Authorities offer financial help to state

3 agencies provide $69.5m for deficit effort

Gov. Charlie Baker is asking some of the state’s independent authorities for help in balancing the fiscal 2017 budget, but it appears only three have stepped forward.

The Massachusetts Development Finance Agency agreed to provide $17.5 million and the Massachusetts Housing Finance Agency is contributing $5 million, for a total of $22.5 million.

The MBTA is also helping out, swapping nearly $47 million due from a $187 million state appropriation for an equivalent amount of money in state bond funds. The switch has little financial impact on the T, but it allows the Baker administration to use the $47 million to lower the amount of money needed to bring the fiscal 2017 budget into balance.

Officials say the Massachusetts Port Authority was asked if it could help out, but the agency, which operates Logan International Airport, decided it could provide no financial aid to the state this year. The Massachusetts Convention Center Authority, which provided $60 million to help balance last year’s budget, was not asked for money this year.

Dominick Ianno, chief of staff in the Executive Office of Administration and Finance, issued a statement saying the administration’s outreach to the quasi-public agencies was “part of its broader effort to ensure the Commonwealth ends fiscal year 2017 in statutory balance.”

Baker has shown little nervousness about dealing with the shortfall. Officials say spending cuts, reversions of unspent money at state agencies, and federal funds are expected to close the gap. Final tax revenue figures for fiscal 2017, which ended June 30, are due next week. Baker estimated on Thursday that tax revenues will grow about 1.5 percent in fiscal 2017, far less than the 4.3 percent figure used to develop the budget. The shortfall for the year is expected to top $439 million.

Officials characterized the financial appeals to the state authorities as friendly, an exploration of what each agency could do to help the state without jeopardizing its own finances.

Draft minutes of the MassDevelopment board’s deliberations on the $17.5 million transfer indicate one member of the board voiced opposition to the proposal. The measure was approved on a 7-1 vote.

The draft minutes described Patricia McGovern, a former state senator and hospital executive, as “deeply troubled” by the Baker administration’s request. “She said she is afraid of the precedent this request will set and wondered if the administration is asking $17+ million this year, what might it seek next year,” the minutes said.

Rachel Madden, who represents Kristen Lepore, the secretary of administration and finance, on the MassDevelopment board, said Massachusetts quasi-public agencies were being asked to extend “grants” to the Commonwealth. She said the administration was determined not to touch the state’s stabilization, or rainy day, fund, according to the minutes.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Meet the Author
When Madden was asked by an unidentified board member to explain what precipitated the state’s shortfall, she said the question is “baffling to the economic experts and others who have suggested that there is no good answer,” according to the minutes.  “It is a conundrum because the state’s economy is thriving.”

 

  • eric.shwartz

    According to a Boston Globe article several months ago, the apparent reason for the state shortfall is that everyone with possible capital gains tax liabilities were waiting to see whether the federal capital gains tax was going to be reduced by the present administration and Congress. This is also one reason why the stock market has been so successful, as people are buying and not really selling stocks. It seems that blue states are being harmed more than red states by the failure to incur capital gains taxes while awaiting these expected changes.

    https://www.bostonglobe.com/business/2017/05/05/the-state-budget-cratering-blame-trump-tax-cuts/QKI5eCPPJa29TeExSYGb4M/story.html

    • QuincyQuarry.com

      One could also make a solid argument that the economic recovery in MA has not been as widely robust as the original projections were predicated upon.