Baker confirms $765M shortfall in state finances

By Bob Salsberg, Associated Press

BOSTON (AP) - The state's budget deficit for the current fiscal year is projected at $765 million, Gov. Charlie Baker announced Tuesday after crunching the numbers with senior aides.

The Republican, who took office less than two weeks ago, said he would lay out plans in the coming days for closing the gap, but he continued to rule out new taxes or cuts in state assistance to cities and towns.

Baker's predecessor, former Democratic Gov. Deval Patrick, had estimated the deficit to be $329 million. Patrick ordered nearly $200 million in cuts to state agencies under his direct control and asked the Legislature to take additional steps, including a $25 million reduction in local aid.

The Baker administration said Tuesday that while state spending is expected to increase by 7.3 percent in this fiscal year, tax revenues are only growing at 4.4 percent.

"That simply isn't sustainable this year or next," the governor said.

The state has an approximately $36 billion budget for the fiscal year ending June 30.

Other factors driving the deficit include a projected $230 million shortfall in Medicaid, tied to the failure of the state's health connector website last year, which prompted state officials to move hundreds of thousands of people into temporary Medicaid coverage, Baker said.

Revenue from state fees and fines was also expected to miss its mark by nearly $180 million, he said.

The governor suggested that $200 million in capital gains tax revenue earmarked for the state's "rainy day" fund could instead be used to help close the budget gap. He said he would work with the Democratic-controlled Legislature on other potential solutions, but reiterated that new taxes or state fees were off the table.

"There are a few things I heard from voters when I was on the campaign trail. And the one of the big ones I heard from them is, we feel like we have been nickeled and dimed every single year for a very long period of time, and we think it's time for the commonwealth to live within its means," he said. "We're committed to that no new taxes agenda, and we're going to stay there.

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