Baker misses budget opportunity
Fails to explain philosophy, spending cuts
GOV. CHARLIE BAKER missed an opportunity on Wednesday to play the role of an educator and explain how and why he is trying to rein in state spending. His press release and his press conference were full of information about proposed minor spending increases in local aid, transportation, and higher education, yet there was almost no information on the centerpiece of his budget proposal – how he plans to bring state spending in line with projected revenues.
In the current fiscal year, according to budget documents of the Baker administration, spending is expected to rise 7.8 percent while tax revenues will grow only 4 percent. For fiscal 2016, which begins July 1, Baker wants spending to grow only 3 percent, or about $1.1 billion. Tax revenues over the year are expected to grow 4.8 percent. If Baker’s budget were to become law, it would be the first time in at least four years that the percentage growth in state spending would not outpace the percentage growth in tax revenue.
It would have been interesting to hear why reduced spending is a worthy goal. It would have also been interesting to hear how it’s going to be accomplished. Baker, after all, is probably the most budget-wise governor the state has had in decades, in part because he used to churn budgets out in the administration of former governor William F. Weld.
Yet Baker didn’t use his time in front of the cameras to explain his budget philosophy or the finer points of cutting spending. Instead, he focused on where he’s going to spend more money and said as little as possible about where he’s going to cut.
Baker was vague on where the savings will come from. He said the biggest amount of savings – aides put the number at about $400 million – would come from reducing the number of people covered by MassHealth. Baker indicated he believes many MassHealth recipients are currently receiving coverage improperly, with many of them on both MassHealth and private insurance.
“There are many people who currently have MassHealth who may or may not be eligible for it under the eligibility terms that exist here in the Commonwealth,” he said. “Let’s face it folks, Massachusetts has the most – one of the most – generous Mass Health [Medicaid] programs in the country.”
Baker launched a similar review of MassHealth enrollees this fiscal year to help balance the fiscal 2015 budget. It’s unclear how the fiscal 2016 proposal differs from the 2015 plan.
An outside section of the budget would also allow the Baker administration to pare back or eliminate chiropractic benefits provided under MassHealth, but other benefits appear to be untouched.
A large chunk of those on MassHealth receive their coverage through private health plans that have been losing big amounts of money because their costs are rising much faster than their rates. Kristen Lepore, the governor’s secretary of administration and finance, said the health plans shouldn’t expect any rate relief in the coming year, with rates unchanged in fiscal 2016.
Baker, however, said state officials would attempt to rein in some of the costs the health plans are facing. Many of the health plans say they have been blindsided by the cost of new wonder drugs that offer significant health benefits but at steep prices. Sovaldi, for example, cures hepatitis C, but costs $84,000 for a 12-week course of treatment. Baker said the state is negotiating directly with California-based Gilead Scientific, the company that makes Sovaldi, for a lower price.The governor made much of the fact that his budget contained no new taxes or fees and didn’t tap the state’s Rainy Day Fund. Yet it does tap the Rainy Day Fund indirectly, by proposing to siphon off about $300 million in capital gains tax revenues that were expected to flow into the fund. Baker similarly snatched $131 million in capital gains tax revenues to balance the current year’s budget. Baker is also tapping a number of other one-time revenues, including $100 million from a tax amnesty program and $30 million from the sale of the Sullivan courthouse in Cambridge.
State employees will pay more for their health insurance under the governor’s proposal. An outside section of the budget would require all state employees to pay 25 percent of their health insurance premiums. Currently, employees hired before July 1, 2003 pay 20 percent of their premiums.