our state budget: building a better future together

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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

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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 Presentation

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Page 1: Our State Budget:  Building a Better Future Together

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

Page 2: Our State Budget:  Building a Better Future Together

Education

Page 3: Our State Budget:  Building a Better Future Together

Transportation

Page 4: Our State Budget:  Building a Better Future Together

Libraries, Parks and Recreation

Page 5: Our State Budget:  Building a Better Future Together

Public Safety

Page 6: Our State Budget:  Building a Better Future Together

Clean Air and Safe Drinking Water

Page 7: Our State Budget:  Building a Better Future Together

Prisons and the Courts

Page 8: Our State Budget:  Building a Better Future Together

Health Care and Public Health

Page 9: Our State Budget:  Building a Better Future Together

Human Services

Page 10: Our State Budget:  Building a Better Future Together

How Much of our Income Does it Take?

9.8%

State and local taxes as % of personal income, 2009

Page 11: Our State Budget:  Building a Better Future Together

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%

Page 12: Our State Budget:  Building a Better Future Together

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

Page 13: Our State Budget:  Building a Better Future Together

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

Page 14: Our State Budget:  Building a Better Future Together

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

Page 15: Our State Budget:  Building a Better Future Together

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%

Page 16: Our State Budget:  Building a Better Future Together

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.

Page 17: Our State Budget:  Building a Better Future Together

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

Page 18: Our State Budget:  Building a Better Future Together

$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

Page 19: Our State Budget:  Building a Better Future Together

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

Page 20: Our State Budget:  Building a Better Future Together

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

Page 21: Our State Budget:  Building a Better Future Together

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

Page 22: Our State Budget:  Building a Better Future Together

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

Page 23: Our State Budget:  Building a Better Future Together

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

Page 24: Our State Budget:  Building a Better Future Together

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

Page 25: Our State Budget:  Building a Better Future Together

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

Page 26: Our State Budget:  Building a Better Future Together

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

Page 27: Our State Budget:  Building a Better Future Together

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

Page 28: Our State Budget:  Building a Better Future Together

Investing in a strong state economy

Page 29: Our State Budget:  Building a Better Future Together

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

Page 30: Our State Budget:  Building a Better Future Together

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

Page 31: Our State Budget:  Building a Better Future Together

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

Page 32: Our State Budget:  Building a Better Future Together

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)

Page 33: Our State Budget:  Building a Better Future Together

Many Program Areas Have Seen Substantial Cuts Over The Last Ten YearsWhat We Do Together Through Government