our state budget: building a better future together
DESCRIPTION
Our State Budget: Building a Better Future Together. Massachusetts Budget and Policy Center 15 Court Square, Suite 700, Boston, MA 02108 617.426.1228 www.massbudget.org. Education. Transportation. Libraries, Parks and Recreation. Public Safety . Clean Air and Safe Drinking Water . - PowerPoint PPT PresentationTRANSCRIPT
Our State Budget: Building a Better Future Together
Massachusetts Budget and Policy Center15 Court Square, Suite 700, Boston, MA 02108
617.426.1228www.massbudget.org
Education
Transportation
Libraries, Parks and Recreation
Public Safety
Clean Air and Safe Drinking Water
Prisons and the Courts
Health Care and Public Health
Human Services
How Much of our Income Does it Take?
9.8%
State and local taxes as % of personal income, 2009
Mass. Taxes are Lower than U.S. Average
AK
WY NY WY
ND VT ME HI
NJ WI
WV RI IN
CA
MN CT
O
HM
I IL LA
NM IA
U.S. KS
NE MT
PA DE AR
MS KY
NV UT MD
MA NC FL
W
AGA
AZ
TX OK ID
VA OR SC CO
NH MO
AL
TN SD
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
State and local taxes as % of personal income, 2009
US 10.4% MA 9.8%
Why We are Called “Taxachusetts”AK NY M
A VT CA WY
MN AZ WI
MT HI NE NJ RI DC ND US CO MI
MD
ME
OR SD WA IA CT LA DE PA WV
NMIL UT KS NV MS KY GA ID NC VA SC OK TN IN NH TX MO FL AR OH AL
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
US 11.4%
MA 13.8%
State and local taxes as % of personal income, Fiscal Year 1977
Mass. Taxes Declined Most: 1977- 2009
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Percent change in state and local taxes as % of personal income
US 8.1% Decrease
MA 29.2%Decrease
State Spending Declined Somewhat
FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08
-1%
0%
1%
2%
3%
4%
5%
6%
7%
EducationEducationEducationEducationEducationEducationEducationEducationEducationEducationEducation
Env. & Rec.Env. & Rec.Env. & Rec.Env. & Rec.Env. & Rec.Env. & Rec.Env. & Rec.Env. & Rec.Env. & Rec.Env. & Rec.Human ServicesHuman ServicesHuman ServicesHuman ServicesHuman ServicesHuman ServicesHuman ServicesHuman ServicesHuman ServicesHuman ServicesHuman Services
Other Other Other Other Other Other Other Other Other Other Other
Health Care Health Care Health Care Health Care Health Care Health Care Health Care Health Care
Health Care Health Care Health Care
Net spending as % of personal income
Env. & Rec.
Econ. Dev. & Infrastructure
Law & Pub. Safety.
Local Aid
FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY080%
1%
2%
3%
4%
5%
6%
7%
Income Tax (-$1.4 billion)Income Income Income
Income Income Income Income Income Income Income
Sales Tax (-$1 billion)Sales Sales Sales
Sales Sales Sales Sales Sales Sales Sales
Other Taxes (-$500 million)Other Other Other
Other Other Other Other Other Other Other
% of Total Personal Income
State Tax Revenues Declined ~$3 Billion
Corporate Tax(-$332 million)
6.3%
5.3%
Revenue Plunges in FY09 as Recession Hits
FY09 Consensus Revenue Estimate (July 2008)
1st Revision (Oct 2008) 2nd Revision (Jan 2009) FY09 Final Collections (June 2009)
$0
$5
$10
$15
$20
$25$22.2
$21.0$20.2
$19.0
Total Annual Tax Revenue (billions), in FY12 dollars
*Final collection total (from Auditor’s revenue report) includes only those tax categories counted in the official Consensus Revenue Estimate.
Closing the Budget Gaps: FY10-FY12
FY10 FY11 FY12$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
Cuts & Savings
Cuts & SavingsCuts & Savings
Federal Recovery Funds
Federal Recovery Funds
Taxes
Taxes
Taxes
FeesReserves
Reserves
Reserves
BillionsTotal Gap: $5 billion
Total Gap: $2.7 billion
Total Gap: $1.9 billion
$2.23 billion
How big is the fiscal year 2013 budget gap?
Rough Calculations
550 million – 266 million + 1.01 billion = 1.29 billion
one-time FY12 FY13 revenue growth cost growth Projected Deficitrevenue not available (inflation)for FY13
This estimate uses DOR revenue estimates, MassBudget spending estimates
How does the Governor fill a $1.3 billion gap for FY 2013?
Cuts and sav-ings; $550
Ongoing revenue initiatives; $215
One-time re-sources; $545•Rainy Day Fund: $400 mil
•Proceeds from various trust funds
•Cigarette tax up $0.50: $63 mil•Sales tax for candy and soda: $62 mil •Enhanced tax enforcement: $22 mil•Bottle redemption: $22 mil
Chapter 70 Education Aid
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gov.
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.09% decrease since FY01
Billions, Inflation Adjusted
Includes ARRA funding; Adjusted using the inflation factor identified in Chapter 70
Gov’s FY13 Proposal Notes:• CH70 up $145.6 mil, but somewhat less when
considering federal Ed. Jobs money
Local Aid
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gov.
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
48% decrease since FY01
Billions, Inflation Adjusted
Gov’s FY13 Proposal Notes:• Unrestricted General Gov’t Aid cut of $65 million
could be reversed with sufficient FY12 surplus funds
Early Education and Care
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gov.
$0
$100
$200
$300
$400
$500
$600
$700
$800
27% decrease since FY01
Millions, Inflation Adjusted Gov’s FY13 Proposal Notes:• Child Care subsidies cut $8.1 million
Higher Education
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gov.
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
30% decrease since FY01
Billions, Inflation Adjusted
Gov’s FY13 Proposal Notes:• Major Community College governance changes
coupled with increase of $14.4 million
Public Health
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gov.
$0
$100
$200
$300
$400
$500
$600
$700
$800
23% decrease since FY01
Millions, Inflation Adjusted
Gov’s FY13 Proposal Notes:• Sales tax revenue from soda and candy used to
fend off deeper public health cuts
Human Services
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gov.
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0 1% decrease since FY01Billions, Inflation Adjusted
Mental Health
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gov.
$0
$100
$200
$300
$400
$500
$600
$700
$800
Millions, Inflation Adjusted 15% decrease since FY01 But some costs shifted
Environment and Recreation
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gov.
$0
$50
$100
$150
$200
$250
$300
Millions, Inflation Adjusted
20% decrease since FY01
Investing in a strong state economy
8% 9% 10% 11% 12% 13% 14% 15%$13
$14
$15
$16
$17
$18
$19
$20
$21
$14.25
$15.81
$13.46
$17.25 $17.40
$19.72
$20.13
$15.25
$15.88 $15.74
$14.28
$15.83
$15.28 $14.97 $14.82
$14.27 $14.59
$14.99
$18.88
$19.10
$15.74
$17.09
$13.35
$14.83
$13.84
$14.39
$15.21
$17.25
$18.12
$15.01
$16.79
$14.34
$13.83
$15.04
$14.24
$15.65 $15.80
$16.27
$14.34
$13.72
$14.20 $14.09
$14.95
$15.41
$16.78
$17.83
$13.82
$15.48 $15.69
Median Hourly Wage by State and Local Taxes as a Share of Personal Income, 2008
State and Local Taxes as a Percent of State Personal Income
SOURCE: Economic Policy Institute analysis of 2008 US Census Bureau Current Population Survey data.
Med
ian
hour
ly w
age
No clear relationship between tax levels and wages
15% 20% 25% 30% 35% 40% 45% 50%$12
$13
$14
$15
$16
$17
$18
$19
$20
$21
$15.05
$18.08
$16.02
$13.08
$17.26$17.62
$20.37
$16.92
$15.24
$15.92
$15.33
$14.20
$16.02
$15.39$15.03
$14.64
$13.97
$14.68$15.09
$19.00
MA
$16.09
$17.59
$12.85
$15.05
$14.06
$14.78
$15.54
$18.14
$19.22
$15.03
$17.04
$14.95$14.51
$15.09
$14.21
$15.85$16.09
$16.83
$14.56
$13.89
$14.50$14.25
$15.72
$16.34
$17.20
$18.10
$14.80
$15.87
$16.44
Percent of workforce with bachelor's degree
Med
ian
hour
ly w
age
Source: Economic Policy Institute analysis of U.S. Census Bureau’s Current Population Survey.
Median Hourly Wage by Percentage of Workforce with Bachelor’s Degree, 2009
Strong relationship between education and wages
10% 12% 14% 16% 18% 20% 22% 24% 26%$11
$12
$13
$14
$15
$16
$17
$18
$19
$20
$21
$22
$23
$13.28
$22.92
$14.12
$11.35
$16.19
$15.55 $15.11
$14.82
$12.31
$13.03
$14.59
$13.88
$16.29
$14.37 $14.11
$13.84 $14.03 $13.69
$11.81
$15.98
MA
$16.93
$15.12
$11.23
$14.07 $14.41
$13.25
$14.57
$13.46
$15.54
$13.89
$15.16
$12.10
$13.20
$15.77
$14.17
$16.12
$15.06
$13.63
$11.70 $11.66
$12.67
$13.75
$14.74
$12.61
$14.01
$16.99
$15.39 $15.11
$16.33
Percent of workforce with Bachelor's degree
Med
ian
hour
ly w
age
(200
9 do
llars
)
Source: Economic Policy Institute analysis of US Census Bureau’s Current Population Survey.
Median Hourly Wage by State and Local Taxes as a Share of Personal Income, 1979
Weaker relationship between education and wages 30 years ago
Economic Development Tax Expenditures
-20%
-10%
0%
10%
20%
30%
40%
Economic Devel-opment Tax Ex-
penditures 35% Increase
Higher Education Spending
14% Decrease
Economic Development Tax Expenditures Increase $400 Million, while Higher Education Spending Declines $200 Million. FY2002-FY2010 (inflation adjusted)
Many Program Areas Have Seen Substantial Cuts Over The Last Ten YearsWhat We Do Together Through Government