Baker sees need to inform lawmakers of spending exposures

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By Andy Metzger

STATE HOUSE NEWS SERVICE

STATE HOUSE — With House and Senate leaders in general agreement about the size of a $765 million budget hole, Gov. Charlie Baker is laying some of the responsibility for the crisis on the former Patrick administration.

The deficit has occupied the attention of the new administration since Baker’s inaugural on Jan. 8 and his top budget aide says he plans to roll out a plan to address it sometime next week.

Picking up budget management midway through the fiscal year, Baker has identified the Health Connector’s temporary Medicaid program, created for those stymied by the broken Connector website, and the insurance program for state and municipal employees as cost drivers behind the problems.

After meeting Thursday with House and Senate Republican leaders, Baker said the Democrat-controlled Legislature, which wrote the state budget based on a draft submitted by former Gov. Deval Patrick in early 2014, relies on the executive branch for information on spending exposures.

“I really do think it’s important for the executive to provide the Legislature with guidance and input on this stuff, especially when as we said several times, two of the big drivers in this were the ongoing issues associated with the Connector and the Medicaid program, and the Group Insurance Commission (GIC), which would have been tough for the Legislature on their own to figure out,” Baker said.

Earlier in the week, on Howie Carr’s radio show, Baker, who has been cultivating relationships with Democratic legislative leaders, side-stepped a question about who was responsible for the budget crisis, saying that was “beside the point” and that assigning blame wouldn’t help him solve the problem.

In December, Patrick’s Secretary of Administration and Finance Glen Shor disputed an analysis by the Massachusetts Taxpayers Foundation alleging a deficit significantly larger than the $329 million problem flagged by Patrick’s team right after the November elections.

When Senate budget-writers were drafting their version of the annual spending bill, Group Insurance Commission staff spoke to the Office of Administration and Finance and Ways and Means Committee staff about an “anticipated shortfall” of about $100 million, according to a May 2014 memo. The Baker administration said this week that the GIC is running $155 million over budget.

Senate Ways and Means Chairwoman Karen Spilka and Rep. Brian Dempsey, expected to be reappointed House Ways and Means chair, both agreed generally with Baker’s estimate of a current $765 million gap.

“We think it’s in that range,” Dempsey said on Thursday after a public hearing on anticipated tax collections.

“It seems as if there’s consensus with that,” said Spilka, who was appointed to the post Wednesday. She said, “It seems reasonable.”

Asked whether he anticipated the budget hole, Dempsey said the budget was based on historical averages as were all of the budgets he has worked on in his four years as Ways and Means chairman.

“Each of those years we saw surpluses. We did that again this year. Unfortunately we’re falling short although the numbers are the historical average over the last three to five years,” Dempsey told the News Service.

“So when we’re putting the budget together we’re very careful to look at the history of each account and to draw conclusions relative to revenue projections based on those revenues we’ve seen the last three to five years. So based on the averages, we built the budget, understanding that there’s always fluctuations and we will deal with it accordingly.”

“It’s not good, and I don’t want us to be in the position clearly – and I’m sure the Senate president nor any members of the Senate body want to be in this same position next year,” Spilka said.

Spilka said lawmakers should look at spending as well as “all aspects of the budget,” and noted the economic trigger that caused the income tax to drop in January.

“The Mass. Health Connector clearly was a problem, the trigger that lowered the income taxes, and there were several other issues that came up,” said Spilka.

Saying “everything is on the table,” Spilka deferred on questions about potential budget fixes, such as spending cuts that would need legislative approval, saying, “It’s really important to hear from everybody.”

“Clearly I wish we didn’t have to cut anything,” said Spilka, an Ashland Democrat.

Patrick put the bottom line of the budget he signed in July at $36.5 billion, but Baker on Monday said state spending is on pace to grow by 7.3 percent in fiscal 2015 to more than $38.5 billion, even after the $252 million in emergency cuts made by Patrick on his way out of office. Baker aides factored into their $38.5 billion estimate public pension system costs not included the $36.5 billion estimate.

Tax revenues are projected to grow at 4.5 percent this fiscal year, and are tracking just $18 million off projections through December.

“Spending seems to be the primary issue here,” Baker said, calling the rate of growth unsustainable.

Baker’s team on Monday released a list of areas where state spending is running significantly above amounts included in the state budget, including spending on health care, child protection services, public counsel services, corrections and county sheriffs.

Baker met on Thursday with House Minority Leader Brad Jones, a North Reading Republican, and Senate Minority Leader Bruce Tarr, a Gloucester Republican, and said they would be joining him in future meetings he holds with House Speaker Robert DeLeo and Senate President Stanley Rosenberg.

Fielding press questions about the controversy regarding underinflated footballs that followed the New England Patriots’ 45-7 championship win over the Colts, Jones and Tarr said football talk did not come up in their meeting where the deficit was a focus.

“As the first meeting we’ve had with the governor in eight years, we were focused quite frankly on the more meaty issues of the day than deflate-gate,” said Jones.

“The only inflation we talked about wasn’t in the context of football; it was actually in the context of the budget,” said Tarr.

Michael Norton contributed reporting.