Wednesday, May 6, 2009

Cost Saving Measures Looking Pretty Good Right Now

Last week, the Republican Caucus made a motion to postpone budget debates until after the new tax collection data had been released. We tried to recess until this week because as revenues continue to plummet, we knew the House's FY10 budget would not be sustainable.

The 2009 fiscal year comes to an end on the last day of June. And because of last month's revenue shortfall, the state is now grappling to close a $900 million budget deficit. This budget gap underscores just how off base next year's revenues estimates are. The economic circumstances we are facing as a state are unlike any we have ever seen before. Revenues decline significantly every month, while the spending on Beacon Hill continues to grow.

Last week, we offered a number of amendments that could have save upwards of $320 million. Of all of the cost saving measures we offered, the House rejected a total savings of $270 million.

Here is a list of the amendments we offered that could have provided real cost savings for the state:

1. Shift all MassHealth members to managed care plans, rather than the MassHealth fee-for-service program and primary car clinician plan. Savings: $160M-$200M

2. Change the Pacheco Law threshold from $200K to $5M. Savings: $20M-30M

3. Provide the rules and regulations for the state to expedite the sale of surplus land, transferring the revenues from such transactions to the general fund.
Savings: $10M-$15M

4. Eliminate the Governor's Washington, DC office entirely. Savings: $403,430

While these cost saving measures may seem small, in a time of economic crisis, every little bit helps, and we would hard call $270 million little. The taxpayers deserve better. We should be going through every single line item and cutting whatever is not absolutely necessary. The House has passed transportation and pension reform bills, both of which have provisions that could save the Commonwealth millions of dollars. We need to get those reforms into place and then re-examine where our state is financially. The Governor and the Democratic-controlled legislature have convinced many that the only way out of this crisis is to raise your taxes. We however, believe cutting waste, reducing spending and tightening our belts are the principles we should be living by while navigating through these extremely tough economic times. The state’s rainy day fund has been tapped three times already during this recession. While yes, it is raining, it likely that we will need to rely on this fund and the monies coming through the federal stimulus package during the next two fiscal years.