Declining revenues, soaring security costs
challenge state

by Daniel J. Fitzgibbons, Chronicle staff

n already cloudy state budget picture grew gloomier this past week as revenue totals for September plummeted 13 percent and Acting Gov. Jane Swift said she will seek $26 million to address public safety needs after last month's terrorist attacks.

     Late last week, the Executive Office of Finance and Administration confirmed the worst about September's tax flow: revenues were down $228 million from the previous year and the state finished its worst economic quarter since 1990. Combined with revenue drops in July and August, the state is now $300 million behind last year's revenue collections.

     The news cast a pall over legislative budget negotiations, where House and Senate leaders have been unable to fashion a final spending plan for the fiscal year that began July 1. Talk on Beacon Hill has now shifted to possible cutbacks this year and warnings that state spending is unlikely to increase next year.

     "Any major new spending initiative is obviously imperiled, and any new tax-cutting initiative should be for the same reason," Senate President Thomas F. Birmingham told The Boston Globe.

     According to press reports, Swift, Birmingham and House Speaker Thomas Finneran last week agreed to hold spending in the current fiscal year to $22.63 billion, about $240 million less than the $22.9 billion packages approved separately by the House and Senate.

     According to reports, Swift will propose a $23.32 billion FY2003 state budget in January.

     The day after Swift announced her agreement with legislative leaders, state Secretary of Administration and Finance Stephen Crosby told about 300 agency chiefs that the Swift administration wants to cap state spending growth at 3 percent next year.

     Health care, education and public safety are considered priority areas for spending, he said. As for other areas, "We are talking about in many cases dealing with no growth in fiscal 2003," he said.

     At the meeting, Crosby reportedly cautioned agency heads to delay implementing expansion programs until a final FY02 state budget is signed by Swift.

     Departments were also warned not to shift costs to other agencies or use accounting gimmicks and instead to focus on meeting the core mission of each agency.