Friday, March 19, 2010

Who's Minding the Store?

Exactly two weeks ago, the Ranking Republican on the House Ways & Means Committee - Rep. Vinny deMacedo – asked Administration and Finance Secretary Jay Gonzalez whether or not the Commonwealth could finish out the last four months of the fiscal year without tapping the Rainy Day Fund. The Secretary’s response was affirmative. Barring any tax revenue downturns within the next four months, the state would end FY2010 in good standing.

The Administration was so confident in its assessment on March 5th, that it recommended $80M of overpaid Medicaid money be deposited into the Rainy Day Fund in order to help shore up the state’s depleted reserves. This happened just as the state partially crawled out from under a $600 million gap the Administration identified in October.

Now only 14 days later, the Administration announces a $300M spending exposure related mostly to Medicaid. The Administration is now suggesting we may have to endure further cuts.

This is simply another example of how the Patrick Administration – despite being handed billions of dollars in federal bailout money and raiding 75% of reserves – cannot competently manage this fiscal crisis.

After downwardly revising tax revenue projections in October due to a $600 million gap, the Patrick Administration increased its projections only three months later in January. The revenue projection was raised by $181 million, and $43 million of October 9C cuts were restored. Clearly, the Administration just cannot get it right.

In January, House Minority Leader Brad Jones criticized the Governor for hastily boosting projections so soon after enduring the worst fiscal crisis since the Great Depression. Recovery will undoubtedly be slow. It is only prudent to proceed with caution. Ignoring our advice, the Administration has now put us in a situation which could have been avoided.

The time has come to hand the keys to the store to someone else.