STATE HOUSE NEWS SERVICE
THE BAKER ADMINISTRATION on Friday ordered the immediate suspension of all state spending on “non-essential” goods and services in an array of categories, including outside consultants, leases and office equipment and computers.
The directive is part of an effort to balance this year’s $38.4 billion state budget in the face of underperforming tax revenues and with only two months remaining in the fiscal year.
In a memo obtained by the News Service, Gov. Charlie Baker’s budget chief Kristen Lepore early Friday afternoon told Cabinet secretaries, department heads, chief financial officers, and chief procurement officers to suspend spending in numerous “object classes.”
“As you know, state tax revenue is currently running $260M below benchmark for the year. Therefore, I am implementing spending control measures in order to ensure that the Commonwealth ends this fiscal year in balance,” wrote Lepore, the state’s secretary of administration and finance.
Tax collections in April, historically the biggest month of the year for receipts, declined by 3 percent from last year, leaving state budget overseers with collections that are running well below benchmarks. While collections could bounce back in May or June, they are up only 1.9 percent over the first 10 months of fiscal 2016. The budget Baker signed last year was predicated on tax revenues growing 4.8 percent.
Senate President Stan Rosenberg this week estimated a $200 million budget gap. Lepore has declined to quantify a budget gap, but ruled out unilateral “9C” budget cuts from Gov. Baker, layoffs or the use of rainy day funds to deal with budget-balancing challenges.
According to the memo from Lepore, the type of spending suspended would cover the “purchase of supplies to rebuild inventory, prepaid postage, special projects that are not time-sensitive, and computer and telephone upgrades that are not critical to operations.”
The object classes affected include administrative expenses, consultant services contracts, programmatic equipment purchases, facility operational supplies, and information technology expenses.
Lepore’s office plans to work with department heads to transfer funds identified as no longer essential for operations, with the goal of completing the exercise by Friday, May 20, according to the memo. The goal of the transfers will be to help balance the state budget through reversions at the end of the year, according to an aide.
“As always, we expect that all departments will process payments as quickly as possible to take advantage of the maximum prompt pay discount available under the contract for goods and services that have been, or will be, purchased and a prompt pay discount opportunity is available,” Lepore added in her memo.
The administration does not have an aggregate savings target associated with the suspended spending directive, an official said.
Days after Baker took office in January 2015, his administration implemented a hiring freeze. In October 2015, the freeze was lifted and the administration transitioned to a payroll cap system designed to maintain the savings related to the hiring freeze. The payroll cap system remains in place, according to an administration official.
It is no surprise because I have known about it for two weeks. The biggest cause comes from two areas:income tax withholding and estimated payment and sales & use tax.
As a result the shortfall is $5B (actual is $4.985B) against the benchmark estimate that was agreed to when the FY2016 budget was hashed out. I will say it again optimistic instead of realistic numbers. According to the polls, Governor Baker is the most popular governor? I think not!
Here’s a perfect example of why Governor Baker enjoys such high approval ratings. No mention about previous cuts made by the Governor to this very same budget…the budget he signed. There’s no context for readers to understand the Governor didn’t put enough money in the budget for certain line items that then inevitably went over budget. The Governor’s popularity is due to omission of material facts that if the public knew would result in plummeting poll numbers.
True, that’s in part he baked in the assumption that the money in certain budget will stay low. He also can blame the House and Senate when they also put together and debated the budget.