Saturday, April 11, 2009

Things to watch for in next week's House budget

The Massachusetts House of Representatives rolls out its budget plan this coming Wednesday. According to the State House News News Service:
House leaders plan to unveil a fiscal 2010 budget Wednesday that lawmakers have warned will include steep spending cuts on top of cuts already implemented this year by Gov. Deval Patrick.
So we have been told. But in assessing the probability that the House budget will live up to the doomsday rhetoric employed to herald its arrival, a skeptical voter would be forgiven for pointing out a few things:

First, we have heard this kind of apocalyptic rhetoric before, with less than impressive results. Governor Patrick made much of executive branch cuts in the weeks leading up to the last election - but when all was said and done, he cut only a fraction of the spending he'd added since taking office. Similarly, it was recently revealed that the Legislature's own "cuts" earlier this year in fact consisted primarily of draw-downs from a spending slush fund rather than any true cuts.

Most recently, in a speech purportedly about tough budget choices, the only example newly-minted Speaker DeLeo offered of likely "spending cuts" was a pledge to "take a hard look at tax credits."

On that note, then, a few educated guesses/predictions about next week's House budget:

1. Per Mr. Speaker's forecast, there will be substantial reductions to existing tax credits. These will be called "budget cuts." Of course reduction or elimination of a tax credit is in no sense a "budget cut." A budget cut deprives some arm of the government of revenue. In contrast, elimination or reduction of a tax credit enhances government revenue. Far from "budget cuts," these are in fact tax increases.

2. It will count reduced spending increases as "cuts." Governor Patrick did this in his own "cut to the bone" budget, which in fact increased state spending by 5 percent. How, you ask, can a budget that increases spending over last year be characterized as a "cut" budget? Easy. Say this year you spent $50 per week on groceries. Next year you plan to spend $60 per week. In light of the lousy economy, you "cut" that spending to $55 per week. You've made a sacrifice in your plans, but you're still eating better cheese than you were last year. That is basically how legislatures nationwide (including Congress) routinely dress up spending increases as "cuts." I'd bet big money that Wednesday's budget will play this game.

3. It will over-rely on one-time revenues (specifically, federal stimulus spending). I wrote on this a few weeks back. When Governor Patrick leaned too heavily on stimulus funds to "balance" his budget proposal he caught some flak from the Legislature. Ultimately, though, it is a good bet that they will do the same thing. It is just easier - politically and otherwise - than making true cuts to state spending.

All of these predictions are, of course, variations on one theme: look for the much-vaunted "cuts" in the House budget to be much more smoke and mirrors than substance.

1 comment:

  1. I'll be watching! Keep up the great work, Dan!


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