000 that would bring his office’s operating budget to $2.47 million, enabling him to hire additional staff in needed areas of expertise and to make technology upgrades. Cunha said his office last year collected $12.6 million in fines and settlements and identified $233.5 million in potential cost savings.

“Investing in our office produces a real return, both in cost recovery and cost avoidance,” Cuhna said. He also requested an increase of $50,000 for the Bureau of Program Integrity, currently funded at $350,000, to hire one additional staffer to help monitor Health and Human Services benefits programs.

In response to Brewer’s question about an ongoing Hinton drug lab investigation where one former chemist pleaded guilty to charges of tampering with evidence, Cuhna said his office’s review would be completed in the next few weeks and is expected to show a lack of effective management and oversight.

Given additional resources, Cuhna said he thinks his office could do more around improving oversight of local housing authorities and tracking funds spent on public education.

Auditor Suzanne Bump requested an increase of $1.35 million for her office to build her field audit staff by 25 percent. Her presentation included highlights of audits done by her office on a $30 million budget that have identified over $300 million in “questionable and unallowable spending, fraud, and ineffective operations.”

“Our work as external auditors is unique in its abilities, its methods, its results, and its value to both taxpayers and citizens, all of whom deserve the effective and efficient operation of government,” Bump said. “This independent audit authority, adequately staffed, is an essential component of government oversight and accountability.”