Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Massachusetts budget cuts: Biggest in 20 years

deval_patrick.gi.top.jpgDemocratic Gov. Deval Patrick Wednesday unveiled the biggest budget cuts in 20 years. By Tami Luhby, senior writer


NEW YORK (CNNMoney) -- Massachusetts is bracing for the biggest budget cuts in 20 years...even as its tax revenues are on the rise.

Gov. Deval Patrick Wednesday unveiled a fiscal 2012 spending plan that would slash $570 million, or 1.8%, from last year's budget, hitting social services, health care and aid to municipalities in particular.

Among the cuts:

  • Closing two prisons
  • Reducing state aid by $65 million
  • Shedding as many as 900 jobs, adding to the 5,900 eliminated since late 2008.
  • Eliminating employment services for those on transitional assistance
  • Cutting benefits for those enrolled in MassHealth, the state's Medicaid program
  • Slashing $23 million in spending on emergency homeless shelters

But the news isn't all bad. The budget calls for providing record levels of funding for K-12 education and maintaining its commitment to lower the corporate tax rate to 8.25%, from 8.75%.

Also, the spending plan does not include any tax or fee hikes, but it does take $200 million from the state's rainy day funds. And it assumes tax revenues will rise by $740 million, thanks to the strengthening state economy.

What's hurting the Bay State the most is the disappearance of federal stimulus funds. State officials relied on $1.5 billion in Recovery Act money for fiscal 2011, which ends June 30. In total the state has received $4 billion since the act was passed in February 2009.

Also, while tax revenues are on the rise, they remain far below pre-recession levels. The fiscal 2009 budget assumed $21.4 billion in tax revenues. The fiscal 2012 plan is budgeting only $20.5 billion, which takes into account an additional $1 billion in revenue from a sales tax hike passed in 2009.

"We've turned the corner, but the hole caused by the recession is so deep, it will take some time to get out of it," said Jay Gonzalez, the state's secretary of administration and finance.

Massachusetts is the latest state to unveil austere budgets. California's governor and Texas lawmakers recently proposed spending plans with harsh cuts to education and social services. To top of page

Index Last Change % Change
Dow 17,598.20 -91.66 -0.52%
Nasdaq 5,115.38 -12.90 -0.25%
S&P 500 2,098.04 -5.80 -0.28%
Treasuries 2.15 -0.06 -2.49%
Data as of 4:05am ET
Company Price Change % Change
Frontier Communicati... 5.15 0.00 0.00%
Bank of America Corp... 17.77 -0.11 -0.62%
Apple Inc 118.44 0.00 0.00%
Tyson Foods Inc 39.96 0.00 0.00%
Facebook Inc 94.14 0.00 0.00%
Data as of Aug 3
Sponsors

Sections

Five major retailers have agreed to stop selling realistic-looking toy guns in New York state, attorney general Eric Schneiderman said Monday. More

The island's economy is a mess. Now its people are suffering from a major drought and water rationing. More

Represented by Teamsters, workers servicing some big Silicon Valley firms demand higher wager and better benefits. More

Candle-Lite is committed to manufacturing in America -- which is a good thing because it contributes more than $300 million to Ohio's economy. More

You can't blame it on the economy anymore. More Millennials now have jobs, but are still living at home. More