Tough Times, Tough Choices

“The next governor and legislature will face a staggering mismatch between expected revenues and the costs of a broad array of important priorities . . . potentially in the billions of dollars . . .” This cheery conclusion comes from the Mass. Taxpayers Foundation’s recent report on the Commonwealth’s fiscal condition.

The report states that the fiscal 2006 budget surplus of $400 million has already been spent, the fiscal 2007 budget is out of balance by about $500 million, and only very tight spending controls on everything in the fiscal 2008 budget will deliver a balanced budget during the first full fiscal year of the next gubernatorial administration.

Yet here we are, four weeks away from the November elections, and every candidate for governor is promising more money for local aid, higher education, K-12 education, and healthcare reform. At least Green Party candidate Grace Ross makes no bones about where the money to fund her priorities will come from – $3 billion in new taxes – a bad idea for a state that’s already among the most expensive places to live, work, and do business in anywhere in the U.S.

For now, the budget is mostly balanced — although the taxpayers association’s analysis about the structural deficit in this year’s budget is right on — the economy is doing OK, and most people won’t accept, at least not easily, the daunting reality that’s spelled out by the report. So the next governor is going to face the more difficult challenge of encouraging and demanding caution and discipline at a time when most people might not be convinced that it’s time for broccoli instead of ice cream and cake.

Independent candidate Christy Mihos has done a great job of spelling out the significant economic and fiscal problems we face, but blames the whole thing on Republican leadership. That’s a bit much. Romney vetoed exactly $500 million in fiscal 2007 spending, which was promptly overridden in its entirety by the Democratic Legislature. In addition, many of the Romney administration’s ideas on spending, housing, local aid, education reform, and the like have never even received a hearing on Beacon Hill, much less a vote.

Democratic nominee Deval Patrick has worked hard to avoid becoming trapped into one position or another on the state’s financial situation — choosing not to support the voter-supported rollback of the income tax to 5%, not ruling out the possibility of raising taxes down the road, and avoiding specific commitments on spending. But he’s also done a good job of pointing out that huge cuts in state aid to cities and towns during the fiscal crisis a few years ago translated into whopping increases in property taxes at the local level, as cities and towns scrambled to make up the lost revenue.

Republican nominee Lt. Gov. Kerry Healey carries the political baggage associated with this financial quagmire. Yes, the economy is OK overall, but it’s much better for high-wage workers than it is for middle- and working-class families. Cities and towns haven’t fallen apart, but they’ve created and raised fees, laid off public safety employees and teachers, and supported numerous Proposition 2 1/2 overrides to make up for big reductions in local aid, and voters have felt the squeeze on their incomes as a result.

Healey also walks a fine line between blaming the Legislature for inaction on good ideas while she promotes herself as a check on their bad behavior. If she blames them too much for poor performance, she raises questions about her own effectiveness, and if she takes too much credit for working with them on key issues, she risks having to explain why so many good ideas have never gone anywhere.

Still, she’s the only candidate who’s made it clear that if the choice comes down to cutting state spending or raising taxes, she’s going to fight to cut spending. At a time when the Commonwealth’s budget writers and elected officials will face tremendous pressure to raise taxes just to stay “even,” voters would be wise to keep this in mind.

Charles D. Baker was secretary of health and human services and secretary of administration and finance under Governors Bill Weld and Paul Cellucci.