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

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,279.74 13.75 0.08%
Nasdaq 4,579.79 -13.64 -0.30%
S&P 500 2,010.40 -0.96 -0.05%
Treasuries 2.59 -0.04 -1.60%
Data as of 8:41am ET
Company Price Change % Change
Yahoo! Inc 40.93 -1.16 -2.74%
Microsoft Corp 47.52 0.84 1.80%
Bank of America Corp... 16.95 -0.09 -0.53%
Oracle Corp 39.80 -1.75 -4.21%
Facebook Inc 77.91 0.91 1.18%
Data as of Sep 19

Sections

Law enforcement officials say Frank Tamayo was the middleman in a $5.6 million insider trading scheme that involved him eating pieces of paper to cover up the crime. More

The Bill and Melinda Gates Foundation has given more money than many western nations. More

It's really good to be Larry Ellison. The Oracle founder is stepping down as CEO, so maybe he'll have more time to enjoy his glamorous life. More

As Occupy Wall Street goes on its debt-abolishing tear, thousands of people across the country are begging them to forgive their loans. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.