The Massachusetts Federation of Young Republicans is proud to post content from Republican state legislators to keep our members apprised of legislation on Beacon Hill. This is the second in a series of guest posts by Republicans in the State House who are working on the legislation that matters most to Massachusetts.
By Representative Brad Hill (R-Ipswich)
There are many things to like about Governor Baker’s proposed $39.5 billion state budget for Fiscal Year 2017. But two things that stand out are its commitment to reducing the state’s over-reliance on one-time revenues and shoring up the Commonwealth Stabilization Fund.
Since taking office in January of 2015, the Baker-Polito Administration has made significant progress in reducing the state’s dependence on one-time sources to help balance the budget.
The Fiscal Year 2016 budget, signed by Governor Baker on July 17, utilized $629 million in one-time revenues, including $300 million in capital gains taxes and another $100 million generated by a corporate tax amnesty program. In contrast, the previous year’s budget, signed by former Governor Deval Patrick, relied on $1.2 billion in non-recurring revenue.
For the upcoming fiscal year, the Governor’s budget proposal calls for using only $253 million in one-time revenues. This is less than half the amount built into the current budget and represents a nearly 80% reduction when compared to Governor Patrick’s last budget.
Governor Baker has publicly expressed his desire to eliminate the use of one-time revenues in future budgets. As he explained to reporters the day before filing his latest spending plan, “We need to do all we can to make sure we do live within our means because at some point, I don't know when that will be, we'll all have to tighten our belts a little bit to deal with a turndown in the economy and we better be prepared for that and not be sitting there with five, six, seven, eight hundred million dollars in one-time revenue sources that aren't going to be there.”
In addition to taking the fiscally responsible position of not spending money that won’t be available from one year to the next, the Baker-Polito Administration has prioritized replenishing the Commonwealth Stabilization Fund, also known as the Rainy Day Fund. Governor Baker’s initial budget was the first in 8 years that did not rely on a draw down from this fund.
The Governor’s new budget continues this positive trend. Instead of raiding the Stabilization Fund, the budget calls for depositing a minimum of $206 million – and potentially as much as $282.5 million – into the account.
The Stabilization Fund currently has a balance of $1.258 billion, but as recently as Fiscal Year 2007 contained $2.335 billion, nearly twice the current balance. Under the Governor’s budget plan, the fund would increase to $1.545 billion in Fiscal Year 2017.
Governor Baker clearly understands that the Stabilization Fund is an emergency reserve fund that should only be tapped during economic downturns to mitigate cutbacks to essential state programs and services.
Governor Baker’s efforts are not going unnoticed: Massachusetts currently has a very favorable bond rating, and Standard & Poor’s has identified his plan to build up the Stabilization Fund as “a positive credit development.” Eliminating the reliance on one-time revenues, spending within our means, and building up the Stabilization Fund will help to ensure that the state continues to maintain a favorable long-term fiscal outlook moving forward.
Representative Brad Hill (R-Ipswich) is the Massachusetts House Assistant Minority Leader