Baker seeks to slash MassHealth

GOV. CHARLIE BAKER unveiled his plan to bridge the $768 million budget deficit with nearly one-third of the spending cuts coming from MassHealth, the primary funding vehicle for the state’s universal health care program.

“It’s very important for state government to live within its means,” Baker said upon unveiling the outline of his proposal, which calls for $514 million in cuts and $254 million in revenue to close the gap. Without naming him, Baker laid the budget shortfall squarely in the lap of former Gov. Deval Patrick. “We inherited a spending problem,” he said.

Baker proposed $168 million in cuts to MassHealth, the state and federally funded insurance program for the poor.  Baker said he will pull back on spending not mandated by the federal Affordable Care Act and enact administrative cuts, unspecified changes in benefits, and “revenue optimizations.” The administration says legislative action is only needed on $10 million of the $168 million in cuts.

The governor said his administration would also conduct an audit to make sure those applying and approved for health insurance subsidies under the Affordable Care Act are eligible to receive them. Baker said the eligibility audit is required annually by the federal government but has not been done in Massachusetts since October 2013.

Baker insisted none of his cuts will affect services for those receiving health assistance.

As promised during his campaign and since taking office, Baker’s proposal includes no new taxes and no reductions in local aid to cities and towns. It does divert an estimated $131 million in capital gains taxes headed for the state’s rainy-day fund for use in dealing with the current budget shortfall. Baker last week had estimated the capital gains tax diversion would yield $200 million. That proposal garnered the initial approval of both House Speaker Robert DeLeo and Senate President Stan Rosenberg, though neither offered any comment on the rest of Baker’s plan.

Baker said he will unilaterally enact $145 million in so-called 9C cuts, including an across-the-board 10 percent reduction in the governor’s office budget. The 9C cuts will affect some 300 line items, though Administration and Finance Secretary Kristen Lepore said the average reduction will be about 1.9 percent for each of the affected agencies with many still remaining above their fiscal 2014 funding levels. Many of the cuts, she said, will be attained through the administration’s hiring freeze (estimated savings of $22 million) and the cancellation of spending previously approved ($108 million).

“This is a responsible and sensible plan to close the gap,” said Lepore.

In addition to staying away from local aid cuts midway through the fiscal year, the proposal holds the beleaguered Department of Children and Families harmless as well as some homelessness programs.

The plan also calls for $105 million in revenue increases. Baker and his spokesman said there would be no new taxes or fees, but they were vague about where the revenue would be coming from. At least $30 million of the total was identified as requiring legislative approval.

Seth Gitell, a spokesman for DeLeo, said in an email that the governor’s proposal would be referred to the House’s budget committee.

Rosenberg, in a meeting with reporters in his office, said the mix of both cuts and revenues “validates” the view that “this isn’t about overspending; this isn’t about overtaxing.” The one area he spoke about generally was an estimated $18 million Baker says can be realized from a one-time corporate tax amnesty program. He said he was supportive, but said it’s important we not do them too often or regularly.  “I’m assuming the Legislature will be OK with it,” he said of the idea of doing one now as part of the budget fix.

One upward adjustment to the budget was an additional $50 million for snow and ice removal for cities and towns. The costs of the recent winter storms ratcheted up the deficit by $3 million from the $765 gap Baker identified initially.

Baker was grilled on his proposed $40 million cut to transportation in light of the myriad of problems the state’s public transit system was having in the wake of the storms with delays, cancelations, and passenger strandings due to aging equipment and infrastructure. Baker said most of the cuts will come from not filling vacancies but said he will meet with Transportation Secretary Stephanie Pollack and other officials to discuss the transit needs.

“This is not just a harsh winter, this is an historic seven days,” Baker said, citing the record-breaking snowfalls over the last week. “I’ve been here a few weeks. Give me a little time to deal with that.”

Baker was also asked, with the state of Boston’s roads and problems with the T, if it was wise to have a parade planned on Wednesday to celebrate the New England Patriots Super Bowl championship. While Baker said the decision lies with Mayor Martin Walsh, he said the support of the fans as well as the timing with many players looking to depart the area with the season over, the parade needs to happen quickly.

“I think we ought to do the parade while the players are still here because it would be a lot more interesting parade with the players as part of it,” he said with a smirk.

Michael Jonas contributed to this report.