THE COMMONWEALTH OF MASSACHUSETTS Executive OFFICE FOR ADMINISTRATION AND FINANCE DEVAL L PaTSICK. ‘TEL: (617) 727-2040 ee pani Pax. (617) 727.2779 ores ww mass gowoat ‘October 6, 2010 ‘The Honorable Richard R. Tisei ‘The Honorable Bruce E. Tarr ‘The Honorable Michael R. Knapik ‘The Honorable Robert L. Hedlund ‘The Honorable Richard J. Ross Massachusetts Senate State House Boston, MA 02133 Dear Senators Tisei, Tar, Knapik, Hedlund, and Ross: At the Govemors request, am writing in response to your letter dated October Sth, in Which you requested detailed information regarding the budget items currenly before the Senate for consideration. Although this is an unusual request for you, never having inquired about budget detail in the past, and we normally work through the kiparisan ‘Ways and Means Committees, am pleased to enclose the information you requested. ‘To be clear, the FY1 budget is balanced. Without using these additional federal resources, our balanced budget will require us to close prisons, cut health care benefits to ‘our poorest citizens close homes serving many with severe developmental disabilities, close shelters forthe homeless, layoff state police and take other drastic actions. The ‘additional federal funding we received in August was intended to continue these programs and services. They cannot be used for other purposes and will go unused if you fail to act. Whats worse, people will be unnecessarily hur. As you will recall, in July, the Governor vetoed over $450 million in spending inthe ‘budget - funding that was contingent on receiving additional federal stimulus funding (MAP) that had not yet been committed by the federal government. Simultaneously, the Governor filed a supplemental appropriation that was necessary to ensure that critical, public safety programs were funded at levels necessary to ensure the safety of residents ‘throughout the Commonwealth. Portions of the July supplemental bill are addressed in the appropriations currently before you. We have moved forward with further cuts to programs and services and further reductions in the state workforce. However, ina few Critical areas the euts to programs and services are so drastic that we believe the bestpprosch isto use a portion of the additional FMAP funding, as intended, to preserve critical services, protect jobs and serve as abridge to economic recovery. ‘The bill before you is fiscally responsible and is being paid for entirely with available funds from the prior fiscal year and additional FMAP funding. It should be noted that ‘only $203 million of the $449 million of additional FMAP funding is proposed to be spent in this Bil (the expenditure ofthese funds for federally reimbursable programs like ‘MassHealth will in tum generate additional federal reimbursements, which are reflected inthe bill Of the remaining FMAP funds, $195 million is programmed to support spending previously supported by state eserves, allowing us to restore all $195 million of. sate reserves originally used to support the fiscal year 2011 budget. In shor, supporting this bill means no state rainy day funds will be budgeted fortis fiscal year, ‘We have managed through this unprecedented fiscal crisis responsibly and proactively, relying on a balanced set of solutions to solve $13 billion in budget gaps. Public employees have shared the sacrifice by ratifying concessions in their collective bargaining agreements a reflected in the pending bill. These agreements are by fur the least costly agreements ever negotiated by any Administration before ours, saving the ‘Commonwealth hundreds of millions of dolar. ‘While we, like individuals and families across the Commonwealth, still face challenges, we are secing positive results from the approach we have taken. We are first in the country in job growth, our tax revenues continue to come in over estimates and other economic indicators show that we re recovering faster and stronger than the rest ofthe ‘country. In light ofthese positive results, itis to early to know the extent ofthe budget challenge we will be facing next year, but it is clear we are moving in the right direction, ‘The restoration of $195 million of state reserves proposed inthis bill will also help provide an additional cushion for next fiscal year. hope you will fee fre to call me if you have other questions and that we can count on the prompt support of the supplemental budget by you and all responsible members ofthe ‘Senate, Sincerely, Jay Gonadief ce: The Honorable Therese Murray, President ofthe Senate ‘The Honorable Robert DeLeo, Speaker of the House of Representatives ‘The Honorable Steven Panagiotakos, Chairman, Senate Committee on Ways and Means ‘The Honorable Charles A. Murphy, Chairman, House Committee on Ways and MeansEXECUTIVE OFFICE FOR ADMINISTRATION AND FINANCE. RESPONSE TO SENATE REPUBLICANS’ INFORMATION REQUEST OCTOBER 6, 2010 1) See the attached spreadsheet for a detailed summary of the current spending projections for line items in the supplemental budget and the need for these appropriations. As is the case every year, we carefully monitor and manage budget exposures throughout the course of the fiscal year to ensure that we maintain a balanced budget. Budget exposures are managed through cuts to programs and services, spending controls and supplemental appropriations. Supplemental appropriations are made only if there are sufficient funding resources available to support the appropriations in a fiscally responsible manner. The Executive Office of Administration and Finance works closely with the ways and means committees to ensure that we maintain a balanced budget over the course of the year and that any supplemental appropriations bilis are affordable. Consistent with our strong and proactive budget management to date, we expec: to actively manage the fiscal year 2011 budget, to make adjustments to the balance sheet as necessary, and to seek additional supplemental appropriations to the extent warranted, affordable and fiscally responsible. 2) With respect to spending projections for other budget line items for which supplemental funding is not included in the pending bill, our current spending projections are consistent with the FY11 General Appropriations Act. There are certain exceptions that we expect may need supplemental funding later in the year, such as snow and ice and certain case load driven accounts. However, as described above, we closely monitor and manage these potential budget exposures over the Course of the year to ensure we remain in balance. 3) We do not currently subscribe to the estimated budget gap for next fiscal year that you cite in your letter. There are many ‘moving factors that will impact the budget outlook for next year, and itis too soon to develop a meaningful estimate. In spite ofunprecedented fiscal challenges, we have significantly reduced the amount of one-time resources supporting the budget in each of the last two fiscal years since the recession began. in addition, tax revenues are performing much better than expected as a result of our strong economic recovery, and the economic recovery should in turn reduce demand — and therefore costs — in our safety net programs.Hal Coun PAC Secretary of Seta PAC [BABS Retened Revenae NOFA Debt Senco SRT Teneeast | —TOs00 00 Tae BE ¥483;3837 000,000 Tizer eos | Taser ae Bae TIE 000 erfres Trang Grants "5000000 [ESacaton TT Casts PAC a. bie Stay IT Costs PAC 600000 ‘8100000 [Sate Posce Communi 3080 [based Service BaDDOTT BETTER 7088 58 wa BETE OTE Gora senicas io aus wih Waunaic Tae TSE | TSO Pasta‘Description forthe Need of FURGing INesec rasta atomeys to patom one pub aay Tae (Gaate Sampag Gaviiar | soasersee | 00000] Tar] —— erage "ax Comptance ez30 00) 400,000 ae Fev anata func "ERUTTED Fabel Vay Poon 7 aaa won "TEDDTGD [Gui See Bramatona Tr TART Tae oniepn Poten and Fe oe ‘Spor gee] ARTES [Ness oo econ to orto Sov EERE METER [erates pate heath care powers. z was waES ado ial esas nacesaty i Teapone © 0 oo nus and sal) of presrbed phomaroueals. 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